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Eversheds report shows GCs in industrial companies see acquisitions and the Indian market as some of the key focus areas for their companies

  • Global
  • India

    03-06-2016

    • 80% of GCs expect to be involved in acquisition, with the main driver being to strengthen/expand existing product lines
    • India was identified by most participants as a focus jurisdiction for future growth
    • The slowdown in economic growth in China, fall in oil prices and global downturn are seen as the macro-economic trends most likely to have the greatest impact on industrial businesses

    Eversheds recently conducted research of 25 senior counsel in leading international engineering, automotive, chemical, aerospace and defence companies to gauge their opinion on the macro economic trends, geographies of opportunity, their M&A strategy and the demographic of their commercial disputes.

    The research found that the rapid fall in oil prices and global economic downturn present challenges for most industrial companies and the majority of participants were uncertain about the future. The research also showed that balanced risk appetite is defining growth in the industrials market.

    In regards to geography, North America and Europe are viewed as stable places to do business for most industrial companies, yet some of the more volatile markets remain attractive from a pure demand perspective and the potential to increase market share.

    Growth is on the horizon for industrial companies over the next 12 months. Those included in the research highlighted that it was likely that there would be capitalisation on the opportunities presented by a rising middle class and greater government expenditure, especially in emerging economies. However, an increase in protectionist policies in some jurisdictions has made it difficult for foreign multinationals to increase market share. India is viewed as increasingly attractive, however there are frustrations around bureaucracy.

    More industrial companies are looking to acquire rather than divest in the next 12 months with most general counsel looking for ‘bolt-on’ opportunities and to acquire businesses that either complement existing product lines or allow for portfolio diversification.

    Parm Singh, Head of Diversified Industrials and India Group at Eversheds said:

    ‘This is our third phase report on the industrial sector and there are some interesting findings around the likely growth in India. The Indian Government is trying to make it easier to do busienss in India. Its “Make in India” policy will encourage more global industrial companies to manufacture in India, to sell products in India, and export into South Asia and Africa. Therefore we will see more companies considering India for expansion.

    ‘Whilst the economic slowdown in China is noted as having an impact on industry it is encouraging to see a focus on acquisitions across the board. In legal terms, product liability, contractual issues and non-payment continue to be the main areas of dispute.’

    Disclaimer

    This information is for guidance purposes only and should not be regarded as a substitute for taking legal advice. Please refer to the full terms and conditions on our website.

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