May 2020, by Conrad Bücheleres
With enterprise valuations falling globally for publicly listed and private companies, cash-rich firms from Asia incl. investment companies like VCs & Pes, face myriads of opportunities to enter targets at a discount that are either deemed non-core activities by industrial companies, or growth assets in need of exit by current financial and strategic shareholders. Additional cashflow to facilitate speeding up core strategies’ implementation at industrial companies will become even more important during this time.
Meanwhile, especially some developed economies are understandably enhancing defense mechanisms to prevent indigenous high-tech, future employment and tax generating assets from being taken out of the country. Therefore, there is an increasing need for interest alignment between prospective new shareholders from abroad and the many locally embedded stakeholders. Such alignment processes can be cumbersome but are imperative and required skillful maneuvering to ensure all parties of a deal win in the long-term.
While such international M&A activities will always be politically charged, the potential synergies remain high for many deal constellations. This includes where prospective new shareholders are able to provide deep connectivity to large high growth markets or are capable to match a new asset’s unique selling propositions (USPs) with its own USPs or those of its portfolio companies. Realizing such synergies ensures not only company growth but also employment and tax revenues. Taking lasting goodwill within the communities into account, one becomes active in ensuring positive deal-pipeline-building to go forward beyond immediate crisis-driven opportunities.