The transaction process was led by Dentons, assisted by HPP Attorneys, Wenger Vieli, Setterwalls, and Binder Grösswang Rechtsanwälte.
HPP Attorneys advised on the transaction with a team comprising partners Andrew Cotton (M&A) and Anna Roubier (FDI/Regulatory).
Please tell us more about the role you played during this transaction.
As the transaction involved a target that supplies defence and law enforcement agents (‘DLE’), the transaction also required a pre closing approval by the Finnish FDI screening authority, the Ministry of Economic Affairs and Employment of Finland.
HPP Attorneys assisted Beretta Holding in submitting a complete notification to the Finnish Screening Authority and the subsequent regulatory process. The transaction was cleared in a speedy manner during Phase I proceedings, with no requests for further information.
How does your work on this deal fit the profile of your firm?
The work on the Beretta Holding/RUAG Ammotec transaction reflects very well the type of assignments that HPP Attorneys handles on a regular basis. We have extensive experience in multijurisdictional matters and regularly assist clients in cross-border transactions, including with respect to regulatory processes, such as FDI and merger control clearances. HPP regularly partners with leading law firms around the world in servicing our clientele.
What impact is this deal expected to have for the wider firearms market, and for RUAG International?
HPP assisted Beretta Holding with the Finnish FDI regulatory process. The Finnish Screening Authority concluded that the transaction has no impact on a key national interest and cleared the acquisition in Phase I proceedings.
Brown Butler worked closely with Black Solicitors during the reorganisation process. Vickers-Lee Holdings is an independent, family-run business in Yorkshire that supplies products for the capture and containment of waste and recyclables. The company, which also owns both CPR Manufacturing Limited and Cromwell Polythene Limited, is helmed by directors and shareholders James and Debbie Lee. As a result of the share reorganisation, directors’ sons Angus, Alex and Henry have become shareholders in the business.
Brown Butler advised on the reorganisation with a team comprising tax director Craig Hughes and director and principal Steve Hornshaw.
The transaction enables Cerved to better support the growth of Italian companies, facilitating their access to funds related to the National Recovery and Resilience Plan, increasing its presence in the field of soft finance, supporting both banking and corporate sectors. Cerved will offer its services directly to companies through its own sales network, supported by Gruppo Del Barba Group’s specialists.
Marcello Benetti, Partner at Studio Legale Benetti advised Del Barba Consulting on the transaction. "It was an honour to assist the company with this operation that allows it to continue its growth path and become a part of one of the most important Italian companies,” commented Mr Benetti.
In the industries that we typically work in (waste, recycling, trucking, logistics, food service, contracting), the M&A activity is off the charts right now. Given rising inflation, labour shortages and the escalating situation in Ukraine, if you are even on the fence about whether or not you want to sell your business, I would advise you to take a serious look at your exit options. On top of all that, the Federal Reserve is planning multiple rate increases this year. Given that, as well as the economic and geopolitical issues facing the United States and the world, there is no telling what the capital markets could look like a year from now. A deal that requires any sort of financing may be difficult to achieve 12 months from now. In short, I do believe it is a good time to sell your business, especially if you are a closely held business. There are quite a few industries right now that are being aggressively consolidated and valuations are very high. This is absolutely a great time to sell, but if you are serious about doing so, I would start the process right now. The last two years have shown us how rapidly things can change, and I would not be surprised if 2023 looks a lot different than 2022.
The number one tip I could give anyone who is trying to sell their business would be to stay organised and have all your information accurate and up to date. I am helping a closely-held family business sell right now. On top of being great people, they have also run their business exceptionally well. In a matter of a week, they were able to provide me with audited financials, tax returns, asset lists, customers by revenue, large contracts, etc. I could tell right away that their information was accurate and that I could trust it. When I am negotiating with buyers, it is a huge advantage to know that what I am selling is accurate and that I will not get a surprise right before closing that results in the owner taking a haircut.
The next tip I would give to anyone considering selling their business is to explore getting a quality of earnings (QoE) done. Every deal I have been involved with, whether it is getting a commercial loan for a client or helping someone sell their business, has involved one of the parties getting a QoE done. A QoE is a “mini audit” that is not as long or costly as a full audit, but it gives instant credibility to the financials that a company provides.
Unless the situation in Eastern Europe escalates even more than it already has, I expect the M&A activity to continue to be busy, at least in the short term.
My next tip would be to check your expectations going into any deal. Your business is not worth what you think it is, it is worth what the highest bidder is willing to pay. We have met numerous owners who have unrealistic expectations about what their business is worth and it can ultimately cost you value. At my old job, I was leading the acquisition of one of our local competitors. We offered him $3.5MM for his business, he wanted $5MM. We ultimately walked away from the deal. Over the course of two years, he lost a few big contracts, had a couple of trucks breakdown, and a key employee left. Just two years after our initial offer, we bought him for $1.2m. You should absolutely get what your business is worth and fight for it, but also remember that it is not you the business owner who ultimately decides how much your business will sell for -it is whoever is willing to pay the most.
Finally, continue to run the business as if the deal will not go through and you are going to run your company for the rest of your life. Until all the documents have been signed and the money is in your bank account, a million different things could happen that could derail the deal. I have seen many business owners think they are going to close on selling their company then begin to neglect the day-to-day operations of the business. In the instances where the deal falls through, I have seen those business owners in some unpleasant situations. No matter your exit strategy, it is pertinent to continue to maintain the standards of your company.
Unless the situation in Eastern Europe escalates even more than it already has, I expect the M&A activity to continue to be busy, at least in the short term. It is possible that it will be a down year for the stock market with rate hikes coming and fixed income securities currently have historically low returns. For financial buyers, especially PE firms, buying companies is the most logical step to earn points on your money. I would expect financial buyers, especially PE firms, to continue to be aggressive in the coming months.
About Michael Cifor
Tangram Partners offers four “core” services. It provides business valuation (BV) services, M&A advisory, debt and equity raising and corporate restructuring. In his role at Tangram Partners, Michael is the primary lead on all of their BV projects as well as support management with other services. During his time at Tangram, he has performed numerous valuations for cases that included divorce proceedings, succession planning, wills and estates and shareholder disputes. On top of his BV work, he has put together three separate syndicated commercial credit facilities totalling over $100m, executed two mergers and one acquisition and is currently in the process of helping a close-held, family business sell.
Tangram is currently engaged with several commercial banks to work out projects where they help businesses that have defaulted on their loans to get back in compliance. While located in upstate New York, the company works nationally with current clients in California, Georgia, Florida, Massachusetts and Michigan.
Immofinanz has acquired Croatian company ENS DEVELOPMENT d.o.o., a developer of in total 23 stop shops throughout Croatia. Immofinanz is a commercial real estate company that manages and develops properties in the retail and office segments in Austria, Germany, the Czech Republic, Slovakia, Hungary, Romania, Poland, and now Croatia.
Marohnić, Tomek & Gjoić advised Immofinanz and Anđelovic, Siketić & Tomić advised the sellers on the deal.
MTG’s team included Partners Josip Marohnić and Tena Tomek, and Attorney Ivona Zagajski.
AST’s team consisted of Partner Marko Tomić, and Associate Domagoj Perić.
Turbulence always creates opportunities for winners and losers to emerge but, following a brief pause on activity at the outset of the pandemic in 2020, dealmaking rebounded strongly throughout 2021 and Bloomberg Business Week notes that global transactions are set to top $5 trillion by the end of the year.
These figures come despite economic volatility and the prospect of tougher competition regulation. Capital, appetite and opportunity have not been in short supply, and investors – particularly within private equity – have been keen to make up for lost time and put excess cash stockpiles to work. The low-interest rates environment is also a factor that has driven activity, alongside the abundance of capital flowing into the economy and chasing deals. This liquidity can also be explained in part by the availability of cheap debt. The coming together of these factors has created a strong pipeline of dealmaking activity and intense competition to get transactions done.
Tim Nye, head of corporate at Trowers commented: "Competition has been so fierce that pent-up demand has led to the amount of capital that can be put to work outweighing the number of deals available. The knock-on impact of this is that confidence has sky-rocketed and valuations have soared."
He adds: "These trends show no signs of abating, based on our conversations within the dealmaking community, and we, therefore, expect a continuation of strong M&A activity throughout 2022".
The health, social and economic challenges created by COVID-19 meant that organisations of all shapes and sizes had to adjust their business plans and corporate growth strategies. For many, organic growth became more difficult and dealmaking, therefore, grew in importance as a primary option for achieving scale or entering new markets.
The ability to be nimble and agile during intense uncertainty and upheaval has been a key for success, and the best way to pivot into new areas over the past year has often been through merger or acquisition.
In certain sectors where disruption has led to huge changes in demand for services, consolidation and the birth of new market entrants have also provided dealmaking opportunities. Healthcare – and particularly HealthTech – has been an active sector as a result of spiking demand for services related both to the pandemic and to the maintenance of business-as-usual healthcare provision as backlogs grew in the wake of lockdown and other restrictions.
Elsewhere, Real Estate has been heavily impacted during 2020-2021 thanks to social restrictions inhibiting peoples’ ability to carry out a range of activities – from working in the office to visiting retail destinations and using leisure and hospitality venues. With smaller organisations struggling with this uncertainty, and the recent or impending withdrawal of government support schemes, some consolidation activity has occurred with larger entities buying up smaller rivals.
Other sub-sectors have been impacted differently, with industrial and logistics sites seeing spikes in demand thanks to the growing use of online retail and home deliveries as people were forced to spend more time in their own properties.
Towards the end of the year, COP26 took centre-stage in November, as world leaders gathered in Glasgow to discuss the changes and commitments that need to be made to achieve net-zero goals and turn the tide in the fight against climate change. The pandemic also helped to thrust ESG considerations into the spotlight, as the impact of an unprecedented global crisis was felt acutely in all corners of the world.
The role of corporates in driving the ESG agenda is vital. With governments, regulators, customers, employees, lenders, insurers and investors increasingly judging companies based on their ESG commitments, these themes are working their way onto the transactional agenda, too.
Just under two-thirds of respondents to a recent Trowers & Hamlins research survey identified ESG as either a significant dealmaking factor or an important factor ‘to a certain extent’, as pressure mounts for due diligence into potential acquisition targets to go deeper than ever before when analysing ESG issues. Large financial institutions from banks to insurers are factoring ESG risks into their pricing decisions, so an ability to demonstrate ESG credentials in those areas is becoming more and more important. With the direction of travel clear for all to see, savvy leaders will already be looking to get ahead of the curve on this to save themselves potential exposure later down the line.
Alison Chivers, corporate partner at Trowers explains: "ESG is an opportunity to set yourself apart from your competitors. If you’re not doing it, you risk finding it harder to get investment, financing or insurance. If you are taking the lead, you can expect to see the benefits.”
As we enter 2022, the embedding of recent and new regulation and guidance will only heighten the need for organisations across all sectors to get their ESG houses in order – this will cover a range of risk areas from working conditions, gender pay and executive remuneration reporting through to climate and sustainability policies. As data and disclosure in these areas become more sophisticated, potential transactions may be scuppered if the ESG numbers do not add up. This in particular is one strong trend from 2021 which we are expecting to become even more deeply ingrained in the minds of dealmaking decision-makers through 2022.
Advisers on the transaction:
Wellensiek
Rosin Büdenbender
Iuslake
Görg
Latham & Watkins
Noerr
Dentons
Brinkmann & Partner
Milbank
KSBG has been established by six municipal utilities of the Rhine-Ruhr area as an acquisition and financing vehicle for STEAG, a leading energy producer and energy services provider with over 6,000 employees and 7,200 megawatts of installed capacity. STEAG Group, having for decades been one of the leading German operators in the sector of hard coal-fired power generation, is in the process of repositioning itself and focusing on business areas and markets with growth potential, in particular renewable energies.
Dr Achim Compes, Partner at Görg, was involved in the transaction as Corporate, Corporate Financing and Energy legal adviser of the shareholders of the KSBG/STEAG Group.
Further areas of legal advice included:
The shareholder Stadtwerke Dortmund AG was advised by Freshfields (Lars Westphal, Konrad Schott and Hauke Sattler. Görg closely cooperated with Freshfields.
Finance Monthly is pleased to announce that its 2021 Finance Monthly M&A Awards edition has now been published.
Every year the Finance Monthly M&A Awards recognise the achievements of the world’s most prominent dealmakers, management teams, financiers and professional advisers whose hard work over the past 12 months deserves to be celebrated. The first eight months of 2021 have seen a focus on recalibrating strategy and accelerated adoption of technology as a result of the COVID-19 pandemic. With GDP and CPI rates promising growth, however, the hopes for strong economic recovery are emerging and the appetite for mergers and acquisitions is intensifying. It is now more than ever that the firms and professionals who operate in the M&A sector need recognition, as well as an acknowledgement that their efforts are never going unnoticed.
At Finance Monthly, we are extremely proud to be able to provide a platform that celebrates the M&A professionals who work tirelessly to ensure the smooth completion of complex deals and exceed their clients’ expectations every day.
Finance Monthly would like to thank all contributors and participants in the 2021 Finance Monthly M&A Awards. Congratulations to our winners and finalists.
To view the awards publication please click here
To view more of our Finance Monthly awards please visit our awards page.
A growing number of corporate investors and private equity firms are employing transactional risk insurance in merger and acquisition agreements to help accelerate M&A deals. Can you tell us a little bit about this trend?
The market for transactional risk insurance (Warranty and Indemnity or W&I)) has been steadily growing over the last 20 years. What had always been seen as a slightly ‘luxury’ product has now become mainstream. The growth of the marketplace came when risk appetite waned and deal teams and their lenders looked for a more ‘belts and braces’ approach to M&A transactions, without diminishing the quality of their bids to sellers. Equally, turning down the peace of mind of an insurance solution was not a risk many wanted to take, as it could prove a costly mistake if a claim did arise. At the same time, the increased availability of the product with new competing insurers in the market meant prices were driven down and more attractive. The industry has also proved itself to be effective in paying claims, which has given confidence to buyers of the product.
What has prompted this increase?
This is due to a number of factors coming together – the fact that the product is much more widely available and understood is probably the most important. Clients need to have confidence in the ability of the insurer to perform in the tight timescales we have come to accept in the M&A world. Also, there is estimated to be in the region of $1.5 trillion of private equity capital currently waiting to be deployed. This makes the buyer’s market extremely competitive and everyone is looking for an advantage in trying to win the bid. By securing an effective insurance policy, buyers and sellers are in a better position when negotiating the respective reps in the sale and purchase agreement (SPA).
How does transactional risk insurance make the negotiations easier?
From a seller’s perspective, this cover can allow them to exit deals with increased funds (no retention), to reduce or eliminate post-closing indemnities, reduce contingent liabilities as well as protect passive shareholders who may not have been part of the sales process. From the buyer’s perspective, it can help to increase the indemnification they have as protection, over and above what they would have received from the seller. In addition, it protects key relationships with retained management at the target company and eases the collection of monies due in the event of a claim, especially in the case of distressed sellers and allows buyers to obtain recourse for unknown issues. By working closely with the W&I insurer at an early stage, the buyer can give the seller comfort around these risks earlier in the bid process, providing them with a potential advantage over competitors.
How has DUAL Asset responded to this trend?
Whilst the W&I market has increased significantly in M&A transactions in recent years, on average buyers still only tend to purchase around 10% of the total enterprise value (EV) of the deal. Whilst the risk appetite in the deal partly drives the decision on the level of cover, the primary consideration is the cost of the policy. This can be between 1% and 5% of the coverage. DUAL Asset identified a niche in the marketplace to offer a much narrower coverage than the traditional W&I policy (covering tax, employment, contracts etc). Our policy covers the basic fundamental warranties in the SPA at a lower price point, and potentially up to the full EV of the deal.
The policy that we originally launched in Europe and now offer globally, including North America, typically sits above the existing W&I policy, as an excess for the covered reps. In some instances, it can be a standalone policy to compliment the W&I policy. Occasionally, in real estate deals, where the buyer decides there is no need for a traditional W&I policy, the DUAL Asset policy can just cover the structural elements of the deal.
How do you think the market will continue to evolve?
There is no doubt that the market will continue to grow. The US leads the way in terms of policies and premiums paid, but penetration of the M&A market for Transactional Insurance still lags behind Europe. We are also likely to see buyers trying to push to breadth of coverage, as they seek to maintain their competitive edge in the marketplace. Insurers will also be asked to look at new acquisition vehicles such as SPACS (Special Purpose Acquisition Companies), which have become popular in the US, to see if they can be included in the process. As long as there continues to be a global M&A marketplace, Transactional Insurance, including traditional W&I and DUAL Asset’s Fundamental product, will continue to play a big part in enabling M&A transactions to complete smoothly.
* Source: DUAL research 2019
Andrew Hillier is the Executive Chairman at DUAL Asset. DUAL Asset specialise in providing transactional insurance solutions in Legal Indemnities, M&A, Probate and Aviation, and are backed by some of the most respected insurance companies in the world. DUAL Asset also created the first and still only legal indemnity comparison site in the UK.
DUAL Asset underwriting Limited is an Appointed Representative of Dual Corporate Risks Limited which is authorised and regulated by the Financial Conduct Authority number 312593.
In any M&A sales process, the seller’s counsel will negotiate a non-disclosure agreement (NDA) with potential buyers and their legal counsel. The one-way NDA that each buyer executes protects the seller’s confidential information. There could be 30, 40, 50 or more potential buyers in a highly competitive M&A sales process, which means an NDA for each potential buyer. Scott Rissmiller has counselled sellers in two different sales processes in the last nine months that involved over 30 and over 50 NDAs, respectively. While some buyers sign the NDA as provided, many buyers negotiate it. Comments on an NDA from the two types of buyers (i.e., strategic and financial sponsors) will vary, especially regarding certain NDA provisions.
The seller’s counsel will not get every point they want in the final NDA from each potential buyer, and thus their counsel must identify the areas to focus on when encountering comments from a potential buyer. Scott lists the three particular areas that often generate comments from any buyer (though their specific comments may vary) as follows:
The NDA defines the scope of confidential information (which is broad but often non-controversial) and will specify to whom the potential buyer can share confidential information. To start, the seller should only permit a buyer to share confidential information with their representatives (e.g., officers, directors, accountants, attorneys, bankers, etc.) who need to know such information. A financial sponsor will also want to share confidential information with other parties, including their lenders, partners, operating partners, and perhaps even portfolio companies. The seller will want to avoid the sharing of confidential information with a portfolio company, especially if it competes with the seller (or any part of their business). However, the seller may be willing to permit a financial sponsor with only a few portfolio companies (none of which compete with the seller) to permit disclosure to portfolio companies. A financial sponsor may want to also specify that a portfolio company is not deemed to be a “representative” and thus subject to the NDA unless that portfolio company receives confidential information. In that case, the seller should specify that a portfolio company is deemed to be a representative if it receives or is given access to confidential information—the key factor being whether a portfolio company can access confidential information, not whether it actually receives confidential information. A strategic buyer may want to share confidential information with subsidiaries and/or a subsidiary’s officers, directors and employees. In that situation, the seller is also focused on limiting disclosure, especially because a strategic (or its subsidiary) likely operates in the same industry and may directly compete. The seller and their advisers should evaluate these types of comments on a case-by-case basis and consult with their business representatives and bankers to determine the nature and history of the particular buyer and whether it presents a legitimate opportunity and justifiable risk.
In order to receive confidential information (including information regarding key executives and employees) and potentially meeting with key executives, a buyer is often required to agree to a non-solicitation provision so that it cannot poach the seller’s employees. This is of greater importance with strategics who compete with the seller or a financial sponsor with competing portfolio companies, especially if the seller is selling only certain assets or a line of business. For some buyers, the seller may be willing to limit the non-solicit to senior executives. Aside from customary non-solicit carve-outs (such as public advertisements), sellers prefer including “direct or indirect” language with respect to solicitations so that a buyer cannot have a representative circumvent the non-solicit. Some financial sponsors may want express language stating that the non-solicit does not apply to any portfolio company that has not received confidential information. Most NDAs specify that it applies only to the representatives who receive or are given access to confidential information, thus eliminating the need for any such express language, which could otherwise be interpreted as a blanket waiver in favour of the buyer.
Buyers typically want language expressly permitting a buyer to retain confidential information in electronic archives pursuant to normal course computer backup operations or to comply with applicable legal and regulatory requirements and record retention policies. An issue arises when the NDA has a relatively short set term because the seller will want any confidential information retained by the buyer after the term to be protected by the NDA’s confidentiality and non-use terms beyond such term, as certain confidential information will not go stale or may be trade secrets. For example, say a strategic buyer drops out of the sales process where the seller is selling a line of business; in that case, the seller is still operating following the transaction, and yet a competitor now has the seller’s confidential information. The seller has a few options, including (i) specifying that confidential information retained for archival purposes or compliance reasons is subject to the NDA for as long as it is retained or (ii) setting a tail period beyond expiration or termination, and/or requiring the buyer to limit access to such retained information to only legal and compliance personnel who need to access it. Financial sponsors with extensive portfolios or who investigate hundreds of potential deals may object to long-standing obligations due to the administrative burden. The seller’s counsel should, as with any other sensitive part of the NDA, consult with the business representatives and bankers to determine what may or may not be acceptable in the circumstances.
Takeaways
Nick Collevecchio, Counsel in Venable’s corporate group, contributed to this article.
Stuart Lang, Founder and Creative Director of We Launch, shares his insight on brand convergence with Finance Monthly.
In the world of finance, the convergence of two institutions – outside of an M&A - is uncommon. Beyond this, we rarely see two financial brands come together for a common cause. However, when it does happen, it’s critical that they present a clear and unified proposition if they are to achieve success. And the value of that should not be underestimated; the Marketing Accountability Standards Board, whose research from 2018 found that brands contribute an average of 19.5% enterprise value.
So how do you successfully unify two brands, without losing the individual equity of each? And how do you present it to prospective investors and convince them to trust the new brand the way they did the old?
Therein lies the biggest challenge.
Different firms have different histories. Different people. Different clients and case studies. They probably have different messaging and imagery styles. And sometimes – different cultures.
Taking advantage of each distinction and bringing them together harmoniously can be a tricky task to comprehend. Brand Value as a monetary value consists of a number of interconnected factors - everything from financial forecast to brand strength and the role that brand plays in the day-to-day business.
The first step towards brand unification is deciphering what makes each business unique and how (or why) to dial up that essence in a unified proposition. After that, sitting down with stakeholders - both internal and external - and pinpointing their motivations is key.
The first step towards brand unification is deciphering what makes each business unique and how (or why) to dial up that essence in a unified proposition.
As well as knowledge of your competition through detailed auditing, which can also help clarify what sets your brand apart from others, whether it be positive or negative.
This depth of understanding will then inform which qualities to amplify and which to put to one side. In a game of Top Trumps, the victor is the one who knows which card to play in order to win a hand. The same thinking applies here. Identify the strongest individual criteria for each brand and take advantage of it. Whether it be the seniority of relationships, calibre of past deals, global reach, or the strength of the existing brand, choosing the right qualities and combining them strategically will help improve your odds of success.
Being as clear and frank in what you want to achieve with such a proposal is the number one goal. Your new brand's visual language needs to present a unified and clear value proposition, running a thread through all of your communication channels as a joint business.
A recent study from RedhouseBrand, analysing 25 financial sector brands, found that clarity in messaging was a key value for these brands to pursue. Being open and honest with what your brands are and what the new venture is really trying to achieve will go a long way to making it legitimate in the eyes of any new or existing stakeholders.
Nevertheless, sometimes that means making a considerable change - which can be difficult. Taking a risk can be the quickest way to stand out in a cluttered market however, and businesses shouldn’t be afraid to embrace that. Finance is about taking risks and if it means building a bigger and better brand together then it's most likely the best option to consider.
It is also worth considering who you bring in to collaborate with you on crafting a fresh approach. A brand is a valuable business asset, and whilst risk of change does offer the opportunity to win big, it’s much more reassuring when that risk is calculated and in the hands of experts.
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If you do bring in branding experts, make sure to fully immerse them in your world and be honest with them about your ambitions. This means putting them in front of stakeholders, your investors and letting them reach out to clients. The more information they have on why you are doing this and how the brands are currently working as independent entities, the more likely they are to implement the changes needed.
This fine balancing act was exactly what M&A advisory firm JEGI CLARITY’s refresh as a single, unified brand faced. Two singular entities with proven track records in their respective markets, they needed to align themselves with potential investors who had no prior knowledge of them. Working closely with their leadership teams and forming a strong understanding of both businesses in their own right helped us translate the qualities that made them successful into a seamlessly unified brand proposition.
It was crucial this was maintained not just at a macro level but threaded through all communication materials – whether big or small. If all brand materials, from messaging to imagery to the website and social, can sing to one another then they can better emphasise the objective of the joint mission.
The 2019 edition of Brand Finance’s GIFT report stated that intangible assets - such as your brand identity - account for 48% of overall enterprise value, so time is always of the essence. Putting any kind of brand reinvention, whether through necessity or not, on the back burner is always going to be the wrong thing to do. It is always worth remembering that your competitor is probably already hard at work on a new look or campaign to communicate their offering. So not putting the attention into yours now, could mean that you are pushed down the pecking order before you even have a chance to start.
Being ahead of the crowd is the best way to make the biggest impact and show that your value proposition is the best around. Acting decisively is far better than remaining static – because those that sit still run the risk of being overtaken by others.
Tell us about Nexia TS and your mission. What sets you apart from other advisories?
Today, Nexia TS is among the top 10 accounting and advisory firms in Singapore and we have a strong presence in other countries across the region, including China, Myanmar and Malaysia.
Being an independent member firm of Nexia International, we are affiliated with accounting firms in many parts of the world. This means that our clients get to enjoy personalised, comprehensive and good services at competitive rates in Singapore and globally. Our desire for quality has been recognised by clients and the accounting profession.
Here at Nexia TS, we listen to our clients, we think on their behalf and we help guide them on difficult decisions. We help steer companies towards growth.
How has the COVID-19 pandemic affected the M&A sector in Singapore?
Despite the immense challenges brought by the pandemic, the uncertainty has also spurred the M&A market amid a weakened economy. The pandemic has created an entirely new and unchartered paradigm as dealmakers sifted through the slump for opportunities while some companies prefer to best err on the caution to observe the situation before making any moves. The level of disruption currently happening has led to new opportunities for both buyers and sellers. Consolidation might be the best chance for survival particularly because the value of a once stable and well-capitalised company becomes attractive now.
What do you think will be the long-term impact of the pandemic on the M&A sector in Singapore?
Businesses must assess the long-term effect on their competitive landscape instead of a bright spot in the bleak economy. Sectors that were clearly impacted by COVID-19 disruptions are travel, tourism and F&B industries. These were considered as “non-essential” when the Singapore Government declared a two-month circuit-breaker in our fight against the pandemic. As a result of safe management measures, most businesses were forced to pivot. Therefore, the consolidation of these companies, or in particular some sectors, will be expected.
What would you say are the typical financial risks associated with a merger or acquisition in the current environment?
In accordance with specific investment needs and acquisition criteria of an M&A deal, the ability to manage and facilitate the process in full length must be carefully executed - from target identification, strategy development, conduct of due diligence, execution and closing of the acquisition deal to bring maximum value. The valuation of the deal whereby largely determined by the willingness of the investor to pay and cash flow play an important part in the decision-making process.
What are the particular challenges of assisting clients with planning their M&A strategy, considering the ever-changing nature of the sector?
Assisting clients with M&A is like fitting a saddle correctly in terms of meeting their expectations, which are sometimes difficult to meet, especially if both parties have different needs and goals. As an M&A adviser, finding the right buyer is key when selling a company to ensure that the business value is optimised for our clients. On top of analysing the market and ascertaining the appropriate valuation metrics, negotiating the terms of the transactions are crucial to building sustainable long-term value for the shareholders.
