Acquire or Get Acquired - An M&A Deep Dive - NASSCOM EMERGEOUT Concalve

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Vivek Gupta spoke about the M&A in today’s economy.He gave five mantras for M&As in todays world and highlighted the effect of them on M&A.The issue raised was in times of recession, how M&A would occur.He had a nice presentation to support his talk and one of the key points of his presentation was that deal activities are very slow nowadays which implies that credit markets are not functioning and the overall approach in economy is to wait and watch. So he stressed that this was the right time for building oneself and to gain as much as one can from the recession. He then spoke about the three plays of M&A, which are, volume plays,niche serves plays and technology plays.He then spoke about key scale consideration which includes profitability and strategic partnership.

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Acquire or Get Acquired - An M&A Deep Dive - NASSCOM EMERGEOUT Concalve

  1. 1. Acquire or get acquired: an M&A deep dive April 29, 2009 Vivek Gupta All rights reserved |1 All rights reserved
  2. 2. Presentation overview • Deal activity in the current economic environment • How could emerging companies react? • What is the buyer universe thinking? • Key messages All rights reserved |2 All rights reserved
  3. 3. Deal activity is very slow • Credit markets not functioning optimally • Overall atmosphere of wait and watch • Sellers don’t like the valuations on offer All rights reserved |3 All rights reserved
  4. 4. But the opportunity is now • Time to build competitive long term strengths • Deal returns historically in recession times significantly higher than during boom times All rights reserved |4 All rights reserved
  5. 5. And the factors will also stack up Economic indicators point to an inflexion point by the second half of 2009 / early 2010; two potential scenarios could then emerge Scenario M&A impact Significant deal activity driven by “value buys” Significant deal activity driven by “value buys” Economic Buyer: Companies of all size Buyer: Companies of all size recovery Sellers: Emerging players and PE funds Sellers: Emerging players and PE funds Significant deal activity driven by survival need Significant deal activity driven by survival need Downturn Buyers: Large companies or PE funds as Buyers: Large companies or PE funds as deepens “aggregators” “aggregators” Sellers: Emerging companies and some big boys as Sellers: Emerging companies and some big boys as well well All rights reserved |5 All rights reserved
  6. 6. So how could emerging companies react Volume plays Niche service plays Technology plays Type of (established service (unique capabilities) (product/ platform company portfolio, good companies) customer base) Build alliances and Hold out if you have Potential Raise capital and partnerships to M&A capital; consider acquire improve market access strategy combination and monetization initiatives over 12-18 avenues months Building customers on Imperatives Long term value is Challenge to monetize the back of capabilities in scale IP without partnerships is key All rights reserved Partnerships/ combinations will be the order of the day |6 All rights reserved
  7. 7. Key sale considerations • Invest in niches [Infrastructure Management, PO, Research and Analytics, Vertical based specializations] • Acquire profitability [not only revenue] • Don’t like 1,500 clients for 30M$ revenue [key account focus] • Open to partial staggered buys/ strategic partnerships All rights reserved |7 All rights reserved
  8. 8. In summary • Deal activity expected to pick up by the end of 2009 • Now is the time to actively prepare for M&A • Partial strategic divestments, partnerships and combinations effective strategy for emerging companies • Building competitive differentiators key to succeeding in the M&A market All rights reserved |8 All rights reserved
  9. 9. BMR IT/ BPO INVESTMENT BANKING TEAM If you would like further information please contact: Bangalore New Delhi 2nd Floor, Embassy Icon Annexe, The Great Eastern Centre, Vivek Gupta 2/1, Infantry Road First Floor, 70 Nehru Place, DID: +91 11 3081 5052 Bangalore 560 001 New Delhi 110 019 Cell: + 91 98104 04411 Tel: 91 80 4032 0000 Tel: 91 11 3081 5000 vivek.gupta@bmradvisors.com Fax: 91 80 4032 0001 Fax: 91 11 3081 5001 Sheetal Bahl DID: +91 11 30815095 Mumbai Chennai Cell: +91 9811824168 3F, Contractor Building 33, South Beach Avenue sheetal.bahl@bmradvisors.com 41, R. Kamani Marg MRC Nagar Ballard Estate Chennai 600 028 Shivani Nagpaul Mumbai - 400 001 Tel: 91 44 4298 7000 DID: +91 22 3021 7165 Tel: 91 22 3021 7000 Fax: 91 44 4298 7001 Cell: +91 99205 91054 Fax: 91 22 3021 7070 All rights reserved shivani.nagpaul@bmradvisors.com www.bmradvisors.com |9 All rights reserved
  10. 10. All rights reserved Mergers & Acquisitions All rights reserved

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