Accounting firm Ernst & Young plans to nearly double its transaction advisory team in Asia over the next three years, to meet rising mergers and acquisition activity in China and India, an executive said on Wednesday.
Dave Read, the London-based head of Ernst & Young's transaction advisory services, told Reuters the firm also sees a 30 percent year-on-year rise in revenue from Asia, excluding Japan, over the next three years from $200 million in the year that ended in June.
Asia, excluding Japan, accounted for 8 percent of its $2.4 billion in global revenue in transaction advisory in its 2006/07 financial year. It has 850 people in Asia, which it hopes to boost to 1,500 in three years.
Read acknowledged investor concern that a decline in credit markets may hurt big leveraged buyouts in the United States but said he was bullish on mergers and acquisitions in emerging markets such as Russia, India and China.
There is so much demand that we just don't have enough people. We are turning away business or not chasing business, he said. We can get graduates and MBAs, but the key thing is to get people who have experience in transactions.
Asia Pacific mergers and acquisitions, excluding Japan, surged 50 percent in the first half to a record $253 billion, according to preliminary data from Dealogic.
Australia accounted for $76 billion worth of deals in the half, followed by China with $55 billion and India with $39 billion, according to Dealogic.
Global M&A volume reached $2.8 trillion in the first half of 2007, up by more than half from a year earlier.
Read, speaking during a business trip to Asia, cautioned that there are fears that problems in sub-prime mortgage market in the United States could slow big leveraged buyouts, which are financed by heavy borrowing using the balance sheet of the target company.
Financing of leveraged buyouts will be a challenge. The economics are not wrong, it is the financing structure, he said, adding that the main worry was uncertainty in debt markets.