Company directors within global businesses are under a constant pressure to drive growth and deliver results. In the past couple of years international M&A has become an increasingly important avenue for securing strategic growth, whether by targeting global customers or by tapping into new markets. At BHP Corporate Finance our recent experience of the local M&A market mirrors this trend. During the past two years we have completed eight transactions with an international flavour involving companies from North America, mainland Europe and the Pacific Rim and we expect this trend to continue. Our air miles are certainly building up!
As a member of Kreston International, BHP is part of a network with representation in over 100 countries. We thought it would be interesting to get the take of our colleagues in India and USA, countries with a track record of M&A activity with UK businesses, to highlight the key issues that companies encounter when contemplating acquisitions in the UK and overseas.
Doug Hubert from USA highlighted the following points as being key:
- the UK is viewed as an established and mature market but is not generally considered to be one that offers entry into a large and expanding market such as Asia
- the common language, a stable regulatory framework, low tax regime and efficient capital markets are viewed as advantageous for the UK
- attractive UK businesses are likely to offer genuine growth potential and a trading entry point into mainland Europe
- three key attributes USA businesses consider when contemplating an overseas acquisition are as follows
- complementary activity ideally offering entry into a new market
- strong management team with local market knowledge/expertise
- stable legal and regulatory market offering the ability to lower taxes and/or repatriation of earnings
Observations from an Indian perspective from Deepak Ladha provided a slightly different view:
- the UK is considered a stable market and presents attractive opportunities for Indian acquirors
- Indian businesses typically prefer a longer engagement and establishing a dialogue/rapport before commencing a process would enhance the prospects of a successful outcome
- three key attributes Indian businesses consider when contemplating an overseas acquisition are as follows
- technology advantage/defendable intellectual property that could be introduced to the Indian market
- access to new markets and enhanced global footprint
- complementary business with genuine synergistic savings
The UK has an open economy which has embraced foreign ownership of its assets – you only have to look at the share registers of Premier League football clubs as evidence of this! The key messages from the conversations we had indicate that international M&A activity involving UK businesses is set to continue and companies that are well positioned in an expanding market, ideally with an existing presence in Europe, are likely to be highly attractive to overseas acquirors.