Yu points out that poor cross-strait interaction in the past has hindered investment in Taiwan by foreign enterprises. With the signing of ECFA, the political situation has stabilized somewhat, and Taiwanese enterprises are drawing attention from large enterprises around the world, especially Japanese companies harboring strong ambitions.

In the face of Japan’s economic downturn in recent years, Japanese companies have turned to increased buyouts to shore up company value. Yu suggests that Taiwanese companies can cooperate with Japanese companies that wish to enter the China market.

Many international companies have entered the China market through mergers with Hong Kong enterprises since the free trade agreement between Hong Kong and China(CEPA) took effect, enabling them to enjoy preferential tariffs and concessions. With the signing of ECFA, international companies are now starting to look for potential M&A targets in Taiwan.

Xue-ming Ling, a PwC accounting manager, says that many companies adopt M&A strategies during periods of economic change, but warns that they must be alert to the need for risk management and should evaluate businesses from a variety of viewpoints.

The value chain for Chinese companies can also be constructed sooner if they are merged with Taiwanese enterprises because of the technical and management advantages that Taiwan offers versus China, therefore Taiwan is a primary M&A target for China.

However, M&A activity between Taiwan and China is still unbalanced. While takeovers of Chinese companies by Taiwanese financial groups are relatively hassle-free, acquisitions of Taiwanese companies by Chinese enterprises are subject to many restrictions.

Yu suggests that Taiwan should target more potential M&A transactions in Europe, America or Japan so that China will no longer be the only option for Taiwanese enterprises. “Mergers are like buying houses. Some people buy houses not for their own use, but as an investment”, Yu said.

Before M&A transactions are made, a detailed assessment of the existing and potential value of the companies should be conducted in order to maximize the benefits for all parties.