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 Though it’s exciting to think about the additional efficiencies your business will gain in absorbing or being absorbed by another company – such as increased capital, wider market reach, economies of scale in production and manufacturing, increased technological capacity, and more – it is important to get to know the company you are merging with first. You want to make sure that it’s a safe and sound transaction, and mutually advantageous to both parties. You wouldn’t want to get married to a person with skeletons in the closet, after all.

The following two tenets are probably the most important things to consider when talks of a merger are in the works.

1. Ask yourself the question: are your businesses a good fit? Why?

How would partnering with each other improve your brand equity, as well as your bottom line? Here, you get to kill two birds with one stone. The first job is to assess how reputable the partner company is deemed by the general public. Would partnering with them align with your company’s values and ethos? Will you still be regarded by the market as the honourable enterprise you have always been seen as, or maybe even improve how you are perceived? Do the brands banding together create the image you have always wanted to be seen by your customers?

Also, will the combination of your businesses increase efficiency overall? Will it contribute to an improvement of your business? Will it be a boost to the company’s overall profitability? Answering these questions in a positive way are the basic and most important concerns you need to cover from the beginning.

2. Take into account all the objective financial considerations.

Of course, there are a lot of figures that need to be studied when getting into a merger. Basically, you have to make sure that a company’s assets, liabilities, and equity are all that they declare them to be. Make sure that assets standings are accurate, are not over declared, major capital investments such as equipment or real estate values are declared as well as corresponding depreciation and amortization for these, not to mention other deeds, title policies, and permits.


Liabilities are also very important to consider. Make sure you have a detailed schedule of all short and long term debt, a full list of creditors and suppliers, corresponding terms and interest rates, and most importantly, the company’s current standing in terms of ability to pay these creditors.

These details can be pretty tedious; so it is wise to hire the appropriate accountants, lawyers, and due diligence companies such as Diligence International Group. It may be an expense for you up front, but it should be seen as an investment – it is better to have all important details ironed out in the beginning before getting into any binding contracts.

These two are probably the two basic pillars in assessing and properly evaluating your merger. The rest may fall under these two categories, such as company culture and corresponding effects on your human resource team, their corporate social responsibility and environmental sustainability practices, patents and other intellectual property concerns, among others.

Baird Capital, the direct investment arm of Robert W. Baird & Co., announced that it has acquired a majority interest in Collingwood Lighting (“Collingwood”). Collingwood is a leading designer and supplier of residential, commercial and exterior luminaires into the professional refurbishment and new-build markets in the UK and France. Baird Capital Partners James Benfield and Dennis Hall will join the Collingwood board of directors.

Collingwood is headquartered in Northamptonshire, England. The Company’s strong position in its markets is underpinned by its products’ energy efficiency, innovation and quality alongside the high levels of service the company provides its longstanding customer base.

“We are delighted to bring Collingwood into the Baird Portfolio. Its high quality products fit well with our energy efficient products strategy and our global portfolio resources are well positioned to help expand the business and optimise its global supply chain. Collingwood is committed to continue to invest in innovation and technology as lighting maintains its central position within intelligent and connected built infrastructure”, said James Benfield, Baird Capital Managing Director.

Steve Grao, Collingwood CEO commented: “We are excited to work alongside Baird Capital. Their culture is a strong fit with Collingwood and their expertise and global resources will be invaluable as we focus on driving future innovation and growth”.

Humatica provided organisational due diligence services for this transaction.


Interview with Patrick Mina, Managing Partner, Humatica

Can you tell us about Humatica’s involvement in the transaction?

We conducted an organisational due diligence which identified the key organisational bottlenecks for Collingwood to take on and execute a significantly more aggressive growth plan and adapt to a faster paced, numbers focused private equity environment.

What was your specific role?

Humatica has been conducting organisational assessments over the past 15 years and built up a proprietary database of behaviours and management processes that drive accelerated value growth. These are tested in structured interviews with management team members using a maturity model i.e. what good looks like for a company at that stage of evolution, in that type of industry, with that type of value creation plan. We also use targeted data analysis from the data room and other sources, psychometric assessments (where feasible) and deal team interactions to gain further insights.

Based on this approach, we identified to what extent the current “baseline” operating model, management and operational processes were scalable and, at a sufficient level, not to have to spend a disproportionate amount of time initially fixing the basics versus growing the business. We also identified the support the management team might need in identifying required organisational changes to their operating model, management and operational processes to deliver the value creation plan on or ahead of time. This involved highlighting any potential skill and behavioural gaps that the management team would need to address to operate as a high performing team on an ongoing basis in the context of an ambitious growth plan.

What were some of the key challenges you faced and how did you overcome them?

We weren’t faced with any challenges apart from some initial scepticism from the portfolio company as to the purpose of our organisational due diligence. This was however allayed once it became clear we were focused on identifying potential bottlenecks and ways to address these to enable them to successfully deliver the value creation plan on time.

A decade on from the great financial crisis and the fall of Lehman Brothers and Europe’s financial services is the only sector not to have returned to pre-crash levels. Below Finance Monthly hears some expert commentary from Beranger Guille, Global Editorial Analytics Director at Mergermarket, an Acuris Group company, on the current state of European M&A in the Financial services sector.

Despite an appetite for large-scale banking mergers and an eagerness to create pan-European banks capable of challenging rivals across the Atlantic, Europe still operates under strict rules that have so far prevented such merger ideas from materialising.

Between 2006 – 2008, Europe saw a total €607.9bn change hands across 1,592 deals. Since 2016 to date, activity remains still nowhere near these pre-crisis levels, with a mere €221.1bn traded over 1,251 deals and a spectacular absence of mega-deals that were once a prominent fixture in the build up to last financial crisis.

10 years later

A decade on from the crash, regulators continue to introduce new rules on top of what is already a very comprehensive rulebook. Basel III and Solvency II: the first ever set of rules on liquidity, placed a robust set of capital requirements on banks and insurers, with additional process still not complete. The capital conversation buffer, which ensures banks build up capital reserves to weather losses incurred during downturns, will take effect on 1 January 2019. In 2013, The European Market Infrastructure Regulation (EMIR) drove the centralised clearing of derivatives and promoted robust reporting requirements to trade repositories. While most recently, the Markets in Financial Instruments Directive (MiFID II) and Central Securities Depositories Regulation (CSDR) has pushed more transactions to occur on exchanges to improve transparency and the overall efficiency and safety of securities settlement.

In the build up to the crash, Italian lender Unicredit conducted a string of mergers between 1998 – 2006, while Royal Bank of Scotland spent €71.1bn acquiring Dutch lender ABN Amro on the eve of disaster. Both left shareholders and taxpayers alike reeling from heavy losses.

The current situation

Today, mega-mergers are once more mooted with cross-border deal discussions between Unicredit and Société Générale reportedly taking place. However, “there is nothing on the table,” according to France’s Minster of the Economy and Finance, Bruno Le Maire.

There is also talk of potential national mergers afoot. In the UK, Barclays chairman John McFarlane is eager to do a deal with Standard Chartered, while German lenders Deutsche Bank and mull a merger of their own.

But, despite an apparent eagerness to get deals done, there is a lot of cold water that investors and analysts are only too quick to pour on such tie-ups.

There is a lack of strategic rationale behind a Barclays-Standard Chartered deal, with two banks having little to no geographical overlap, with the former boasting strong ties in the UK and US and the latter firmly focused on emerging markets in the Asia and Africa. Meanwhile, discussions between Deutsche Bank and Commerzbank certainly offer a stronger rationale, but it should not be forgotten that Deutsche Bank launched a €8bn rights issue – its fifth capital hike since the crash – to plug holes that continue to leak.

A political climate

Given the political environment in the EU, and that there is a degree of nationalism when it comes to banks, large-scale cross-border deals look anything but likely. Two years ago, Swedish lender Nordea made an approach to acquire ABN Amro but had its offer slapped down by the Dutch government. Some bankers were even brazen enough to pitch a merger between Barclays and Santander. Cross-border European deals for the time being at least seem off the table, but domestic mergers could provide dealmakers something to chew on.

The timing of renewed merger talks is interesting, with the next cyclical downturn expected to come to bear in the next two years.

Calls for consolidation amid so much uncertainty is cause for concern, but desperate times lend themselves to management contemplating desperate measures. Weak profitability is putting pressure on banks to take action at a time when big tech, fintech and alternative lenders threaten to grab market share. And while the appeal of cross-border mergers may provide a boost to the sector's profitability, bigger banks, history tells us, are not necessarily healthier banks.

To hear about valuations and middle market M&A, Finance Monthly reached out to the experts at IBG Business.

IBG Business exists to bring merger and acquisitions skills, resources and knowledge to middle market business owners selling (or buying) businesses. “The firm is defined by its expertise, character and commitment to delivering exceptional results”, says IBG Oklahoma Managing Partner and Principal John Johnson. “Our team brings extensive background, robust training and deep resources to each deal. Time and again, the precise execution of our refined professional process has yielded maximum value under optimal terms and timing for our clients.”

Owners should seek professional help prior to selling a business or planning an eventual exit. IBG Denver Managing Partner and Principal, John Zayac, explains the complexities sellers face: “Price is often a starting point in the discussion, a common marker for value. However, it is only the tip of the iceberg. Price is predicated on a complex foundation of components including shifting responsibilities for risk, tax treatment and intangible values, all of which may move dramatically as a sale is negotiated”. Regarding the question “What is my business really worth?” Gary Papay, IBG Pennsylvania Managing Partner, also asks “And why?  Knowing the reasons underlying the value of a business can reveal value-enhancing improvements or set up better initial positioning of deal terms.”

Casual opinions of what a business is worth are as abundant as sparrows. Those opining rarely have knowledge of the particulars of the business, the deal terms, an understanding of the sector or any transaction expertise. All are imperative to formulating a competent view on value. Sellers often reach out to valuation specialists for a fair market value opinion, but these regimented, theoretical valuations - while an improvement on sparrows - are better suited to litigation, divorce, or estate planning.

The most useful guidance for prospective sellers will combine sophisticated appraisal techniques with recent ‘boots on the ground’ experience on actual transactions. A market-informed opinion of the value of a business will gauge how potential buyers might respond to its sale. The opinion should provide a range of values, articulate what factors underlie the opinion, and comment on possible impacts of different deal structures. Strategies to minimise obstacles and enhance value may be offered.

Seasoned mergers & acquisitions advisers can also expertly evaluate and manage the nuances and practicalities that arise in the ‘real world’. In any transaction, the buyer and seller have opposing goals: each seeks to best serve their own interests but must ultimately acquiesce in some part to the other while retaining sufficient benefit for themselves. The odds of success in this process dramatically improve when it is proactively managed by a seasoned professional who can keep polarising realities within a cooperative framework. The parties will also be more likely to work well together post-close.

Pre-sale valuation work and pro-active management of transactions are key, but subtle dynamics and market factors unique to a deal can also be vital determinants of value. IBG Arizona’s Principal and Managing Partner Jim Afinowich and Managing Director Bruce Black recently worked on a deal that perfectly illustrates such market dynamics. The client’s firm, a niche food manufacturer, initially might have had a competent fair market value of around $20M. IBG perceived growing demand in the industry vertical, and thought an opportunity existed with the evolving market dynamics. They advised the client to decline early offers and to continue to build value in the business. Improve it did, but IBG’s “read” on the market and recommendation on timing made a tremendous impact for the client:  a buyer seeking market control and expansion in the vertical ultimately out-bid several competitors to buy the company for the cash price of $120M. While such extreme opportunities are uncommon, the “savvy” of a seasoned dealmaker can radically impact what is already one of the biggest financial events in the lifetime of a business owner.

Business owners must understand optimal timing and valuation complexities prior to any sale. Today, demand remains robust for quality middle market businesses and valuations are still excellent, but a cooling in the market is anticipated. Active mergers and acquisition broker and advisory firms prepared to assess opportunities with a ‘real-time’ read on transaction market remain the most vital resource for owners seeking to sell for top value.


Contact details:



Direct: 480 327-6610

Main: 480 421-9789

Fax: 602-792-3811


Finance Monthly speaks with former tech entrepreneur Gary Moon, who turned tech investment banker 16 years ago. He is currently the Managing Partner of the boutique investment bank Nfluence Partners, which focuses on M&A and capital formation advisory across various technology, media & telecom sectors, as well as having a new growth capital fund for mission-aligned businesses.


What challenges arise in advising clients on their M&A strategy given the fluctuating nature of the sector?

If you are not active in the market across a significant number of assignments, it can be difficult to understand the nuances of what drives buyer behavior in various technology sectors where valuations can range from < 1x revenues to > 16x revenues. You need strong historical understanding and pattern recognition on how technology adoption cycles impact M&A. With the lack of an IPO market, consolidation of middle market companies by the tech elites and significant increases in private equity activity in the tech sector, the dynamics of what attracts various buyers and the valuations that they will pay shift regularly as well.


What have been the trends in the corporate M&A sector in the US in the past twelve months?

Over the past year, we’ve noticed that strategic acquirers are more selective and require a higher degree of strategic value to transact. The long-term trend of pursuing companies of more meaningful scale has continued, while a mix of deal consideration to ensure management continue for several years post-acquisition is also increasing.


What issues can bring a deal to a standstill? How would you overcome these?

The biggest and most common issue is missing revenue forecasts. While one can be optimistic, it is more important to have a realistic set of projections that can be delivered within a few percentage points of accuracy. The other common mistake for companies that are not well advised is not getting in front of bad news. Diligence teams are thorough and you can count on them to find any outstanding issues. Better to deal with them up front than to have a surprise as you are trying to close a transaction. Otherwise, not only will you have to deal with the issue, but you’ll also have to deal with the breakdown of trust given the lack of disclosure.


What advice would you give to a company considering a potential merger or an acquisition?

Make sure that the most likely companies to acquire you know who you are in advance through partnership or other market-based activity. The majority of transactions happen between companies that know each other in advance. It also provides you potential competitors in the sale process, as you do not want to be in a position where you are only negotiating with a single party for your acquisition.


What are the companies that Nfluence works with?

We work with expansion and growth stage companies across a number of sectors within TMT including both venture ecosystem and entrepreneurially financed. We are also excited about working with growth stage companies in the purpose economy - mission-aligned and/or impact-driven. These companies tend to have unique requirements from capital formation to acquisition and liquidity and we are spending a lot of time working in and developing this ecosystem.


About Gary Moon & Nfluence:

Spun out in 2018, Nfluence was originally founded in 2011 as the Technology, Media & Telecom (TMT) group at Headwaters MB. Gary Moon and his partners built Headwaters into a top 10 technology-focused boutique investment bank ranked by closed transactions in 2017. Over the past 12 years, Gary and the senior team at Nfluence have managed the completion of nearly 200 transactions, repeatedly demonstrating tenacity, creativity and effectiveness on behalf of their clients. Gary has been a strategic and financial adviser to numerous technology and growth firms and has extensive experience with both institutionally financed and founder financed ventures. Gary has advised on client exits to such prominent companies as AT&T, Cisco, Equifax, Microsoft, Nuance, Tyco International and WeWork, and has helped firms raise growth capital and complete private equity recapitalizations from name brand institutional investors.

Prior to joining Headwaters, Gary was the Managing Director of Europe for Ridgecrest Capital Partners, a boutique investment bank focused on technology mergers & acquisitions. In this capacity, Gary led the efforts of the firm in growing the European practice which ultimately comprised a significant percentage firm’s revenues. Prior to joining Ridgecrest, Gary led the Mobile, Wireless and Communications Technology practices for Viant Capital, a boutique investment bank in San Francisco. Prior to embarking on his advisory career, Gary was the founder and CEO of Luna Communications, a North American focused wireless systems integration firm. Luna Communications was sold to a publicly traded competitor, where Gary became the CTO and Managing Director of Client Services.



In good times and bad, M&A remains one of the best ways to get ahead of the competition and increase opportunities – and returns – for businesses. It also represents an immense commercial activity that drives significant macroeconomic value across the globe. But why are still so bad at it? Below Finance Monthly hears from Carlos Keener, Founding Partner at BTD Consulting, on M&A tactics and the value in improving on our own.

Even during the ‘Great Recession’ of the last decade, the worst since the 1930s, the poorest year for M&A saw over 35,000 global deals representing $2.25tn – equivalent to more than 3% of global GDP. M&A impacts national economies, individual businesses, and everyone involved.

Yet far too many deals still fail to achieve their objectives. By most measures, long-term M&A success rates remain very low compared to other growth or investment activities. Underneath many celebrated cases of outright merger collapse lies a general prevalence of underperformance, one that has remained unchanged in over 30 years. An Accenture report, Who says M&A doesn’t create value, published in 2012, actually celebrated the view that as many as 58% of all acquisitions added shareholder value 24 months post-close. Problem solved? We think not.

We do not believe such figures deserve the complacent optimism they receive. If you ‘play the M&A odds’ and do no better than your peers, your business is likely to be walking away from approximately half of a percent of its enterprise value with every single deal. That could easily add up to millions if not tens of millions of pounds.

Even so, this is about more than just the numbers. Underperforming acquisitions damage shareholders, careers, brands, communities and opportunities for companies and people alike. Executive survival in serial acquirers is notoriously short: according to one study, disciplinary replacement of CEOs is 77% higher than in non-acquisitive companies.

This endemic level of failure rarely prompts serious remedial action or increased rigour the next time there’s an M&A opportunity. The reason stems from the unique ‘gain today, pain tomorrow’ nature of deal-doing which can be typified by a few characteristics such as:

Studies of M&A and integration best practice are widespread and largely focus on tangible, concrete ways to improve individual steps along the process. They might advocate more due diligence, earlier integration planning, increased focus on culture or better communications. These can certainly help individual cases, and yet overall levels of M&A success remain largely unchanged. Best practice is available, understood, widely applied, and yet it is clearly insufficient.

Our own experience and research suggests that success rates are stuck because in most cases both organisations and the external groups that support them fail to understand and grapple with the leadership behaviours that really underpin M&A performance. These behaviours embody the culture, mindset, motivations and actions necessary for sustained success. Our detailed research report Inconvenient Truths identifies 10 critical leadership behaviours both pre- and post-close that impact M&A performance. Here are three of the ten to consider before embarking on your next deal:

  1. Avoid anything that generates deal fever: Over 90% of professionals surveyed believe deal fever has a significant, if not critical, impact on M&A performance - and we don’t mean a positive impact. Does your M&A process consistently eliminate the personal agenda, and discourage equating ‘deal doing’ with ‘deal success’? Ensure you have a clear understanding of the motivations – hard and soft – of the deal team from the outset.
  2. Minimise the influence of politics and egos in rational, objective deal debate: This is easy to say, but difficult to implement. In our study, 90% of executives at least occasionally withheld objections to a deal where there is widespread group support for proceeding. And 29% do this most of the time if not always. It is critical to use your deal process and your influence at the top table to set the right tone. This means building an environment for open, constructive debate, allowing everyone around the room to have a valid voice, and preventing any one individual from dominating the discussion.
  3. Ensure those doing the deal are accountable for delivering its benefits: As one Corporate Finance VP told us, “Getting the deal done is all we do; integration isn’t really of interest to us.” But without this, the pre-deal team will typically only have a passing interest in whether benefits are realised, while the post-deal business may not support the deal from Day 1. Making sure the group assessing a potential deal includes those who must make it work in the long term is key, as is giving the executive responsible for post-close success the ability to veto the deal itself.

All of this might seem obvious. But these points are rarely tackled head-on, and in part that’s because they can by difficult to address. A strong, robust M&A process can help encourage these ‘good behaviours’, or at the very least highlight when they’re not being followed. Those who think this might not be worth the pain and effort might want to know that according to our study, leaders who successfully follow our 10 ‘good habits’ consistently see M&A deliver long-term benefit 72% of the time. That is more than four times more than those who don’t follow the habits. They also saw an increase in share price of 46% over the three years of our study, which is more than twice that of their ‘badly-behaving’ peers.

Agave Partners is a cross-border investment bank specializing in the access to the Chinese market for innovative product companies in such domains as Semiconductors, Telecommunications, Data Centres, Artificial Intelligence, Robotics, Automotive and Avionics.

With offices in San Francisco, Beijing and Chicago, Agave Partners represent US and European companies interested in developing strategic partnerships in China for their commercial development and for restructuring their capital. The company realizes Corporate Financing and M&A transactions.  

Agave’s ability to source the right strategic partners in China is in their unique blend of banking and operational experiences allowing to align corporate strategies and structure transactions beyond the aptitude of traditional investment banks. Founder and Managing Director Robert Troy tells CEO Today more about it.


Could you tell us a bit about Agave Partners’ M&A practice?

Our M&A practice focuses on mid-market US and European innovative companies, to which we provide our expertise in identifying Chinese industrial groups able to acquire companies whose offering fits the domestic needs.

Our unique positioning in this practice comes from the combination of our effective presence in China with an office in Beijing dedicated to developing strategic relationships with large industrial and private equity groups, and our expertise in technologies at the core of capital-incentive domains that align with the strategic roadmap of these groups.

These are critical ingredients to maximize the outcome of a deal that is beneficial to both parties, while efficiently navigating through the multiple hurdles, be they administrative, financial, or cultural.


Can you detail a recent transaction that Agave Partners advised on? What were some of the issues that you were faced with?

Agave Partners Advisors was mandated by Kalray SA to source a strategic partner in China with interest in using Kalray technology in its application domain and interest in investing in the company.

We prospected industrial groups that we know to be innovation hungry in highly competitive segments of the Chinese market, including data centres, avionics and automotive; searching for a company which can get a strong strategic advantage at adopting Kalray technology for serving its clients.

Because Kalray technology is very advanced, we found various industrial groups in China, among the most sophisticated, curious about it and genuinely interested in discovering how this technology can be put into practice in their product lines; how it offers a discriminant competitive advantage in better serving their clients; and questioning how fast the market can adopt.

On the buyer’s side, we were confronted to the challenge of promoting a disruptive technology and navigating the full cycle of technology assessment in situations involving product designs and many other steps driving to the strategic decision. Our blend of technologists and bankers’ expertise happened to be of critical importance.

On the seller side, we enjoyed a high-level cooperation with an agile client, not short of commitments when extensive travels and endless negotiations were required to match interests, assess the risks, commit on future developments and overall demonstrate a willingness to engage in a powerful but controlled relationship. Our key contributions have of course been to assist in structuring a complex deal negotiated by parties which were not even speaking the same language and belonging to extremely different business cultures. Our multicultural team made of people used to work and deal in Europe, the US and Asia has certainly been the second key factor of success.


What do you think the next 12-24 months hold for the global M&A market?

Antagonist forces are shaping the global technology market. We see growing altogether (i) a renewed interest of corporations for technology innovations, (ii) a levelling of industrial capacities between continents, (iii) a global awareness of not-to-miss massive game-changer disruptions on their reach to maturity in a variety of application domains including but not limited to automotive, robotics, avionics or healthcare, (iv) the adoption by entrepreneurs and CEOs of worldwide reach as a new normal.  We also see necessary geopolitics considerations creating a growing level of uncertainties with high potential for delaying the trend toward a global reach.

This push-pull situation makes it extremely difficult to predict what the future might hold, but in the short term, we don’t see any possible inflexion of the growing M&A trend in the technology sector for a variety of reasons.


What are some of the current projects that Agave Partners is working on? What lies on the horizon for the firm in 2018?

Agave Partners is working for entrepreneurs and CEOs having a worldwide development strategy. As long as 2018 is concerned, we are primarily working at increasing our capacities to respond to a fast-growing deal flow of high quality companies which see China as their next frontier.

We also have the ambition to become an investor in our most promising clients. For this purpose, we recently signed an agreement with China Electronic Corporation Corporate Venture and their HDSC branch to launch a multi-corporate fund involving European and American electronic corporations as well. Agave Partners Funds is a work in progress with expectation to be launched in the spring of 2018.


Contact details:

Address: 4 Embarcadero Center, Suite 4000

San Francisco, CA 94111





By their nature, M&A transactions are challenging at the best of times - never mind during periods of political and economic uncertainty. History is littered with unsuccessful deal-making that more often than not leads to poor staff retention rates, buy side write-downs, divestment, dissolution and/or bankruptcy.

Typically, failed transactions are caused by a culmination of different issues. So what are some of the major industry pitfalls that merging parties ought to be aware of?


Lack of strategy

Believe it or not, many investors do not focus on the long term strategy associated with a merger or acquisition. The logic behind a deal is all too often side-lined for short term goals and perceptions driven by politics, ego and self-interest. In 2005 EBay’s acquisition of Skype, which left many dumbfounded, was valued at $2.6 billion. The lack of rationale behind the deal was a topic of much criticism. Four years and following an £860 million write-down, the e-commerce corporation announced the sale of over half of the telecommunications company. Although it is clear that in order to gain better insight long-term, reforms that substitute quarterly updates for more extensive financial reporting periods need to be implemented, the issue of an effective incentives system remains unsolved.


Cultural incompatibility

Disregarded for the most part, culture actually plays a big role in the success or failure of a merger. According to the Society for Human Resource Management, clashes account for more than 30% of overall failures. A particularly high profile case gone awry was AOL’s merger with Time Warner in 2001 referred to subsequently by Jeff Bewkes as ‘the biggest mistake in corporate history’.

The deal which equated to a $99 billion loss and led to the eventual divorce of the conglomerate in 2009, caused numerous job losses, retirement plans, workplace disruptions and probes by the SEC and Justice Department over the eight year period.

Although there are a number of variables outside of a buyers’ control, a focus on realistic and applicable core values, an effective internal communications strategy and an engaged workforce can help safeguard against the worst outcomes.


Poor due diligence

Being unprepared for the due diligence phase is among the most common reasons for botched deals. M&A transactions rarely fail due to lack of knowledge however. Over half of them go pear-shaped because those involved in the deal are reluctant to confront issues head on. All areas of potential liability therefore need to be acknowledged and investigated.

Buyers are often guilty of proceeding with a deal despite the challenges they face because of the amount of time and money involved. Being prepared to call it a day if risk outweighs benefit is critical. Allocating inadequate resources during the review stage cost Bank of America $50 billion in legal fees following the acquisition of Countrywide Financial in 2008. The former, which also suffered significant reputational damage, paid the ultimate price for mistakes made by the mortgage lender.

Going about due diligence strategically in both a logical and rational way is paramount to ensure success, as is transparency. Although it may seem counterintuitive, in order to increase trust and iron out potential issues from the get go, sellers should guide buyers to areas of potential difficulty rather than wait for them to learn of the issue themselves much later on in the process, which could result in a breakdown of trust.


Not using the right tool for the job

These days the majority of transaction due diligence is carried out online and handled by virtual data rooms (VDRs) facilitating, among other things, the digitisation of documents, the automation of tasks and the streamlining of workflows.

Given the need for highly secure access to confidential documents during the due diligence phase, security should be the priority for everyone implementing a VDR. Two-factor authentication, automated encryption and a detailed rights management system that enables the administrator to grant different permissions is essential.

A VDR should allow for high-speed access to documents, high-speed batch uploads to process large volumes of documents and real time document translation given the increasingly international nature of M&A transactions.

The software should also allow all parties to conduct their due diligence in a structured and transparent manner. A clear and flexible index structure that supports document review workflows, a structured Q&A and a reporting process that creates a clear audit trail should all be sought out and secured.


About Drooms:

Drooms, Europe’s leading virtual data room provider, works with 25,000 companies around the world including leading consultancy firms, law firms, global real estate companies and corporations such as Morgan Stanley, JLL, JP Morgan, CBRE, and UBS. Over 10,000 complex transactions amounting to a total of over EUR 300 billion have been handled by the software specialist.

Alumnus of Wharton School (General Management) and The Doon School (India’s top School), Business Advisor by profession, and mountaineer at heart, Suraj Nangia strongly believes in living life off the edge, he has climbed 4 out of the seven summits - Mt. Kilimanjaro (Africa), Mt. Elbrus (Europe), Mt. Aconcagua (South America), Mt. Kosciuszko (Australia) and Mt. Cook (New Zeeland).

A true sports enthusiast, he is national swimmer and participated in India’s Longest race (19 km) in 2001 and ranked 24/150, played state cricket and represented U-19 for Delhi, represented State U-15 & U-17 in Squash.

Salsa is the flavour of his life and lets him connect to his soul. He was a salsa dance instructor at Salsa India between 2007 and 2015, still manages to attend salsa nights to keep his feet moving.

He has all the prerequisite to be a successful entrepreneur - a risk taker, somebody who can persevere through all odds, one who has an in depth knowledge of the domain, somebody privy to the burning needs of an industry, one who constantly strives to achieve more.

Second in command of a 220 + professionals firm, Nangia & Co. LLP, a consultancy firm that offers 360 degree services to clients across verticals, helping its clients with India Entry Strategy, Handling complex international M&A Matters, corporate taxation, professional taxation, international taxation, indirect taxation, transfer pricing, litigation support, corporate governance, risk advisory, IFRS services, corporate financial advisory and audit& assurance. Apart from leading the Tax, Compliance and M&A practice, Suraj also handles all financial matters of the firm. Foreseeing the growth opportunity owing to ‘Start-up India’, he recently established a dedicated practice catering the start-ups in India.

His zeal to never stay static and to keep moving has hugely fuelled Nangia & Co.’s growth trajectory - be it in terms of expanding to new verticals or to keeping the cycle of learning running.


What is India’s M&A growth trajectory?

M&A is the path businesses take to achieve exponential and not just linear growth and therefore continues to generate interest. The Indian M&A landscape is no different. Mergers and acquisitions have become an integral part of the Indian economy and daily headlines. Based on macroeconomic indicators, India is on a growth trajectory, with the M&A trend likely to continue.

There has been a spate of high-profile transactions in India in the last few years, whether domestic or international, and both inbound and outbound. With the government continually working towards reforms on all fronts, be it in its regulatory policies to attract foreign investors, providing an impetus to the manufacturing sector with Make in India, improving India’s Ease of Doing Business rankings, or providing solace to the much-beleaguered infrastructure sector by paving the path for real estate investment trusts (REITs)/infrastructure investment trusts (InvITs), there is no looking back.

M&A deals are likely to be the favoured route for foreign direct investment flows into India in 2017, as market consolidation is expected in sectors facing a cash crunch such as e-commerce and telecommunications. The renewable energy sector is likely to see M&A deals, but it could also attract Greenfield investments. The new insolvency and bankruptcy regime will also facilitate the sale of distressed assets, and thereby a hike in M&A activity.


What about the tax concerns that new entrants will have?

Ever since the Vodafone tax litigation took the Indian M&A landscape by storm in 2007, tax aspects surrounding any M&As in India came to the forefront—so much so that corporates have now started taking tax insurance to insulate themselves from the uncertainties and vagaries of interpretation of Indian tax laws. Of course, while the government is making strides in trying to deliver the comfort of certainty to the investor community (by issuing clarifications on various aspects of indirect transfers), it is also tightening the screws on various fronts—the renegotiation of India’s tax treaties, the looming advent of General Anti Avoidance Rules (GAAR) in 2017 and the signing of Multilateral Instrument under Base Erosion and Profit Shifting (BEPS) project.


What differentiates Nangia & Co. from its competitors?

While other firms lay emphasis on the number of resources, Nangia & Co LLP from the very beginning had decided to remain a boutique firm so as to provide personalized and competent services to clients. Having been in the industry for over 35 years, the team still consists of about 220 people who work in close quarters with the rest of their teammates. This lends a sense of openness and ownership among all the resources. Another major factor is the competency of our people who keep themselves updated with the going ons of the industry and moving ahead with the times. There is a healthy mix of domain experts who bring to the table their own expertise which helps the firm impart 360 degree services across a section of verticals.


Contact Details:



By Henry Umney, CEO, ClusterSeven

 In the financial and banking sector, M&A activity is expected to be healthy, due to disposal of non-core businesses by global banks, potential relaxation of regulation in the US, and the European Central Bank encouraging cross-border diversification and consolidation for value creation.  

 Strategically, M&A offers a great opportunity to organisations, with the potential of propelling some banks and financial institutions to top positions in the industry. This said, for organisations to truly take advantage of M&A scenarios, it’s crucial that from the word go, the new entity is able to demonstrate to and convince the regulators and the market that they are agile, effective and well-managed businesses. The regulatory deadlines are stringent and carry huge non-compliance penalties, which have the potential to inflict chaos and havoc for the new entity in the market. 


Extricating businesses

Organisations involved in a M&A need to disentangle processes from their original environment to migrate them to the new entity so that the merged business is operational from day one. For instance, traders need to connect to the new entity’s systems and market data feeds on the very first day of the cross-over so that their trading activity is not compromised.

However, there are many technology-related operational challenges to divesting and merging entities, including poor IT integration, data amalgamation, compliance and regulations and the rampant use of the Microsoft Excel spreadsheet. In fact, the impact of the spreadsheet is often under-estimated, which threatens the success of these highly strategic, M&A-driven transformational initiatives.

The financial controls that are in operation in organisations are spread across multiple enterprise systems and a multitude of critical spreadsheets that span the entire business. Most organisations understand the importance of extricating the enterprise systems and connecting them to the new environment in a M&A scenario. However, there are also a number of complex, business-critical processes that reside in intricately connected spreadsheets, that organisations don’t always have visibility and indeed an understanding of. This makes securely disentangling and migrating key processes and financial controls to the new entity problematic, risky and challenging.

Ensuring timely knowledge transfer of financial controls and business processes is yet another challenge that organisations undergoing an M&A situation face. As companies amalgamate, organisations make significant cost savings through combining processes and merging personnel roles, frequently resulting in employees departing the organisation. To suitably transfer the knowledge from the acquired or merging entity, organisations need to have a full understanding of the complex critical spreadsheets that are relied upon for financial control, information on the individuals who control and manage those processes, their integrity and where they exist in the business.


Manually separating processes costly and error-ridden

In the first instance, many organisations attempt a manual approach to understanding the spreadsheet landscape and the complex interlinkages across the environment in order to extricate businesses. It rarely works – the process is complicated, time-consuming, costly in man-power, error-ridden and with stringent deadlines to provide documentary evidence to authorities, it is commonly wasted effort.

On the other hand, technology enables the merging or acquired entity to understand its business processes, identify the individuals who are applying the controls and put automation around those procedures. This also reduces the key man dependency and ensures the necessary knowledge transfer to the new organisation.


Scottish Widows Investment Partnership (SWIP) separates from Lloyds Banking Group – a case study

The disentangling of the Scottish Widows Investment Partnership (SWIP) from Lloyds Banking Group to Aberdeen Asset Management in 2014 is a prime example of the value of a technology-driven approach to M&A-led operational transformation.

Following its acquisition, SWIP needed to separate its business from Lloyds so that the necessary and critical processes could be migrated to Aberdeen Asset Management. For example, where certain processes relied on market data feeds that were owned by Lloyds, or had linkages to systems owned by Lloyds.

Due to the number of intricately spreadsheets across the vast spreadsheet landscape and the complexities of the business processes residing in this environment at SWIP, manually understanding the lay of the land was impossible. So, by utilising technology, SWIP was able to inventory the spreadsheet landscape, identify the business-critical processes, understand them and pinpoint the files that required remediation. Simultaneously, the technology helped expose the data lineage for all the individual files, clearly revealing their data sources and relationships with other spreadsheets. SWIP was able to securely migrate the relevant business processes to Aberdeen Asset Management and where necessary decommission the redundant processes.


Paying heed to role of the spreadsheet is prudent

In any M&A initiative, there is always a substantial amount of work related to complex, business-critical processes that reside in spreadsheets and the dependencies of such processes on enterprise systems and vice versa.

Technology offers a fail-safe and automated mechanism – including everything from identifying and understanding the processes, establishing the data linkages across the spreadsheet landscape through to remediation, migration and decommissioning. Teams that prudently adopt a technology-led approach to drive M&A-led operational transformation initiatives, find it extremely constructive and beneficial to the business. It mitigates the risks, minimises the disturbances that separating financial controls and processes can cause for the new entity and gives the organisation the best possible start from market, regulatory and financial standpoints.


About the author

Henry joined ClusterSeven in 2006 and for over 10 years was responsible for the commercial operations of ClusterSeven, overseeing globally all Sales and Client activity as well as Partner engagements. In July 2017, he was appointed Interim CEO and is strongly positioned to take the business forward. He brings over 20 years’ experience and expertise from the financial service and technology sectors. Prior to ClusterSeven, he held the position of sales director in Microgen, London and various sales management positions in AFA Systems and DART, both in the UK and Asia.


Twitter: @ClusterSeven



According to a new whitepaper from asset management strategy consultancy Casey Quirk, a practice of Deloitte Consulting LLP, the industry is likely to experience "the largest competitive re-alignment in asset management history" through merger and acquisition activity from 2017 to 2020.

According to its new Investment Management M&A Outlook, "Skill Through Scale? The Role of M&A in a Consolidating Industry," Casey Quirk expects strong merger and acquisition activity in 2017 with a continued historic pace of deals through 2020.

Among the factors driving this brisk activity in 2017 and beyond are an aging population, affecting industry asset levels and flows, as well as a broad shift to passive management that has created pressure on industry fees and placed greater value on firms with valuable distribution platforms and those investing in technology. Forty-four deals took place in the first quarter of 2017, and Casey Quirk expects 2017's volume to likely outpace the last two years.

"Investment management has become a fiercely competitive industry, increasingly shaped by the same winner-take-all dynamics influencing other maturing financial services sectors," said Ben Phillips, a principal and investment management lead strategist with Casey Quirk and one of the authors. "Amid this challenged marketplace, the gap is widening between leading and lagging asset and wealth management firms. Unlike deals of the past, consolidation pressures, with a focus on scale, will likely drive the next round of M&A activity to position firms for growth."

According to Casey Quirk, most of the investment management merger and acquisition deals in 2017 and in the next few years should fall in the following categories:

"Economic pressure, distributor consolidation, the need for new capabilities, and a shifting value chain are the catalysts that are fueling M&A activity," said Masaki Noda, Deloitte Risk and Financial Advisory managing director, Deloitte & Touche LLP, and co-author of the paper. "Asset managers are feeling pressure from many corners and are looking for ways to secure a competitive advantage. Strategic deals may be the answer."

In 2016, 133 mergers and acquisitions occurred in the asset management and wealth management industries, down slightly from 145 in 2015, but with a higher average deal value, up from $240.9 million in 2015 to $536.4 million last year. In investment management, about half of the deals rose from the need to add capabilities such as innovative investment strategies or access to new market segments. In wealth management, the vast majority of transactions—64 out of 78—resulted from consolidation, as various smaller wealth managers sought to improve profitability through economies of scale. Merger and acquisition deal volume by category is from SNL Financial,, Casey Quirk analysis and Deloitte analysis.

(Source: Casey Quirk)

Written by Nick Pointon, Head of M&A at SQS


In June 2015, US security regulators investigated a group of hackers, known as FIN4. The group were suspected of breaking into corporate email accounts of 100 listed companies and stealing information in relation to mergers[1] for financial gain. Hackers are always on the lookout for opportunities to exploit vulnerable IT systems during mergers or acquisitions.

Starwood Group, an American hotel and leisure company, was the victim of a data breach in 2015 caused by malware infected point-of-sale terminals, shortly after the acquisition by Marriott Corporation had been announced. As a result of the breach, hackers gained access to customer names, payment card numbers, security codes, and expiration dates. It was later questioned whether IT systems were appropriately assessed before the acquisition was made public knowledge.

There is so much going on in the process of an acquisition or a business merger that IT systems are often neglected. This creates vulnerabilities, potentially exposing sensitive information which cyber criminals can exploit. IT teams must focus their attention on ensuring the security of existing systems before a company even considers undergoing an acquisition or merger.


Pre-acquisition technical due diligence

Technical due diligence refers to the period during which IT systems are inspected, reviewed and assessed for areas of vulnerability that need to be addressed. Organisations looking to be acquired or merge, should begin a process of technical due diligence internally before seeking interested parties. By carrying out such an internal technical due diligence, the company being acquired can be satisfied its systems are robust, secure and fit for purpose, and the acquirer’s due diligence will not expose any issues that may jeopardise the deal.

In addition to the security vulnerabilities, many organisations carry open-source licensing risks.  Open-source modules or snippets of code are commonly incorporated by developers into software to aid rapid development.  Although this open-source code is freely downloadable, it is normally subject to an open-source licence, and this licence places restrictions and obligations on what can be done with this code. Companies often have no idea what open-source code is used in their systems and any breach of licensing restrictions can be costly to fix and endanger the deal. So the internal technical due diligence should include an assessment of open-source licensing risk, allowing the company to resolve any problems in advance.

By conducting thorough technical due diligence before embarking on the process of an acquisition, organisations will have a greater appeal to interested parties and can ensure the deal will proceed smoothly. Those looking to acquire will have a clearer understanding of the technical assets for sale, with the added reassurance there won’t be any unpleasant surprises.

Yahoo recently felt the ramifications of neglecting IT systems in anticipation of the Verizon acquisition, after it was revealed earlier this year that 500 million customer email accounts were hacked. This now has the potential to affect the final deal - Verizon have issued a statement stating that the company is looking to alter the terms of the deal, as it felt Yahoo wasn’t completely transparent about the breach. This is a prime example of technical due diligence that hasn’t been thoroughly conducted and proves issues unearthed during the closing stages of an acquisition have the potential to affect the final sale price.


Pre-implementation hurdles

Once an acquisition has been agreed in principle, senior stakeholders must then address which systems are being continued and which should be decommissioned. A skilled project manager must be chosen to manage and monitor the implementation of the systems; ensuring decisions impacting the seamless integration of the acquisition are made on time.

Companies often underestimate the amount of work that goes into managing the process of an acquisition. This can result in the appointment of a project manager without the necessary skills needed to efficiently run the entire process. All too often it is assumed acquisitions only affect the financial and legal teams, when in reality it affects every department. An individual is needed with the skills to communicate across all departments and at all levels.


Post-acquisition finishing touches

The sale is agreed and personnel have merged, but it doesn’t stop there. Post-acquisition integration is a separate project in its own right and requires close engagement from senior stakeholders. Merging IT systems across companies can affect the smooth running of daily operations, exposing flaws in acquired systems likely to cause system downtime. By bringing third-party experts on-board, companies facing both pre- and post-acquisition challenges can be kept safe in the knowledge that IT systems are maintained and sensitive data is kept safe.

No matter how big or small the company or the number of employees, acquisitions are always a major upheaval. In order to allow the organisation to continue to operate efficiently both during and after the deal, it is vital the entire integration is properly planned and effectively executed.  This planning starts during due diligence by carrying out a thorough assessment of the technology and systems.  And the process continues with the execution of the integration project, which requires a skilled project manager supported by engaged stakeholders and effective communication at all levels in the new organisation.


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