icai – study circle meeting mergers & acquisitions - strategy & execution · icai –...

1

ICA

I –

Stu

dy C

ircle

Meeting

Merg

ers

& A

cquis

itio

ns -

Str

ate

gy &

Execution

Harish H

V

Partner –National Management

Grant Thornton India

24thJuly 2010

2

Discussion Points

•In

troduction

•In

dia

n M

&A

Activity

•B

asic

s o

f M

&A

•M

&A

Execution P

rocess

•C

onclu

sio

n

©Grant Thornton International. All rights reserved.

The O

bje

ctives…

•To d

iscuss w

hy M

&A

s a

re a

cru

cia

l com

ponent of ‘C

orp

ora

te

Str

ate

gy’to

day a

nd

•To e

xam

ine the a

ppro

ach to e

xecute

this

str

ate

gy (em

phasis

on

Due D

ilig

ence a

nd V

alu

ation a

s s

upport

functions)


Day in a

nd d

ay o

ut w

e flip o

pen n

ew

spaper

front pages a

nd c

om

e a

cro

ss s

uch

headlines...

Bhart

i A

irte

l buys K

uw

aits Z

ain

Tele

com

The Economic Times: Mar 25,2010

Abbott a

cquir

es form

ula

tion b

usin

ess o

f Pir

am

al H

ealthcare

The Hindu Business Line: May 21, 2010

GTL Infr

a a

cquires T

ow

er B

usin

ess o

f R

eliance Infr

a for $11 B

n

Livemint : June 28,2010

Not done


Merg

ers

and A

cquis

itio

ns a

s a

Busin

ess S

trate

gy

•M&A is a critical tool of Business Strategy for survival and growth especially in

rapidly e

volv

ing k

now

ledge a

nd technolo

gyoriented businesses

•Results of the India

n M

&A

and P

rivate

Equity s

urv

ey (H

2-2

009)carried out

by

Gra

nt Thorn

ton Indiathrough 200 interviews conducted with the industry

leaders across India, say that 34%

of busin

esseshave a p

ositiv

e o

utlookfor

the Indian economy and an overwhelming 9

1%believed that the Indian

economy will undergo furt

her

consolidationin the current market conditions.

The Survey also reveals that 58%of the corporates expect to be involv

ed in

an a

cquis

itio

nwithin the next 1

2m

onth

s

•It is equally important to plan for selling a business as it is to acquire a

business. Grant Thornton’s M&A and PE survey results show that 31%of

businesses will e

lim

inate

non-c

ore

serv

icesactivities to maintain or improve

profitability.


A few

pert

inent questions that pop in o

ur

min

ds…

!

•Why do companies choose M & As rather than internal growth?

•Why do they pay millions and billions of dollars for such acquisitions?

•Why should a business takeover another?

•How does a seller put a price on his offer?


I quote

David

Sin

cla

ir . . .

“It w

as o

nce thought th

at sta

tes too s

ophis

ticate

d to fig

ht each

oth

er w

ould

make w

ar th

rough s

port

. They d

o n

ot. T

he real

inte

rnational battle

gro

und these d

ays is the b

oard

room

.The

weapon is takeover”.


The M

A

D

Mark

et

$6

8 B

illio

n


454

330

375

30.9

511.9

739.7

3T

ota

l M

&A

172

174

225

5.2

16.7

016.5

0D

om

esti

c

282

156

150

25.7

45.2

623.2

3C

ross

Bord

er

196

82

106

13.1

91.3

817.8

7O

utb

ound

86

74

44

12.5

53.8

85.3

6

Inbound

2008

2009

2010*

2008

2009

2010*

Volu

me

Valu

e (i

n b

illion U

SD

)

M&A Activity: 2010 Highlights

*Jan to Jun of Calenderyear 2010. Figures for 2008 and 2009 are for the full calenderyear

The

val

ue

and v

olu

me

of

dea

ls c

om

ple

ted in the

1st

Hal

f of

2010

hav

e al

read

y e

xce

eded

those

com

ple

ted f

or

the

whole

of

last

yea

r


Key Highlights (H12009-H12010)

•Total 375 a

nnounced d

ealswith v

alu

e o

f $ 3

9.7

3 b

illionduring H

1-2

010as

against 128 deals with announced value of $ 5.70 billion in H1-2009

•There were 7

“billion d

ollar”M&A deals in H1-2010 compared to 2 in H1-2009

•There were 3 M&A deals with deal value of over $500 Mn in H1-2010 as

compared to none in H1-2009

•The value of

dom

estic d

ealsannounced has increased from $

4.2

8 b

illion i

n

H1-2

009to $

16.5

0 b

illion in H

1-2

010

•A

vera

ge M

&A

deal siz

ehas increased from $ 44.53 million in H1-2009 to $

105.95 in H1-2010

•The value of C

ross B

ord

er deals(both Inbound and Outbound) announced in

H1-2010 has increased more than 10 times compared to H1-2009

•Though v

olu

me o

f M

&A

dealshas g

row

n b

y 1

93%during H1-2010 as

compared to H1-2009, valu

e o

f M

&A

deals

has g

row

n b

y 5

97%

!


Trends in Cross-Border and Domestic Deals:

We have seen exponential growth in M&A over the

last 3 years(H1)

106

31

108

17,8

74.2

1

452.7

4

7,0

64.6

1

Ou

tbound

225

64

110

16,4

97.8

7

4,2

76.2

7

4,2

60.5

3

Dom

esti

c

44

33

51

5,3

55.7

9

970.6

9

4,7

71.9

7

Inb

oun

d

2010*

2009

2008

2010*

2009

2008

Volu

me

Valu

e (I

n M

illi

on

US

D)

H1

M&

A D

eals

- V

olu

me

-

50

100

150

200

250

2008

2009

2010

Volume

Inbound

Outb

ound

Dom

estic

M &

A - V

alu

e

-

5,0

00

10,0

00

15,0

00

20,0

00

2008

2009

2010

Value(USD Mn)In

bound

Outb

ound

Dom

estic

Figures are for the 1stHalf of each year for the purposes of comparison


Top Outbound Deals

Maj

ori

ty S

take

300.0

0T

elec

om

War

id T

elec

om

Inte

rnat

ional

Ltd

Ban

gla

des

hB

har

ti A

irte

l L

td

Acq

uis

itio

n464.0

0M

etal

s &

Ore

s

Shad

eed I

ron a

nd

Ste

el C

o L

LC

O

man

Ji

ndal

Ste

el &

Pow

er L

td

Acq

uis

itio

n600.0

0M

inin

g

Tri

nit

y C

oal

Corp

ora

tion L

LC

US

A

Ess

ar M

iner

als

Res

ourc

es

Lim

ited

Str

ateg

ic S

take

685.3

0

Phar

ma,

Hea

lthca

re &

Bio

tech

Par

kw

ay H

old

ings

Ltd

S

ingap

ore

Fort

is H

ealt

hca

re L

td

Acq

uis

itio

n1,3

40.0

0M

etal

s &

Ore

s

Anglo

Am

eric

an P

lc –

Zin

c busi

nes

sU

KH

indust

an Z

inc

Ltd

Acq

uis

itio

n1,8

63.0

0

Ban

kin

g &

Fin

anci

al

Ser

vic

es

KB

L E

uro

pea

n P

rivat

e

Ban

ker

sB

elgiu

mH

induja

Gro

up

Acq

uis

itio

n10,7

00.0

0

Tel

ecom

Zai

n A

fric

a B

VA

fric

aB

har

ti A

irte

l

Dea

l T

yp

e

Dea

l V

alu

e

(Mil

lion

US

D)

Sec

tor

Targ

et

Coun

try

Acq

uir

er

TO

P O

UT

BO

UN

D D

EA

LS


Top Inbound Deals

Incr

easi

ng S

take

to

60.3

7%

88.1

1

Phar

ma,

Hea

lthca

re &

Bio

tech

Aven

tis

Phar

ma

Ger

man

yH

oec

hst

Gm

bH

Incr

easi

ng S

take

to

34.4

2%

89.9

4

Met

als

& O

res

Utt

am G

alva

Ste

els

Ltd

Net

her

land

Arc

elorM

itta

l

Incr

easi

ng S

take

to 6

0%

246.0

0

Engin

eeri

ng

Tel

co C

onst

ruct

ion

Equip

men

t C

o. L

tdJa

pan

Hit

achi C

onst

ruct

ion

Mac

hin

ery L

td.

Str

ateg

ic S

take

295.0

0

Ban

kin

g &

Fin

anci

al

Ser

vic

es

Kota

k M

ahin

dra

Ban

k L

tdJa

pan

Sum

itom

o M

itsu

i

Ban

kin

g C

orp

ora

tion

Acq

uis

itio

n450.0

0

Tel

ecom

Ess

ar T

elec

om

Infr

astr

uct

ure

Pvt L

tdU

SA

Am

eric

an T

ow

er C

orp

Acq

uis

itio

n3720.0

0

Phar

ma,

Hea

lthca

re &

Bio

tech

Pir

amal

Hea

lthca

re

Solu

tions

-D

om

esti

c

Form

ula

tions

Busi

nes

sU

SA

Abbott

Lab

s

Dea

l T

yp

e

Dea

l V

alu

e

(Mn

US

D)

Sec

tor

Targ

et

Coun

try

Acq

uir

er

TO

P I

NB

OU

ND

DE

AL

S


Top Domestic Deals

Incr

easi

ng S

take

to 1

00%

243.0

0

FM

CG

, Food &

Bev

erag

esG

odre

j S

ara

Lee

Ltd

India

Godre

j C

onsu

mer

Pro

duct

s L

td

Acq

uis

itio

n280.4

3T

elec

om

Tw

enty

Fir

st C

entu

ry

Infr

a T

ele

Ltd

India

Wir

eles

s T

T I

nfo

Ser

vic

es

Incr

easi

ng s

take

to

91.9

0%

656.3

1

Rea

l E

stat

e &

Infr

astr

uct

ure

Man

agem

ent

DL

F A

sset

s L

td

India

Car

af B

uil

der

s an

d

Const

ruct

ions

Pvt. L

td

Maj

ori

ty S

take

1,0

21.2

8

Tel

ecom

Info

tel B

road

ban

d

Ser

vic

es P

vt L

tdIn

dia

Rel

iance

Indust

ries

Lim

ited

Acq

uis

itio

n1787.2

3

Tel

ecom

Air

cel L

td -

17,5

00

tele

com

tow

ers

India

GT

L I

nfr

astr

uct

ure

Mer

ger

11,0

00.0

0

Tel

ecom

Tow

er A

sset

s of

Rel

iance

Infr

atel

Ltd

.In

dia

GT

L I

nfr

astr

uct

ure

Dea

l T

yp

e

Dea

l V

alu

e

(Mn

US

D)

Sec

tor

Targ

et

Coun

try

Acq

uir

er

TO

P D

OM

ES

TIC

DE

AL

S


Secto

ral bre

ak-u

p o

f In

dia

n M

&A

deals

Secto

r w

ise –

M&

A D

eals

by V

alu

e –

H12010


Valu

e w

ise M

&A

deal bre

ak u

p

153

237

81

41

94

73

4

14

17

8

17

15

7

2

5

0

50

100

150

200

250

300

350

400

H1-2

008

H1-2

009

H1-2

010

Volume (No. of Deals)

Valu

e n

ot dis

clo

sed

< $

49.9

m$50m

- $

99.9

m

$100m

- $

499.9

m$500m

- $

999.9

m >

1000m

India

n M

&A

Deals

Scenari

oThe India

n m

ark

et has s

een a

sig

nific

ant in

cre

ase in the

valu

e a

nd v

olu

me o

f deals

com

pare

d to last year


1863.00

KBL European Private Bankers

Hinduja Group

1,787.23

Aircel Ltd -17,500 telecom towers

GTL Infrastructure

1,340.00

Anglo American Plc -Zinc business

Hindustan Zinc Ltd

1,021.28

Infotel Broadband Services Pvt Ltd

Reliance Industries Ltd

685.30

Parkway Holdings Ltd

Fortis Healthcare Ltd

3,720.00

Piramal Healthcare Solutions -Domestic

Formulations Business

Abbott Labs

10,700.00

Zain Africa BV

Bharti Airtel

11,000.00

Tower Assets of Reliance Infratel Ltd.

GTL Infrastructure

Deal Value

($ Mn)

Acquiree

Acquirer

Som

e r

ecent M

&A

deals


898.6

221

Rea

l E

state

& I

nfr

ast

ruct

ure

Man

agem

ent

2,0

44.6

813

Met

als

& O

res

2593.0

438

Bank

ing &

Fin

an

cial S

erv

ices

4937.9

4

31

Ph

arm

a, H

ealt

hca

re

& B

iote

ch

25,5

39.9

410

Tel

eco

m

Val

ue

of

dea

ls

(US$ m

n)

No o

f dea

lsSec

tors

Sig

nific

ant Secto

r-w

ise tra

nsactions in H

12010

The B

asic

s o

f M

erg

ers

& A

cquis

itio

ns


The M

ain

Idea

One p

lus o

ne m

akes thre

e O

r S

ynerg

y:

This equation is the special alchemy of a merger or acquisition.The key

principle behind buying a company is to create shareholder value over and

above that of the sum of the two companies. Two companies together are

more valuable than two separate companies-atleast, that’s the reasoning

behind M & A.


Motives for

M &

As

•Str

ate

gic

Benefit-Leadin

g to ‘In

org

anic

gro

wth

’:

Rapid growth can be achieved without adding to the capacity of the industry. eg

Telecom Infra where there is consolidation happening

•Snuffin

g o

ut com

petition o

r pre

venting their e

ntr

yAcquiring to kill competition which could be a potential future threat is

one strategy. eg Reliance acquiring IPCL

•In

cre

asin

g m

ark

et share

to d

om

inate

the s

egm

ent

This is particularly critical in consumer good industry where market share helps

in dominating the product category eg. Wipro acquiring Chandrika soap


Motives for

M &

As

•A

cquis

itio

n o

f new

technolo

gy/ com

pete

nce/ capability o

r geogra

phy

•Tax S

hie

lds

•A

ccess a

nd u

tilization o

f ‘S

urp

lus F

unds’. e.g

.Tatas acquiring VSNL

•In

vestm

ent savin

g / leapfr

ogstartup Sterlite acquiring HZL to enter the zinc

business

•R

eactive to o

ther m

erg

ers

in the industr

y s

een regula

rly in B

PO

industr

y

•A

sset str

ippin

g e.g. Acquiring a company to sell off assets and generate cash

e.g. Wimco.


Motives for

M &

As

•D

ivestitu

re

-Focus on core business

-Declining profitability

-Need for funds for other activities

•D

em

erg

er

-Need to correct under-valuation

-Tax benefits

•Valu

ation K

ickers

-Especially in cross border transactions


Theori

es b

ehin

d M

& A

s

There

are

thre

e theories u

nder w

hic

h e

xpla

in the rationale

for m

erg

ers:

a) The ‘Effic

iency T

heory

’-that holds M& As are driven by

the search for synergies-operational,financial,distribution,R & D etc

b) The ‘R

esourc

e D

ependency T

heory

’-suggests that M& As are

a result of organizational interdependence i.e. complementary businesses or with

suppliers and consumers.

c) The ‘A

gency T

heory

’-holds that M & As are an

outcome of managerial desire for power and higher

salary (and the bonus for having completed the

transaction)


Why d

o M

& A

s fail?

As a

str

ate

gy M

and A

s fail d

ue to the follow

ing reasons:

�Due to inadequate planning

�Lack of Communication

�Lack of direct involvement of human resources

�Lack of training

�Lack of key people and talented employees

�Lack of customers

�Due to corporate cultural clashes which results in lack of synergy

�Due to power politics

Execution


Tip

s for

eff

ective im

ple

menta

tion o

f M

and A

as a

str

ate

gy

•This is an opportunistic area and hence b

asic

crite

ria to a

cquire/ div

estmust

be in place and regularly reviewed

•Be open to such opportunities and do not have a closed mind

•Have s

et crite

riaand a k

ey p

ers

onto filter opportunities to avoid time wasting

•Ongoing business must function effectively without getting disrupted. Hence a

separa

te focused team

/ in

div

idualeither internal or external is needed and

the key management can work on it once it reaches a critical stage. However, in

order to be effective the top management, ideally P

rom

ote

r/ C

EO

must be

involv

edin giving direction to the team

•Also critical to keep the discussions e

xtr

em

ely

confidentialto avoid

speculative loss of morale within the organization.


The P

rocess…

Focused o

n a

cquis

ion b

ut id

entical fo

r div

estm

ent

Inte

rnal te

am

for th

e p

rocess w

ith k

ey functional ele

ments

needs

to b

e p

ut

in p

lace a

t firs

t.Target search & identification

Evaluation of opportunity

Term sheet/MOU

Due diligence

Valuation & negotiation

Structuring

Documentation & legal issues

Execution

The p

relim

inary

ste

ps


Targ

et Searc

h a

nd Identification

This

can b

e d

one u

sin

g the follow

ing a

ppro

aches

-Investment Bankers/ Accounting firms

TIP: Agree on a flat success fee, even if it sounds large, with the

investment banker and if possible an inverse reward structure rather

than on the value to incentivise lower acquisition price

-Customers/ Suppliers

-Internet

-Dedicated Databases e.g. Merger Market

-Friends and relatives


Evalu

ation o

f opport

unity

This is the most crucial stage as the 'fit' needs to be established as

thoroughly as possible.

�The fit must be examined in terms of

•Management Bandwidth of acquirer to manage the acquisition

•Think through at macrolevel

Str

ate

gy

Managem

ent &

C

hem

istr

y

Com

patibility

Synerg

y V

alu

e


Pre

lim

inary

negotiation/ M

OU

This is the penultimate stage before getting in the lawyers, accountants

etc to do the due diligence etc etc.

�Crucial to get the professionals involved at this stage to come to basic

understanding on

–Valuation

–Scope of due diligence

–Key issues that need to be still resolved.

–Tax and related issues

•Valuation needs to be justified using local market conditions for the

assumptions

–Cash Flows basis

–Comparable acquisition basis

–Market multiples P/S, P/E, EV/Sales, EV/EBITDA

–Synergy value

–Risk of not acquiring

•Be ready with min/max and be ready to walk away.

Execution

Due D

ilig

ence


Due d

ilig

ence

�Important to go through a s

ound a

dvis

orwith strong knowledge of the

markets/Industry

�Thorough D

ue D

ilig

ence –

Fin

ancia

l, L

egal, T

axetc, is critical to avoid post

acquisition liabilities. It is important to go to the best possible firms for this rather

than shop for fees. Savings here may translate to huge losses later

�Get com

ple

te u

nders

tandin

g o

f busin

ess-meet customers, suppliers etc and

test whether the assumptions made on the acquisition bear out.


Due d

ilig

ence

Due diligence should cover

-Fin

ancia

l

•Review of Financial Statements and Accounting Policies and their

adherence to prudent accounting practices

•Identification of unrealizable assets and undisclosed liabilities

•Adequacy of Internal controls and procedures

•Assessment of the Contingent liabilities such as guarantees, warranties,

tax assessments, disputes and litigations etc. which are not provided in

the financials

Effective due diligence should focus on the requirements of the acquirer

and bring together historical context, sector knowledge and specialist

resources to provide a robust challenge to the projections.


Due d

ilig

ence

Key Ite

ms to c

over in

Fin

ancia

l D

ue D

ilig

ence:

•Historical performance

•Product/Service portfolio and margins

•Working capital

•Customers and Suppliers

•R&D, Assets and Intangibles

•Group risks

•Management and Organisation


Due d

ilig

ence

–Legal

•Ascertaining the status of statutory compliance with respect to corporate

laws, economic and labour legislations, direct and indirect taxes etc.

•Review of key contracts with customers, suppliers, employees,

professionals, marketing agents, royalty arrangements etc.

•Evaluating the Legal ownership of IPRs such as Copyright, Patents and

Trademarks

–Tax •Ascertaining the compliance with applicable tax laws

•Evaluate demands/notices from Tax Authorities

•Review application of Tax Laws –Aggressive/Conservative

•Assessing the probability of claims from the authorities

–Technic

al D

ue D

ilig

encewould be a key input to evaluate/consummate the

transaction

H

R a

nd m

anpow

errelated.

Execution

Valu

ation


Valu

ation A

ppro

aches

�Valuation is a bit of science and a lot of perception

�Tru

e v

alu

e is the p

erc

eiv

ed v

alu

e to a

buyer w

ho is ready, w

illing a

nd a

ble

to

buy

�G

ood b

usin

ess u

nders

tandin

gis a key to successful valuation

�Understand the real drivers behind the valuation

�Valuation is d

ynam

ic a

nd n

ot sta

tic.


Valu

ation A

ppro

aches

Primary Methods of Valuation:

�Cash flow (earnings) based

�Market based

�Asset based

All valuation (except market based) require a proper understanding

of the business and the companies. This is the key to a good valuation.

It is best to approach valuation from m

any p

ers

pectivesand then e

valu

ate

th

e range to n

egotiate. Also multiple approaches gives a comfort level that

one method may not give and serves as a cross check.


Earn

ings b

ased v

alu

ation

�K

ey facto

rs for cashflow

pro

jections

�Projected revenues and costs

�Projected capital costs

�No. of years for projection

�Discount rate

�Opportunity cost

�Acquirer’s WACC

�Acquired company’s WACC

�Terminal value -could be marginal / nil for some knowledge based and

high technology businesses


Mark

et based v

alu

ation

•Use the m

ark

et prices o

f sto

cksto value the company

•Also compare with industry

benchm

ark

son P/E, P/S,EV/Sales, EV/EBITDA

values and trends in valuation

•Try and d

iscount fo

r unusual peaks a

nd v

alleyswhich arise from general

market sentiment

•For unliste

d c

om

panie

sdevelop a s

urr

ogate

valu

ationusing industry

benchmarks of P/E, P/S, P/EBITDA, EV/Sales, EV/EBITDA etc. and d

iscount

by 2

0-3

0%for la

ck o

f liquid

ity o

r listing.


Asset based v

alu

ation

Asset Valu

e

•Valuation of tangible assetsnot reflected in accounts eg. Land

•Valuation of intangible assetse.g. Brands using the Brand Strength

Assessment Method or Cost-to-create or Excess-earnings Approaches

Human Capital using Lev Schwartz method

Process value using Relief-from-royalty method


Pre

miu

ms a

nd d

iscounts

Pre

miu

ms a

nd d

iscounts

to the intr

insic

valu

e a

re inhere

nt to

valu

ation in M

& A

s

�Market share premium

�Controlling stake premium

�Brand value premium

�Cost of not acquiring

�Small player discount

�Payment terms -cash / stock

�Discount for potential loss of employees


Paym

ent te

rms -

Cash V

s S

tock

�Cash transactions

-Acquiring shareholders take on entire risk of synergy value (also possibility of higher

return)

�Stock transactions

-Risk is shared in the proportion of holding

Issues to be considered

-Are the acquiring company’s shares overvalued /

fair-valued / undervalued?

-What is the risk of expected synergies?

Execution

Str

uctu

ring a

nd D

eal clo

sure


Str

uctu

ring

Options

�Takeover–A stake is picked up in the target company with management

control. Both the companies retain individual identity

�M

erg

er–The target company’s assets, liabilities and business are merged

into that of acquirer and the target company ceases to exist

�D

em

erg

er and s

ubsequent M

erg

er–An undertaking, division or business

segment is hived off into a separate entity and either the main entity or the

new entity is offered for takeover / merger with other company

�A

malg

am

ation–A new company is formed to takeover the business and

assets/liabilities of two companies. Both the amalgamating companies

cease to exist

�R

evers

e M

erg

er–A non-listed company merging into an existing listed

company to take benefit of immediate listing or a profit making company

merging into a loss making company to take benefit of taxation set-offs.


Legal aspects

Examine the legal aspects carefully in terms of;

�A

ppro

valsneeded by both sides for the transactions

�Sta

tuto

ry form

alitieswith National Company Law Tribunal, Registrar of

Companies, Environmental & Labour departments

�No Objection C

ert

ific

ate

s/C

leara

ncesfrom

�Banks/Financial Institutional Lenders

�Creditors

�Shareholders /(Venture capital investors)

etc.

�A

ppro

valswith regard to E

conom

ic legis

lations

from RBI, SIA, FIPB, Competition Commission,

STPI etc. wherever applicable.


Taxation

Examine the tax aspects carefully in terms of ;

�Impact on the tax situation of the enterprise

�Sale

of assets

Incase of sale of assets, the sale proceeds are identified against each block of

assets and capital gains/losses will accrue to the target company

�Sale

of B

usin

ess/U

ndert

akin

gThis type of transaction facilitates carry forward of losses to the new/acquiring

entity subject to fulfillment of certain conditions prescribed in the Income Tax

Act

�C

ross-b

ord

er

Acquis

itio

ns

The impact of international taxes and double taxation avoidance treaties to be

evaluated.

Key ris

ks:

•Transfer pricing issues

•Availability of tax losses and other tax benefits/ exposures

•Implications of tax liabilities on the books.


Docum

enta

tion a

nd d

eal clo

sure

�Get the best help and be careful about in

dem

nitie

s, w

arr

antiesetc.

�Vet docum

enta

tion a

t diffe

rent le

vels

-don’t be in a hurry to sign

�Flesh out post acquis

itio

n inte

gra

tion p

lanat this stage itself covering

strategic integration, financial integration, HR integration etc.

Conclu

sio

n


Success S

trate

gie

s

�Issue: Integrating people and culture

-Address employees and dispel fear about future of themselves andthe

company

-Encourage exchange programmes between operational staff

�Issue: Management bandwidth inadequate to acquire and integrate

companies into its system

-Get the right kind of specialists to help you –consultants with knowledge of

both India and US, legal advisors, human resources advisors etc

�Issue : Ensuring customer and business continuity

-Retain key people including some of the promoter-management team with

equity interest or other structures.

-Have a hand-holding agreement

-Take the leadership team into confidence


Sum

mary

�In

org

anic

str

ate

gy thro

ugh M

&A

has b

ecom

e inevitable

to a

chie

ve

gro

wth

in s

cale

and v

alu

e c

reation

�In

dia

n c

orp

ora

tes s

ee s

ignific

ant opport

unitie

s in M

& A

s in the

years

to c

om

e

�Pro

per evalu

ation o

f such o

pport

unitie

s a

nd s

ynerg

y v

alu

e is

cru

cia

l

�Post acquis

itio

n m

anagem

ent is

key


Acquire, grow and reap the benefits

Thank You

Hari

sh H

V

Partner –National Management

Grant Thornton

WINGS, First Floor,16/1

Cambridge Road,Halasuru,

Bengaluru 560008, India

T:+91 80 4243 0700

M:+91 99001 12127

E:[email protected]

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