ANNUAL REVIEW

Mergers & Acquisitions 2014

April 2014  |  MERGERS & ACQUISITIONS

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Financier Worldwide canvasses the opinions of leading professionals around the world on the latest trends in mergers & acquisitions.

 

UNITED STATES

Patrick Hurley

MidMarket Capital Advisors, LLC

“We have fared better here in the US than other regions, particularly if the focus is the middle market and if the measure is aggressive bidding for companies available for purchase. Corporate buyers continue to set the tone and their appreciation for the discipline installed by private equity owners is readily proven by the willingness to pay impressive relative values for good businesses transformed through professional ownership into strong performers that can continue to grow within big public companies. The main factors driving deals today are earnings momentum and buyer hunger for growth.”

 

ARGENTINA

Laura Lavia Haidempergher

M & M Bomchil

“M&A activity in Latin America during 2012 and 2013 increased, with Brazil leading the ranking. However, the situation for Argentina has been the opposite. The main factors affecting M&A flow are connected with uncertainty, devaluation, lack of clear rules, an ineffective and changing legal framework, and several de facto prohibitions to import goods and transfer of dividends outside the country. Additionally, foreign companies are no longer the main investors, at present local players lead existing transactions.”

 

VENEZUELA

Luisa Acedo de Lepervanche

Mendoza, Palacios, Acedo, Borjas, Páez Pumar & Cía

“The economy of Venezuela is deeply troubled and in the last 18 months has deteriorated significantly. There is an exchange control system, in force since 2003, which within the last year has seen the following huge distortion – the main official exchange rate is VEF 6.3 per USD 1, while in the parallel market you need more than VEF 80 to buy USD 1. There is another official exchange rate (SICAD), where the government convokes specific economic sectors and then sells to them a limited amount of foreign currency, at an exchange rate determined by the authorities each time – it is currently VEF 11 per USD. In the last year, inflation reached over 50 percent.”

 

UNITED KINGDOM

Michael E. Hatchard

Skadden, Arps, Slate, Meagher & Flom

“The market has shown increasing resilience but deal completion remains sporadic. There is a wall of interest in deals however as we approach Q2. Strategic opportunity is a principal driver. Valuation expectations have converged somewhat. Deal resistance at board level has diminished and been replaced by concern over effective utilisation of significant cash piles that earn next to nothing on deposit. Pharma has been a standout sector driven in part by patent expiry back fill and in part by fiscal opportunity.”

 

SWITZERLAND

Stéphane Konkoly

burckhardt Ltd

“Even though the aggregate number of deals was relatively stable, 2013 saw a multiplication of small deals – below CHF 100m – compared to the previous years, without any large-cap, multi-billion transactions. Sellers as well as buyers increasingly focused on consolidation of core businesses and on vertical integration when acquiring or divesting assets. M&A activities remain strong in the pharma and life sciences sectors as well as for financial services and consumer goods, while the number of private equity deals seem to stagnate and transactions in the IT and industrial sectors tend to slow down.”

 

TURKEY

Ayhan Kılınç

Akinci Law

“M&A activities in Turkey within the last 12-18 months have been stable even though Turkey has faced difficult political developments and fluctuating exchange rates. The main reason for stability has been the privatisation of the some major government enterprises, especially in the area of electricity and gas distribution. The factors driving deals are the political situation, exchange and interest rates, government incentives, a friendly climate for foreign investment and economical parameters in the competitive markets.”

 

SINGAPORE

Shirin Tang

Shearman & Sterling

“There has been a fairly steady flow of mostly small to mid-cap transactions – typically under $250m – in the last 18 months. Geo-political factors, such as the current unrest in Thailand and impending elections in Indonesia, are temporarily suppressing current transaction flow in the affected countries, with market actors adopting a wait-and-see approach. Two clear trends have arisen – Singapore continues to be the most prolific outbound investor in Southeast Asia and Singapore companies are clearly favouring investments into North America and Brazil, with a significant increase in the value of transactions into the Americas over 2012 numbers..”

 

INDIA

Kartik Ganapathy

Indus Law

“Factors contributing to diminished M&A activity in the financial year 2013 to 2014 included a slowing domestic economy, high lending rates, an unstable currency, policy uncertainty and concerns regarding India’s rate of continued economic growth. The difficulty of doing business in other BRICs and developing economies and the attractiveness of India as a continuously growing consumer market are significant factors driving deals in India..”

 

NEW ZEALAND

Cathy Quinn

Minter Ellison Rudd Watts

“There has been a healthy improvement in New Zealand M&A activity levels over the last 12-18 months. The improving New Zealand and global economic environment, coupled with high business confidence, contribute to the increased appetite for M&A in New Zealand. We have seen more interest from both offshore entities and private equity firms looking for M&A opportunities, whether to expand operations, diversify earnings or exit investments in a positive market.”

 

MIDDLE EAST & NORTH AFRICA

Ziad El-Khoury

Squire Sanders

“M&A activity has been on the rise in the MENA region over the last 12-18 months, with 2013 deal values reaching their highest since 2008. Deal activity regained momentum in 2012, where the total value of transactions increased by 76 percent on those from the previous year, and further increased by 30 percent in 2013. One of the recent deals is Arqaam’s acquisition of Bahraini-based Instrata. The majority of M&A activity took place in the Gulf Cooperation Council (GCC) countries, with the merger of Dubai Aluminium (Dubal) and Emirates Aluminium (Emal) to create the US$15bn Emirates Global Aluminium in the UAE, the largest deal to complete in 2013.”


CONTRIBUTORS

Akinci Law

burckhardt Ltd

Indus Law

M & M Bomchil

Mendoza, Palacios, Acedo, Borjas, Páez Pumar & Cía

MidMarket Capital Advisors, LLC

Minter Ellison Rudd Watts

Shearman & Sterling

Skadden, Arps, Slate, Meagher & Flom

Squire Sanders


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