Discovering opportunity in a crisis: M&A
Dealmaking in India came down to a more natural course in 2019 after hitting a record high the previous year when it crossed the psychological milestone of $100 billion for the first time ever. While private equity and venture capital investment activity remained strong, lack of big ticket buys shrunk the value of mergers and acquisitions (M&As). Indeed for the first time ever, value of PE deals was neck to neck with M&As, reflecting the changing contours of dealmaking.
But with some top notch global firms such as Saudi Aramco and ArcelorMittal evincing interest in Indian assets and local behemoths like L&T, Adani and JSW adding to their inorganic growth plank the M&A ecosystem is far from quiet.
The global business lockdown has created a raft of opportunities for Indian firms waiting with cash eyeing quality international assets. At the same time the folly of putting most eggs in one basket (read-China) is now more than apparent to the global majors and this creates a picture where MNCs would look more seriously at putting up an India base to derisk their supply chains. Not to mention the more hectic domestic M&A scenario as firms look to scale up with mergers to create a stronger business and snap up troubled rivals.
All in all, the ecosystem for M&As is only expected to become more exciting.
But there are various shades that an acquirer needs to be careful about starting with better due diligence on the target. Post deal the job becomes even harder as its time to see through the more critical aspect of integration.
To discuss the emerging opportunities and challenges, learnings from past moves that worked as well as those that didn’t, Mosaic Digital, the corporate banner behind VCCircle.com, is organising its next edition of M&A Summit (virtual event) on 26th June.