COVID-19 and its Impact on M&A in Singapore

We speak with Henry Tan, Group CEO & Chief Innovation Officer of Nexia TS, who’s been serving as an adviser to clients in Singapore and the region since 1993. As Group CEO, he manages the firm and works on growing its footprint to a major player in the market. Co-founded by Henry and his business partner Sitoh Yih Pin, both experienced chartered accountants, Nexia TS offers accounting services in a unique and personalised way.

Tell us about Nexia TS and your mission. What sets you apart from other advisories?

Today, Nexia TS is among the top 10 accounting and advisory firms in Singapore and we have a strong presence in other countries across the region, including China, Myanmar and Malaysia.

Being an independent member firm of Nexia International, we are affiliated with accounting firms in many parts of the world. This means that our clients get to enjoy personalised, comprehensive and good services at competitive rates in Singapore and globally. Our desire for quality has been recognised by clients and the accounting profession.

Here at Nexia TS, we listen to our clients, we think on their behalf and we help guide them on difficult decisions. We help steer companies towards growth.

How has the COVID-19 pandemic affected the M&A sector in Singapore?

Despite the immense challenges brought by the pandemic, the uncertainty has also spurred the M&A market amid a weakened economy. The pandemic has created an entirely new and unchartered paradigm as dealmakers sifted through the slump for opportunities while some companies prefer to best err on the caution to observe the situation before making any moves. The level of disruption currently happening has led to new opportunities for both buyers and sellers. Consolidation might be the best chance for survival particularly because the value of a once stable and well-capitalised company becomes attractive now.

What do you think will be the long-term impact of the pandemic on the M&A sector in Singapore?

Businesses must assess the long-term effect on their competitive landscape instead of a bright spot in the bleak economy. Sectors that were clearly impacted by COVID-19 disruptions are travel, tourism and F&B industries. These were considered as “non-essential” when the Singapore Government declared a two-month circuit-breaker in our fight against the pandemic. As a result of safe management measures, most businesses were forced to pivot. Therefore, the consolidation of these companies, or in particular some sectors, will be expected.

What would you say are the typical financial risks associated with a merger or acquisition in the current environment?

In accordance with specific investment needs and acquisition criteria of an M&A deal, the ability to manage and facilitate the process in full length must be carefully executed – from target identification, strategy development, conduct of due diligence, execution and closing of the acquisition deal to bring maximum value. The valuation of the deal whereby largely determined by the willingness of the investor to pay and cash flow play an important part in the decision-making process.

What are the particular challenges of assisting clients with planning their M&A strategy, considering the ever-changing nature of the sector? 

Assisting clients with M&A is like fitting a saddle correctly in terms of meeting their expectations, which are sometimes difficult to meet, especially if both parties have different needs and goals. As an M&A adviser, finding the right buyer is key when selling a company to ensure that the business value is optimised for our clients. On top of analysing the market and ascertaining the appropriate valuation metrics, negotiating the terms of the transactions are crucial to building sustainable long-term value for the shareholders.

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