Investing in India’s growth story – Kroll Quarterly M&A Newsletter

08 September 2016

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Favorable economic and demographic conditions, plus an encouraging regulatory regime, are turning India into an ideal target market for inbound M&A in Asia-Pacific. Since 2011, inbound transactions have trended up, and overall foreign direct investment (FDI) in the country reached a peak in 2015 that placed India as one of the leading destinations for global FDI, ahead of the region’s economic behemoth China. General sentiment among foreign investors for Indian investments remains strong, creating a bright outlook for inbound M&A through the rest of 2016 and into 2017.
 
Kroll, the global leader in risk mitigation and response, has once again teamed up with Mergermarket to analyse the opportunities and challenges of investing in India in the latest edition of their Spotlight Asia series.
 
In addition to a comprehensive analysis of trends shaping the Indian M&A market, this issue includes exclusive insights from Kroll Managing Director Reshmi Khurana who highlights the key country-specific risks foreign investors are likely to face and the actions needed to uncover them through a thorough due diligence program.
 
Additional M&A trends and highlights in the newsletter include:
 
  • In 2015, inbound M&A totaled 227 deals worth US$19.6bn. In the first half of 2016, 82 deals worth close to US$9bn were announced, putting the country on track for another banner year of inbound investment.
  • India attracted 6% of all US outbound M&A transactions (deal volume) in 2015, surpassing the 2% of outbound M&A directed at China that year. So far in 2016, India has continued to attract US interest, with US$3.1bn through 27 deals compared to similar US investment in China at US$1.3bn and 13 deals.
  • Technology, media and telecommunications companies accounted for 26% of deal value and 22% of deal volume since 2011 led by feverish interest in the country’s e-commerce market.

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Due Diligence Roadmap #2: Managing The Buy-Side

15 September 2016

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Thorough preparation, effective team organization, and clear communication are the driving factors behind successful due diligence. However, defining the universal components of a so-called “diligence dream team” is difficult as no two teams — or deals — are alike.
 
With an emphasis on examining team structure and communication challenges, RR Donnelley, in conjunction with Mergermarket, is pleased to present Due Diligence Roadmap: Managing the Buy-Side. This report, the second in the series, provides important findings on which members of the due diligence team are the most vital to the process and what challenges respondents often face when communicating with teams across the globe.
 
Key findings include:
 
  • About three-quarters of respondents said legal advisors play one of the most important roles during the due diligence process.
  • Half of all respondents indicated that the success of post-merger integration depends entirely or to a large extent on whether the two teams collaborate actively.
  • 50% of respondents indicated that one of the biggest challenges to maintaining effective communication with a target company is the target’s unwillingness to share critical information.

Attractive M&A Targets: Part 1 – What do buyers look for?

21 September 2016

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Mergermarket is pleased to present Attractive M&A Targets: Part 1, an analysis of the financial characteristics of acquisition targets conducted by the M&A Research Centre at Cass Business School and commissioned by Intralinks. The first instalment of this two-part research study investigates six key financial measures (growth, profitability, leverage, size, liquidity and valuation) of a global sample of 33,952 public and private companies, with annual revenues of at least US$50 million, over the period 1992-2014.

Monthly M&A Insider – September 2016

22 September 2016

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Global M&A activity has continued to slow down when compared to the record highs of last year. With 946 deals worth US$182.2bn, this has been the lowest-valued August since 2013, seeing a 34.7% decline in value and 446 fewer deals. According to global statistics, the top sector for the month was energy, mining & utilities, with 84 deals that were up 28.1% in value when compared to last year. Analysts are expecting global M&A to rebound in the ending portion of the year, though values are unlikely to reach levels seen in 2015.
 
Highlights from this report include:
 
  • North America, despite being the main contributor to global M&A for August, had a 37.1% decrease in deal value.
  • Europe lost 64.5% of its value within two months of the Brexit vote, which occurred in June, leading to the least active month for the region since 2009.
  • The largest deal to come out of August involved Pfizer’s acquisition of Medivation for US$13.2bn.

Digging Deeper: Chinese cross-border mining M&A steals the spotlight

23 September 2016

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While the commodity super cycle may be a distant memory, China’s recent wave of cross-border resource acquisitions is helping to prop up global mining M&A. Indeed, the country has served as the only legitimate catalyst for deals since January 2015, closing 20 cross-border mining deals worth approximately US$8.3 billion, a 6% share of investment globally into the sector. The momentum continues in 2016 with several major offshore acquisitions announced by Chinese firms, particularly in emerging markets, signaling that a level of confidence is returning to the mining sector. Global law firm White & Case and Mergermarket are proud to present this exclusive thought leadership publication, Digging Deeper: Chinese cross-border mining M&A steals the spotlight, an update of market trends in the mining space and China’s resource ambitions.
 
Highlights from “Digging Deeper”:
 
  • Chinese mining companies closed 20 cross-border mining deals worth approximately US$8.3 billion since 2015, with three deals valued at US$4.2bn in H1 2016.
  • 40% of Chinese mining cross-border M&A has targeted Central and Southern Africa since 2015, followed by investments into North Asia (24%) and South America (18%).
  • Copper accounted for 38.3% of target resources by value, followed by iron ore (26.2%), niobium (18.2%) and gold (15.8%) since 2015.

Mid-Market M&A: Riding Out The Downturn

06 October 2016

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North American dealmaking has failed to reach the heights of the past two record-breaking years. This is particularly true for mega-deals. However, mid-market M&A has seen less of a drop-off. Strong deal flows can be seen in the energy, mining & utilities, financial services, healthcare and consumer sectors. The energy sector in particular leads the group with 202 deals made so far, valued at US$18.2bn. This brings about the question, why are middle market deals holding firm while bigger deals tumble?
 
Mergermarket, on behalf of Firmex, a virtual data room provider, interviewed five top dealmakers to discuss why mid-market conditions have been immune to the overall M&A slowdown.
 
Points of discussion include:
 
  • The effect of Brexit and the US presidential vote on North American mid-market M&A.
  • Mid-market deal flow strength in sectors such as consumer, healthcare, energy, and more.
  • Credit availability in various M&A segments.
  • An outlook into M&A for the remainder of 2016 and 2017.

Handling upheaval: The impact of Brexit and the US election on M&A

10 October 2016

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The Brexit referendum on June 23 kicked off a season of significant political events across the globe, including the unpredictable US election. As dealmakers gear up for the busy year-end period, how are these events affecting the M&A environment?
 
Toppan Vite, a trusted financial printing and communications company, in partnership with Mergermarket, asked five M&A experts to find out.
 
Points of discussion include:
 
  • What effect did the Brexit vote have on global and North American M&A?
  • How much of the decline seen in North American deal values is attributed to the uncertainty of an approaching presidential election?
  • How will the current political upheaval in the US and EU affect private equity in North American M&A over the coming 6-12 months?
 
See more and subscribe to Toppan Vite’s blog here.
 
Toppan Vite, a leader in financial printing, delivers a hassle-free experience for mission-critical content for capital markets transactions, financial reporting and regulatory compliance filings, investment companies and insurance providers. Part of the world’s largest printing company with over $13 billion in annual sales, we have the scale, financial strength and commitment to be the partner of choice for mission-critical transactions, any size, across the globe. Learn more at us.toppanvite.com

The Global Challenge Part 2: Practical considerations of Japanese business transformations and the impact on target companies

14 October 2016

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To view the Japanese version of the report, click here.
 
Baker & McKenzie and Mergermarket are proud to present a new report on the evolving and increasingly competitive business landscape for Japanese corporations and how these corporations can revisit their current cross-border M&A doctrines and make the necessary changes to engender change on a transformational and international scale. Faced with growing challenges in their domestic market, not least an aging and shrinking population amid global economic uncertainty and turbulence, Japanese companies are shifting towards a search abroad for growth. As a catalyst for this shift, Japanese corporations are using cross-border M&A to engender the kind of transformational change in operations and organizational structures needed not just to survive but thrive in today’s competitive corporate landscape.
 
Research commissioned by Baker & McKenzie, in collaboration with Mergermarket, has culminated in the report ‘The Global Challenge Part 2: Practical considerations of Japanese business transformations and the impact on target companies’. The second issue in a flagship thought-leadership series, the report trains its focus on post-merger integration, assessing the tactics used by Japanese businesses and their competitors in the United States and Europe in their pursuit of transformational change via cross-border M&A. Examining perspectives from the sell-side, the report identifies the most pressing issues when engaging in cross-border M&A and analyzes how Japanese corporations can turn these challenges into value opportunities that pave the way to more promising growth as global corporations.
 
Highlights from the report include:
 
  • The report underlines four main key areas that affect pre-deal success and post-deal integration – namely, managing corporate cultures, identifying and retaining talent, influencing the IT integration process, as well as addressing challenges and change opportunities during integration.
  • 64% of respondents at companies acquired by US/European corporations and 52% of those at targets acquired by Japanese corporations rated their recent business transformations as exceeding expectations and targets.
  • 68% of respondents at US/European-acquired targets rated the effectiveness of the talent retention program as very effective, compared to 59% of respondents at Japan-acquired targets.
  • 22% of respondents at targets acquired by Japanese corporations and 29% of those at targets acquired by US/European corporations agreed that combining IT platforms and systems created the most setbacks to the transformation process.
  • Integrating research and development (R&D) departments was a far greater challenge for companies acquired by Japanese buyers (26%) than their US/European counterparts (9%). Similarly, human resources was a larger problem area for the former group (22%) than for the latter (11%).

XBRL: Final disclosure

16 October 2016

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There is a new shift in reporting formats that could bring about greater transparency, lower costs, reduced risks, and higher quality data. The SEC recently announced it would allow US listed companies to use Inline eXtensible Business Reporting Language (or XBRL), a computer readable format, to file their quarterly and annual financial statements. This translates to companies no longer needing to file for the same information in two different formats, reducing complexity and the chances of errors.
 
In order to find out how XBRL format in financial reporting will affect US listed companies, Vintage commissioned Mergermarket to interview five industry experts and the U.S. Securities and Exchange Commission.
 
Points of discussion include:
 
  • The main benefits and challenges of using the new filing format.
  • How effective the SEC has been in implementing XBRL.
  • The possibilities of using the new format for broader applications and sectors.
  • The SEC’s perspective on XBRL’s future, response to critics on the format, and more

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