The survey respondents expect European markets to recover by then and the situation to stabilise. A majority of such companies have also said that the deal size they have in mind is less than US $100 million on an average. This clearly establishes that companies, which want to invest are not willing to go for large sized buys. The reason for a cautious approach in terms of a longer time frame and smaller deal sizes could be because of the current economic environment but the fundamental reasons for investing in the EU still remain strong.

The rush to acquire companies in the EU reached its peak in 2007, when the total investments reached a high of Euro 9.5 billion. This figure dropped to Euro 2.4 billion in 2008 according to Eurostat, the statistical office of the European Union.

The FICCI survey reveals that EU countries emerged as a favoured destination for Indian companies, which were seeking growth in size and scale of operations, increased market access, new customers, better technologies and R&D facilities, skilled manpower, buying established brands and access to distribution networks, and to move upwards in the value chain.

About 60 per cent of the respondents have also reported that post their acquisition, there has been a positive impact on their profitability. This could also one of the factors which makes Indian companies open to investing in the EU. Though more than 60 per cent of the respondents have said that the present economic scenario has led to attractive valuations of the companies in the EU, they still prefer to be cautious in terms of the overall strategic fit and not invest immediately.

About 90 per cent of the respondents are of the opinion that the Government of India’s policies towards outward investments have been favourable.