Latest Expert Exchange Queries
sitemapHome | Registration | Job Portal for CA's | Expert Exchange | Currency Converter | Post Matrimonial Ads | Post Property Ads
News shortcuts: From the Courts | News Headlines | VAT (Value Added Tax) | Service Tax | Sales Tax | Placements & Empanelment | Various Acts & Rules | Latest Circulars | New Forms | Forex | Auditing | Direct Tax | Customs and Excise | ICAI | Corporate Law | Markets | Students | General | Indirect Tax | Mergers and Acquisitions | Continuing Prof. Edu. | Budget Extravaganza | Transfer Pricing
Popular Search: VAT RATES :: ARTICLES ON INPUT TAX CREDIT IN VAT :: list of goods taxed at 4% :: TAX RATES - GOODS TAXABLE @ 4% :: ACCOUNTING STANDARDS :: cpt :: ICAI offer Get Windows 7,Office 2010 in Rs.799 Taxes :: Central Excise rule to resale the machines to a new company :: ACCOUNTING STANDARD :: VAT Audit :: empanelment :: due date for vat payment :: articles on VAT and GST in India :: TDS :: form 3cd
Mergers and Acquisitions »
 Deals of the day-Mergers and acquisitions june 20, 2017
 How new funding avenues, M&As are powering India’s renewable energy sector
 Finance Ministry asks PSBs to explore acquisition of smaller banks
 Bank of Baroda, Canara Bank may lead next round of mergers
  Deals of the day-Mergers and acquisitions June 13, 2017
 India’s booming stock market has a downside: It’s making M&As expensive, says BNP Paribas
 Cross border mergers make India favoured FDI route: UNCTAD
 BNP expects challenging 2017 for India M&A deals as stocks rally
 Why Gulf mergers and acquisitions are back on the rise
 Sebi issues listing norms for NCDs in mergers and acquisitions
 Indian chemical industry: Will M&A be a game changer?

6 important aspects of Global Mergers & Acquisitions
April, 22nd 2010

With a rebound in global markets, Indian companies are back with their appetite to go for ambitious overseas acquisitions in order to log into inorganic growth-driven expansion plans.

Gradually, the strength of the recovery is ensuring that corporate honchos pull-up their firms back to the normalcy levels of pre-crisis duration a couple of years back. Going further, increased optimism would lead to revival in the number of outbound deals by the corporate India.

However, closure of mega-deals may need to determine and verify several aspects in order to envelope a seamless coming together of two different entities from different culture and locations altogether.

6 important Aspects of Global Mergers & Acquisitions

Global Thinking

The foremost requirement for a corporate looking to go global, to start with, is to change the old technocrat mindset and think big and global. Companies working in overly competitive environment have to change fast as per the evolving dynamics in their industry of operation.

Bharti Airtels take-over of Zain Telecom is a case in point. Even as Bharti holds a numero uno position in the growing telecom markets of India, the companys management whiffed saturation of the urban markets in India along with regime of intensifying price wars.

Without being content with their current market share and stature, the company initiated a bold step of acquiring African assets of Kuwaits Zain Telecom in a whooping $10.7 billion deal, inviting wrath of analysts community over valuations.

As per an estimate only one in two Africans hold mobile phone and with Zain having strong presence in most of the countries in Africa, Bharti has taken a lead in diversifying its risks involved in domestic markets.

Pricing and Valuations

Pricing and valuations at which the targeted firm is being taken over is the most crucial decision to be taken while contemplating a global acquisition move. Preferably, both the CEO and the CFO of the company needs to figure out the net cost-benefit analysis involved in acquiring an overseas company.

At the same time, it must be kept in mind that merely pricing and valuation should not form a base of final decision. Even long term impact of the deal should be taken into account. In most of the mega-deals, the valuations are often touted as being overtly expensive in terms of pricing.

But, if the deal is likely to be earnings accretive over the longer duration it may be worth it to go for a bold move. Similarly, if the move is likely to give the company a quick head-start within a given market, it could be worth it rather than going for slow organic growth process unless the valuations demanded are above realistic levels. The example of Bharti Airtel provided above fits perfectly well under this heading too.

Abiding Local Laws

An overseas company targeted to be acquired is governed by specific local laws and policies. Different countries are governed by diverse set of jurisdiction processes. It could be in the form of local land acquisition laws or even local labour laws with different set of trade union rules.

Take the case of Tata Steels acquisition of UKs Corus, where the initial strains have begun to show through labour issues and could likely result in labour strikes on account of Tata Steels decision to mothball its Teesside unit in northeastern England.

The regulatory issues of overseas destination have to be tackled in conformation with local jurisdiction laws and rules under the recommendations of local legal experts.

Flexible Decisions & Adaptability to Change

Companies have to ensure that their business decisions and mandates are flexible and adaptable to change in the overseas markets. A product which is an instant hit domestically need not necessarily be as much viable in a foreign market.

Take the case of same company Bharti Airtel. The telecom company played well its cards related to low-cost, high-volume game in the growing markets of India. In fact, it got a firm foothold through this strategy as Indias premier telecom operator.

And now the company is looking to replicate the same model in Africas too. It is not necessary that the same model would work over there too. If the volume game does not work over there, the company needs to be ready with a Plan B to quickly adapt to the diverse trend of local consumers.

Diverse Tactics of Marketing

An acquisition abroad is like marrying with an entity with distinct features and characteristics altogether, even though the new entity becomes a part of ones own company post-takeover.

While on the marketing front, it could entail relating to diverse tastes of consumers situated in the destination country. It could be more sensible to hire employees from local state who are more acquainted of the local environment conditions and trend dynamics.

Availing services of the local employee expertise in production and marketing aspect could be seen as a game clinching aspect for going along with overseas ambitions. Employing local people would attract less stiffness from local people on issues related to employment concerns.

Higher levels top executives, preferably even on the board seats, would act as an added boost for an able aid to top management in working our local business strategies for the company.

Serving to Social Causes of Local Destination

A foremost most rule that drives any top class company is to serve the social causes of the society. Whatever you give, comes back goes the saying. A responsible and accountable company would be better-off to part away some small portion of its earnings as a give-back to the local country and its people.

Companies can initiate a number of societal objectives like adopting responsibility for improving infrastructure of a specific area or a location. It could be donations to charity organization and leprosy hit people.

It could as well be any other social cause which spreads awareness among the people. Taking part in rehabilitation of areas hit with natural disasters. Most of all, the companies should also take accountability about the environmental aspects and welfare of the local country.

Home | About Us | Terms and Conditions | Contact Us
Copyright 2017 CAinINDIA All Right Reserved.
Designed and Developed by Binarysoft Technologies Pvt. Ltd.
Software Reengineering Software Re-engineering Software Reverse Engineering Software Reverse Development Software Change Modulation Software Conversion Software Re-creation Software Re-development

Transfer Pricing | International Taxation | Business Consulting | Corporate Compliance and Consulting | Assurance and Risk Advisory | Indirect Taxes | Direct Taxes | Transaction Advisory | Regular Compliance and Reporting | Tax Assessments | International Taxation Advisory | Capital Structuring | Withholding tax advisory | Expatriate Tax Reporting | Litigation | Badges | Club Badges | Seals | Military Insignias | Emblems | Family Crest | Software Development India | Software Development Company | SEO Company | Web Application Development | MLM Software | MLM Solutions