National Conference Value Creations


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National Conference Value Creations

  1. 1. Pavan Kumar Vijay Chairman, M&A Council, ASSOCHAM Managing Director , Corporate Professionals Capital Pvt. Ltd. National Conference on Value Creation through Mergers & Acquisition
  2. 2. M&A refers to reorganizing the legal, ownership, operational, or other structures of companies for making it more profitable, or better organized for its present and future needs.
  3. 3. Why M&A?
  4. 4. Restructuring in India - Past - Present - Future
  5. 5. Recap of M&A
  6. 6. Phase I - Consolidation Licensing in one company Float another company Focus on all the businesses in the group Co. A Ltd. Auto Parts Steel Textiles Co. A Ltd. Steel Cement Food
  7. 7. Phase II – Hiving off non-core business Focus only on Core business of the Company i.e. Steel Co. A Ltd. Steel Cement Food Non –Core business Cement Food Hive off
  8. 8. Phase III - Acquisition Co. A Ltd. Steel Co. X Ltd. Co. Y Ltd. Co. Z Ltd. Steel Unit Steel Unit Steel Unit Focus on to strengthen its Core business area by acquisition
  9. 9. Makeover of M&A
  10. 10. “ The only certainty in our modern world is CHANGE . The ability to survive and flourish depends on our flexibility and the willingness to constantly adapt to a changing world”
  11. 11. Rationale of M&A at present <ul><li>Backward and Forward Integration </li></ul><ul><li>Unlocking the Value </li></ul><ul><li>Restructuring of Balance Sheet </li></ul><ul><li>Geographical Expansion - Cross Border Acquisition </li></ul>
  12. 12. Primary Drivers in M&A
  13. 13. Primary Obstacles in M&A..
  14. 14. M&A Scenario In India During Last 12 Months Top 10 ACTIVE SECTORS Sector Name Deal Value ($ mn) No. of Deals Energy 25,135 29 Telecommunication Services 7,053 16 Materials 6,314 72 Pharmaceuticals, Biotechnology & Life Sciences 5,512 52 Capital Goods 2,520 90 Software & Services 2,093 113 Health Care Equipment & Services 1,730 24 Utilities 1,681 15 Banks 1,512 7 Consumer Services 1,289 34 Total 54,839 452
  15. 15. Regulatory environment In India for M&A
  16. 16. Future of M&A in India
  17. 17. New legal framework
  18. 18. Changing Values <ul><li>Old Values </li></ul><ul><li>The Company is targeted to achieve the multiple objectives by itself </li></ul><ul><li>The Company wants to fulfils the demands of multiple stakeholders </li></ul><ul><li>Global growth of the Company </li></ul><ul><li>New Values </li></ul><ul><li>The main purpose of the Company is to maximise its shareholder value </li></ul><ul><li>Increasing their own capacity through acquiring a set up business </li></ul><ul><li>Selective market leadership i.e. To be a master in a single product or service by focusing on their core business through mergers and acquisitions of the same business </li></ul><ul><li>Focus on overseas acquisition. </li></ul>
  19. 19. Future M&A focus
  20. 20. Alternative strategies Business proposition Participation strategy Offering strategy Operating strategy Pricing strategy How the business will achieve a profitable strategic position (in terms of market economics and competitive position) What product market segments to target for continued participation, entry or exit Whether and how to differentiate (customer perspective) Whether and how to differentiate (operating perspective) How to price for improved market economics or competitive position (or both)
  21. 21. Thank You Pavan Kumar Vijay Chairman, M&A Council, ASSOCHAM Managing Director, Corporate Professionals Capital Pvt. Ltd.