Old family firms are ripe for the picking
Cashed up investors will find there will be businesses to buy out because the patriach is retiring and the children do not want to carry on
Hong Kong family businesses are increasingly becoming targets of takeovers by institutional investors as the older generation of entrepreneurs retires, bankers say.
Hundreds of listed companies controlled by wealthy families may be taken private in the coming decade because they face operational difficulties or the younger generation is not interested in holding on to them.
One example would be companies in the garment industry, which is considered a sunset sector in Hong Kong.
Potential buyers for such businesses could be capital-rich global private equity firms or powerful state-owned enterprises from the mainland that often consider Hong Kong a stepping stone before they expand into European and American markets more aggressively.
Many investment banks and management consultancy firms have already pitched the idea to local family businesses for possible merger and acquisition (M&A) plans this year.
"Taking a company private is not just the trend in the US, it is also going to happen in Asia and in Hong Kong. We've got the same question from many clients this year - what are the potential takeover targets that are worth pitching to in Hong Kong?" said an investment banker with an American firm in Hong Kong.