Transaction Drivers

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Transaction Drivers & Influencers of Success

Global plans of India Inc.

India is going global. From traditional manufacturing companies venturing overseas to acquire natural resources, new age companies from the fintech, edtech and healthtech sectors, among others, fuelled by global ambitions and backed by funding, are now aggressively scouting for opportunities to establish themselves in overseas markets. A giant superpower is emerging, straddling across capital intensive manufacturing businesses to technology powered capital light services sectors.

Select decision drivers during an acquisition process include but are not limited to assessment of customer, operational and technology synergies. Regulatory requirements or contractual obligations regarding planned offshoring strategies need to be identified before arriving at a net benefit computation. A reorientation of human resources and operations may have to be carried out to derive the maximum benefits from a transaction.

Post Transaction Integration

Integration is one of the most important pillars of a successful M&A transaction. From key employees to technology, business processes, governance and communication, the importance of integration cannot be over emphasized. While execution of an integration plan commences only after closure of a deal, the thought process has to be initiated on Day 1.

Complementary or overlapping customer segments, employee positions, vendor networks, technology infrastructure and governance practices have to be assessed at every stage from initiating negotiations, pricing, due diligence till agreement closure. Challenges for a deal maker arise around confidentiality and competitive practices and necessitate a well-programmed strategy. A dedicated team, defined time frame and regular communication to various stakeholders are few of the key requirements to a successful integration.

Focus on ESG

As focus on Environmental, Social and Governance factors is expected to create potential advantages in a company’s competitive positioning in the long run, it would continue to dominate the headlines whether from the perspective of a corporate or a financier. The challenge for many deal makers is to formulate a suitable M&A strategy in an evolving industry. A balance has to be created between the long-term nature of infrastructure and the disruption of new technologies.

All businesses now need to have clear sustainability programmes and policies. Further, a company’s engagement with employees, governance issues such as cybersecurity, bribery and corruption, and diversity policies within the company as well as its supply chain will be key decision drivers for a potential transaction.