Inarticulate ramblings of a management consultant

the day to day experiences of a consultant operating in weird and wonderful client situations

The rise and rise of unsolicited bids…

Dealogic reports that there have been 17 unsolicited bids this year, an unprecedented number since 2008 and a record in terms of value of USD 54.9 billion.

How it used to work…

  •  In the old days, the intermediaries of investment banks, brokers, corporate financiers were there to assess an appetite and report back on potential conditions which might make an approach attractive.
  •  In the old days, the raising of finance for acquisition was intimately connected to advisory functions…the efforts around deals were closely related to longer term relationships.
  •  In the old days, maintaining confidentiality was paramount…keeping the conversation at the highest possible level was a key consideration in any deal
  •  In the old days, the old boys club was a comfort for those inside…and a barrier to those with no entry.

 How times have changed with the advent of the Asian buyer:

Walls have ears

 Keeping it schtum!

No-one seems to care if approaches become public knowledge…there’s almost an expectation that a negative opinion will exist in the press but the approach is made in any case.

Who is this

 Who is this?

Buyers emerge from the woodwork and no-one knows anything about them. One corporate strategist I spoke with recently observed that the first step in recent sales was to google the buyer! So little is known of corporates emerging from Asia that the scope of due diligence takes on a completely different perspective!

Show me the money

Show me the money!

The source of finance has little to do with the public markets. The financing of acquisitions is hard to understand and usual judgements around debt ratios, banking arrangements, previous loan history are no longer a major factor in assessing the potential success or failure of a deal.

Disintermediation

 Intermediaries have become disintermediated!

Direct approaches, often ham-fisted but with the credibility of corporate strength, governmental support and a domestic market to die for…have become the rule. Paying 1.5-2% for introductions? Not for the Asian buyer…!

Pain

 Integrate….why bother with the pain?

Zero threat of redundancy, leadership change, strategic change…instead, the somewhat old fashioned, hard to fathom but also strangely threatening, wish to learn (which brings up all sorts of visions of corporate espionage)

To use an overused idea, perhaps this is the first stage of disruption in the M&A marketplace.

Categories: Corporate Finance, Financial Services, Mergers & acquisitions, Strategy, Transformation

Tags: , , ,

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