Singapore ranks third in countries with most failed M&A deals

Singapore’s failure rate hit 9.2%, just slightly below Australia's 11.9% and China's 12.9%.

Singapore has the third highest proportion of failed acquisition deals between 1992 to 2016, collaboration software firm Intralinks revealed.

According to research they conducted with the Cass Business School, Singapore hit a deal failure rate of 9.2%, just slightly below Australia's 11.9% and China's 12.9%.

Meanwhile, the failure rate of deals where Singapore was the acquirer nation hit 9.1%.

Amongst deals where Singapore was the target nation, Russia had the highest failure rate of 50%, followed by Hong Kong's 20%, and the US with 18.5%.

The failure rate hit 13.8% for Malaysia, 11.1% for China, 5.6% for Australia, 5% in Japan, and 4.5% for the UK.

Amongst deals where Singapore was the acquirer, Australia has the highest failure rate of 26.7%, followed by Japan with 16.7%, and China's 10.8%.

The failure rate hit 10.7% for the US, 9.1% for Germany, 8.2% for Hong Kong, and 7.9% for Malaysia.

Worldwide, 7.2% of mergers and acquisitions (M&A) deals announced last year failed to complete, the highest rate of worldwide deal failures since the start of the global financial crisis in 2008, itself the highest since 1995, and significantly higher than the overall long-term average deal failure rate of 5.7%.

Here's more from Intralinks:

The failure rate for deals involving public company targets is significantly higher than for private targets. Since 1992, the long-term public target average failure rate was 11.1% compared to the long-term private target average failure rate of just 3.7%, and an overall average deal failure rate of 5.7%.

The probability of failed deal completions for public targets is influenced by five significant predictors: target termination fees (break fees), target and acquirer size, the target’s initial reaction to the deal announcement, the number of financial and legal advisers retained by the acquirer for the deal and the type of consideration offered by the acquirer to the target company’s shareholders.

The probability of failed deal completions for private targets is influenced by four significant predictors: the relative size of the target compared to the acquirer, the liquidity of the acquirer, the type of consideration offered by the acquirer to the target company and acquirer termination fees (reverse break fees).

External financial shock such as liquidity, financing and banking crises appear to temporarily significantly increase the rate of failed deal completions, whereas external political shocks appear to have no impact.