Emerging opportunity missed

The ONS research showed that foreign buyers of UK businesses spent £18bn
during the second quarter of 2006, six times the amount UK companies spent on
acquisitions abroad during the same period.

David Brooks, head of mergers and acquisitions at Grant Thornton, said the
lack of deal activity abroad by UK corporates meant they were missing out on
building a presence in growing markets.

‘UK companies are investing cautiously in the emerging markets of China and
India. RBS and Vodafone had have made moves into China but there haven’t been
many others,’ Brooks said.

‘When growth appears to be topping out in the UK and the US, you would expect
companies to push into areas that are showing consistent GDP growth.’

The likelihood of this trend changing within the next year, however, is slim
according to Brooks, as these markets are difficult to break into.

‘The Americans made the push into China much earlier than Europe. They have
spent a large amount of time building relationships and it is only now that they
have reaped the benefits of that preparation,’ he said. ‘UK companies will move
into China and India, but it is going to be slow. The regulatory and cultural
differences make it a difficult market to crack.’

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