Sunday, 4 September 2011
Attracting Foreign Buyers: The Benefits of M&A International
Mid-market, private company M&A’s challenges are different from public company M&A. Typically, public companies are larger and have more resources at their disposal, including a corporate development department. Corporate development (not to be confused with business development) focuses exclusively on strategic relationships and M&A. They have the experience and resources to efficiently complete acquisitions.
In the private company market, most companies do not have corporate development departments. You typically approach and discus an M&A opportunity directly with the CEO or CFO. If acquisitions are not of interest, or possible around the time you approach them you typically will not get the time of day from them.
In mid-market M&A it is important to have relationships with many entities to be able to get that connection and get your opportunity considered. But, what if you envision your potential buyer to be in a foreign country? Speaking from Canada, we have many leading specialised mid-sized technology companies that have emerged here and for them to realise full value in a strategic auction process they must access international buyers. The USA has always been the primary hunting ground for well capitalised buyers but today we see international interest in specialised technology from Germany, the UK, as well as India and China.
That is why Veracap is a longstanding member of M&A International. Founded in 1985, M&A International Inc. (“MAI” see www.mergers.net) offers the resources of over 500 professionals in 47 M&A advisory and investment banking firms operating in 41 countries. MAI members advise primarily middle-market companies on acquisitions, divestitures, fundraising and fairness opinions, closing over 1,400 transactions totaling more than US$85 billion in transaction value in the past five years.
As I check our intranet site, I see that MAI members are working on over 450 live transactions today…. over 50 in technology alone. 50 technology deals around the world…, that means that my colleagues may have reached out to over 2,000 technology companies in the last six months. That means that right now members of MAI have relationships with, and are engaging corporate development personnel at RIM in Canada, Google in the USA, Sony in Japan, China Mobile in China, HTC in Taiwan, Infosys in India, Samsung in Korea, Siemens in Germany, SAP in France, Philips in Holland, BT in the UK, etc.
So what is the point? In mid-market, private M&A reach is important. In large public M&A, the banking relationship are so established that if Facebook wants to buy Badoo (a social media site popular in Latin America) it is not hard to initiate the conversation, but in private M&A if “ABC Co”, an excellent company but not a household name by any means, wants to be considered by “Giant Tech Co.” in a foreign country, then MAI relationships will get it done … and get it done quickly. An invaluable component as mid-market transactions are increasingly completed on an international scale.
Derek van der Plaat, CFA has worked in private market M&A for more than 20 years and is a Managing Director with Veracap Corporate Finance in Toronto.