• Thursday, March 28, 2024
businessday logo

BusinessDay

More M&As seen on surge in start-ups

More M&As seen on surge in start-ups

There will be more mergers and acquisition (M&A) deals in no time owing to a continuous rise in start-ups, with firms scrambling to retain positions in the market.

Data from Global Transactions Forecast report released by Baker McKenzie and Oxford Economics, a global law firm, say that M&A deals in 2017 amounted to $469.8 million in Nigeria and rose by 475 percent to $2.7 billion in 2018.

The report says that going forward, M&A will be on a continuous rise, especially as companies scramble for larger market share as well as larger resources. It further says that this will increase M&A deals to $5.2 billion in 2019, adding that increasing allocation to technology-driven transformation is the key to future growth.

In Nigeria, many firms have embraced M&As to scale. However, this is more common among large enterprises. Coca-Cola recently acquired Chi Limited in a deal that is set to redefine the drinks market.  Olam Nigeria last week completed the acquisition of Dangote Flour in a N120 billion deal.

Firms are struggling to stay afloat due to recurrent challenges inherent in the business environment. However, start-ups have found ways to proffer solutions to these challenges through innovation and M&As.

In 2014, Wakanow, a Nigerian travel agency, acquired Oya.com.ng, an online bus ticketing startup, for $2.5 million.

Related News

In 2015, One Africa Media (OAM)  Group, acquired Jobberman.com, a recruiting portal.

 In 2018. Zinox Technologies acquired Konga, and Konga, in turn, merged with another ecommerce platform Yudala, which is affiliated with Zinox.

Nigeria ranks 116 with 48.3 points on the Global Competitiveness Report and 131st  on the World Bank’s 2020 Doing Business Index. Although this is an upward movement by 15 places from its previous position of 146, the country is yet to surmount basic challenges such as multiple taxation, infrastructural hiccups and power cuts.

The manufacturing sector is the biggest hit. Reports show unless manufacturers are more innovative, they may be unable to compete.

A report by the World Bank themed ‘Trouble in the Making?: The Future of Manufacturing-Led Development’ says that changing technologies and shifting globalisation patterns are destined to reshape manufacturing-led development strategies. In line with global best practices, digitalisation and technological advancement has been on a constant rise and is seen as a route to development.

Gbemi Faminu