Embracing a Growth Mindset in a Changing World

In recent years, the world has undergone profound transformations, reshaping the landscape of various sectors and industries. The confluence of macroeconomic tailwinds, geopolitical tensions, and sector rotations has created an environment that demands a fundamental reevaluation of strategies, particularly within the landscape of APAC M&A.

The Shifting Investment Environment

The private equity sector is beginning to show signs of revival, particularly in the US. However, this momentum has yet to extend to the Asia Pacific region. Despite experiencing a challenging market downturn in recent years, APAC remains a region of immense potential, housing half of the global population with a notably young demographic compared to the US and EMEA (Europe, the Middle East, and Africa). Additionally, APAC accounts for 60% of the world’s GDP and is projected to contribute two-thirds of global growth in the coming decades.

This dynamic region boasts a unique combination of promising growth engines, such as China and India, alongside established economies like Japan, Australia, and South Korea. China and India, often viewed as a diversification strategy, represent both opportunities and challenges, exhibiting significant growth potential that cannot be ignored. Meanwhile, Japan, having been in a state of stagnation for decades, is experiencing a revival marked by a steady increase in M&A activity, and it also stands out as the only major market in APAC that is effectively countering the broader trend of declining fundraising efforts across the region. Some countries in South East Asia have also emerged as winners out of the last few years’ turbulence, due to factors like supply chain diversification and commodity price rise. 

The Need for a Fundamental Reassessment

As the investment landscape evolves, it is crucial to recognize that traditional strategies may no longer yield the same results. The age-old tactics that once guaranteed success in deal-making must be reassessed in light of the new economic realities. The current environment, characterized by high interest rates and increased caution in cross-border transactions, necessitates a return to core principles and fundamental rationales behind M&A transactions.

From a deal making perspective, gone are the days when leveraging high debt for increased internal rate of return (IRR) was a feasible strategy. With structural shifts in interest rates, the landscape of financing has become more complex and tailored – for example, with the rise of private credit and tailored convertible instruments. Similarly, expectations for multiple expansions as a common exit strategy for private equity firms must be re-evaluated. Of course, the revolutionary impact of AI, which is impacting almost every portfolio company and corporate, will certainly be a factor in transforming the future investment and M&A landscape. 

From a deal execution perspective, conventional methods such as wide and rapid auction processes may no longer be the most effective means for successful M&A sell-side strategies, given the existing valuation gaps and the need for innovated transaction structures. Private equity continuity vehicles are becoming more mainstream, as these allow GPs to wait for the best exit window whilst providing liquidity options for LPs.  The execution timeline is often much prolonged with cautiously designed due diligence processes and risk assessments. These include, but are not limited to, innovated earn-out structures, risk hedging via bespoke MACs or insurance solutions, hybrid closing mechanism of locked-box and completion account methods.  

Embracing a Growth Mindset

In this ever-changing environment, it is essential to return to the fundamentals of value creation, focusing on earnings, pricing power, operational efficiencies and sustainability. Scaling growth through diversification can serve as a means of mitigating risk, both macroeconomic and geopolitical. Rather than simply chasing trends, investors should aim to position themselves ahead of the curve or, at the very least, ride it effectively.

Acknowledging that risks are an inevitable part of the investment landscape is vital. M&A advisors must emphasize the importance of recognizing, pricing, and even thriving on these risks. Cultivating a growth mindset—characterized by persistence, resilience, and a commitment to learning—will empower professionals to navigate uncertainties and adapt to change.

In the context of International Women’s Day, we celebrated the past few years’ IWD with themes of “Break Bias -2022“, “Embrace Equity-2023”, “Inspire Inclusion-2024” and “Accelerate Action-2025”. Although M&A is still a very much male dominated field, with growth mindset, the stereotype will not disrupt people’s potential; and labels, either positive or negative, towards a certain group of people, should not be encouraged, so that we can nurture a culture of welcoming constructive criticism and thriving in continued learning. We all need to accelerate action to embrace equity and inspire inclusion, creating a more hospitable place for everyone and encouraging growth mindset to achieve full potential.

In a world defined by constant flux, curiosity, and a desire for self-improvement, are paramount. By focusing on attaining success for clients and contributing to a better world, professionals can transform setbacks into strengths and pave the way for future achievements.

As we lean into core principles while fostering a growth mindset, we position ourselves to thrive in a consistently changing environment. The future may indeed be brilliant, provided we remain adaptable and committed to continuous learning. By embracing the fundamentals of M&A transactions and recognizing the importance of resilience in the face of uncertainty, we can navigate the complexities of today’s world and emerge stronger than ever.