John Keppel, Partner and Managing Director, TPI


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NASSCOM: India leadership Forum 2009,Day3, Session 15A: M&A in 2009: Gazing into the crystal ball, John Keppel, Partner and Managing Director, TPI

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John Keppel, Partner and Managing Director, TPI

  1. 1. Nasscom M&A
  2. 2. What's the Payoff? <ul><li>What was the risk appetite, and what did the risk-reward payoff look like in 2008? </li></ul><ul><ul><li>Optimism in H1 even in a tightening market, moved toward stagnation in Q3 and Q4 as the full extent of credit crisis became apparent. </li></ul></ul><ul><li>What will be the industry’s risk appetite in 2009? </li></ul><ul><ul><li>Appetite for risk remains extremely low, with limited transaction volumes occurring, opportunities will primarily be related to consolidation and distress circumstances. </li></ul></ul><ul><ul><li>Captive divestitures as one form of M&A may buck the trend as the service provider community looks to establish solid foundations for growth during the recession. </li></ul></ul>
  3. 3. What's the Payoff? <ul><li>What will be the top risks (and associated rewards) in M&A in 2009? </li></ul><ul><ul><li>Long drawn out transactions impacted by indecision </li></ul></ul><ul><ul><li>Inability to value companies appropriately and a lack of available financing options </li></ul></ul><ul><ul><li>Purchasing of elite teams to gain capability rather than companies </li></ul></ul><ul><ul><li>Opportunistic buys at very reasonable reduced values </li></ul></ul><ul><li>What are the implications for Buyers, Sellers, Investors </li></ul><ul><ul><li>Generally held view is that 2nd quarter 2010 will see an upward change in M&A activity. </li></ul></ul><ul><ul><li>The outsourcing sector is likely to be one of the first sectors to pick up again by virtue of it’s long-term recurring cash-flows. </li></ul></ul><ul><ul><li>Buyers – Looking either long term or at distress opportunities </li></ul></ul><ul><ul><li>Sellers – Looking at low valuations until normality returns </li></ul></ul><ul><ul><li>Investors – Increasingly risk averse with lowered return expectations </li></ul></ul>