{"id":10233,"date":"2020-04-28T12:00:55","date_gmt":"2020-04-28T06:30:55","guid":{"rendered":"https:\/\/swaritadvisors.com\/learning\/?p=10233"},"modified":"2020-04-28T12:03:28","modified_gmt":"2020-04-28T06:33:28","slug":"mergers-and-acquisitions-trends-and-outlook-in-this-sector","status":"publish","type":"post","link":"https:\/\/swaritadvisors.com\/learning\/mergers-and-acquisitions-trends-and-outlook-in-this-sector\/","title":{"rendered":"Mergers and Acquisitions: Trends and Outlook in this Sector"},"content":{"rendered":"\n<p class=\"has-drop-cap\">Coming from a strong year of 2018, the global market of Merger and Acquisition slowed in 2019. While the worldwidemarket announced that the volume of transactionswas in line with the year 2018 (driven by the increased volumes of transactions in North America), but the deal count for the deals greater than $250 million was down 9 percent globally year over year. Despite declines announced in the <strong><a href=\"https:\/\/swaritadvisors.com\/mergers-and-acquisitions\"><em>Merger and Acquisition<\/em><\/a><\/strong> activity, strategic dialogue continued strong as the companies continued to use Merger and Acquisition to strengthen their businesses.<\/p>\n\n\n\n<p>Whereas\nin India, unlike last to last year, i.e., 2018,\nwe had observed a downward&nbsp;trend in the transactions concerning Mergers\nand Acquisitions during the year 2019 both interms of volume and deal numbers.However,\nthe activities concerning mergers and acquisitions saw a spur due to the sale\nof distressed assets under the Insolvency and Bankruptcy Code (IBC). Further,\nit is noteworthy to note that the Insolvency and Bankruptcy Code, although in\nits embryonic stage, has already gathered a lot of investor attention to be c\nas an M&amp;A category in itself, solely involving distressed assets.<\/p>\n\n\n\n<div id=\"ez-toc-container\" class=\"ez-toc-v2_0_65 counter-hierarchy ez-toc-counter ez-toc-light-blue ez-toc-container-direction\">\n<p class=\"ez-toc-title\">Table of Contents<\/p>\n<label for=\"ez-toc-cssicon-toggle-item-6a3a550eeaa1d\" class=\"ez-toc-cssicon-toggle-label\"><span class=\"\"><span class=\"eztoc-hide\" style=\"display:none;\">Toggle<\/span><span class=\"ez-toc-icon-toggle-span\"><svg style=\"fill: #999;color:#999\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" class=\"list-377408\" width=\"20px\" height=\"20px\" viewBox=\"0 0 24 24\" fill=\"none\"><path d=\"M6 6H4v2h2V6zm14 0H8v2h12V6zM4 11h2v2H4v-2zm16 0H8v2h12v-2zM4 16h2v2H4v-2zm16 0H8v2h12v-2z\" fill=\"currentColor\"><\/path><\/svg><svg style=\"fill: #999;color:#999\" class=\"arrow-unsorted-368013\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" width=\"10px\" height=\"10px\" viewBox=\"0 0 24 24\" version=\"1.2\" baseProfile=\"tiny\"><path d=\"M18.2 9.3l-6.2-6.3-6.2 6.3c-.2.2-.3.4-.3.7s.1.5.3.7c.2.2.4.3.7.3h11c.3 0 .5-.1.7-.3.2-.2.3-.5.3-.7s-.1-.5-.3-.7zM5.8 14.7l6.2 6.3 6.2-6.3c.2-.2.3-.5.3-.7s-.1-.5-.3-.7c-.2-.2-.4-.3-.7-.3h-11c-.3 0-.5.1-.7.3-.2.2-.3.5-.3.7s.1.5.3.7z\"\/><\/svg><\/span><\/span><\/label><input type=\"checkbox\"  id=\"ez-toc-cssicon-toggle-item-6a3a550eeaa1d\"  aria-label=\"Toggle\" \/><nav><ul class='ez-toc-list ez-toc-list-level-1 ' ><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-1\" href=\"https:\/\/swaritadvisors.com\/learning\/mergers-and-acquisitions-trends-and-outlook-in-this-sector\/#Recent_Reports_on_Mergers_and_Acquisition\" title=\"Recent Reports on Mergers and Acquisition\">Recent Reports on Mergers and Acquisition<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-2\" href=\"https:\/\/swaritadvisors.com\/learning\/mergers-and-acquisitions-trends-and-outlook-in-this-sector\/#Recent_Deals_of_Mergers_and_Acquisitions\" title=\"Recent Deals of Mergers and Acquisitions \">Recent Deals of Mergers and Acquisitions <\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-3\" href=\"https:\/\/swaritadvisors.com\/learning\/mergers-and-acquisitions-trends-and-outlook-in-this-sector\/#Mergers_and_Acquisition_Deals_in_Start-up_Sector\" title=\"Mergers and Acquisition Deals in Start-up Sector\">Mergers and Acquisition Deals in Start-up Sector<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-4\" href=\"https:\/\/swaritadvisors.com\/learning\/mergers-and-acquisitions-trends-and-outlook-in-this-sector\/#Key_Events_and_Trends_of_2019_that_Dominated_Mergers_and_Acquisitions\" title=\"Key Events and Trends of 2019 that Dominated Mergers and Acquisitions\">Key Events and Trends of 2019 that Dominated Mergers and Acquisitions<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-5\" href=\"https:\/\/swaritadvisors.com\/learning\/mergers-and-acquisitions-trends-and-outlook-in-this-sector\/#Important_Legal_FacetstoPonder_While_Exploring_M_A_Transactions_in_India_along_with_the_Ways_to_Streamline_Its_Process\" title=\"Important Legal FacetstoPonder While Exploring M&amp;A Transactions in India along with the Ways to Streamline Its Process\">Important Legal FacetstoPonder While Exploring M&amp;A Transactions in India along with the Ways to Streamline Its Process<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-6\" href=\"https:\/\/swaritadvisors.com\/learning\/mergers-and-acquisitions-trends-and-outlook-in-this-sector\/#Expected_Outlookfor_M_A_in_2020_during_COVID_-19\" title=\"Expected Outlookfor M&amp;A in 2020 during COVID -19\">Expected Outlookfor M&amp;A in 2020 during COVID -19<\/a><ul class='ez-toc-list-level-3' ><li class='ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-7\" href=\"https:\/\/swaritadvisors.com\/learning\/mergers-and-acquisitions-trends-and-outlook-in-this-sector\/#Conclusion\" title=\"Conclusion\">Conclusion<\/a><\/li><\/ul><\/li><\/ul><\/nav><\/div>\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Recent_Reports_on_Mergers_and_Acquisition\"><\/span>Recent Reports on Mergers and Acquisition<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>Furthermore,\nthe above stated is also apparent from the India&nbsp;M&amp;A Report\n2019&nbsp;published by the Bain and Company&nbsp;in alliance with the Confederation\nof Indian Industry (CII).According to the said report, 70 percent of the growth\nand development in the M&amp;A activity in the year 2018 was due to the\ndistressed deals, enabled by way of the corporate insolvency resolution process\nunder Insolvency and Bankruptcy Code.<\/p>\n\n\n\n<p>Moreover,\nas per the M&amp;A Trends Survey 2020 published by the Deloitte Company, precise\nand robust signals showthat M&amp;A deal activity will persist. The said survey\nwas conducted on 1000 executives, out of which only 4 percent of the respondents or executives\npredicting a decline in the number of deals in the next 12 months. Also, just2\npercent of the survey respondents anticipate a drop-off in the deal size in the\nyear 2020.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Recent_Deals_of_Mergers_and_Acquisitions\"><\/span>Recent Deals of Mergers and Acquisitions <span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>In the\nyear 2019, some notable foreign investments across several industry sectors\nmaking its way into the country albeit the downward trend, the facts of a few\nare as follows &#8211;<\/p>\n\n\n\n<ol><li>Acquisition\nby the Ebix Inc of a majority stake of 71 percent in Yatra for $337.8 Mn.<\/li><li>Lately,\nEdtech Companies are also grabbing investor attention by way of deals like Byjus\u2019s-Qatar\nInvestment Authority (QIA) investmentsand Blackstone Partners-Aakash\nEducational Services Limited.<\/li><li>Acquisition\nof the Aadhar Housing Finance Limited by the Blackstone Partners. Some of the other\ndeals in the sector consist of investment of $250 Mn by the CDPQ in the\nnon-banking armrest of Edelweiss Group named ECL Finance Limited.<\/li><li>4 percent\nstake pick by total S.A. for $864 Mn in the Adani Gas Limited,is the largest\nFDI (Foreign Direct Investment) in the highly regulated gas distribution\nsector.<\/li><li>The Logistics\nsector is the armrest of e-commerce business, saw foreign direct investments in\nthe form of Shadowfax-Flipkart deals,and Delhivery-Canada Pension Plan\nInvestment Board (CPPIB).<\/li><\/ol>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Mergers_and_Acquisition_Deals_in_Start-up_Sector\"><\/span>Mergers and Acquisition Deals in Start-up Sector<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p><strong>We had also observed quite a few Mergers and Acquisitions deals in the start-upsector namely \u2013<\/strong><\/p>\n\n\n\n<ol><li>acquisition of Fastfox by the Elara Technologies, <strong><\/strong><\/li><li>CRIDS by Sachin Bansal, <strong><\/strong><\/li><li>Wibmo by PayU, <strong><\/strong><\/li><li>acquisition of Nightstay by Paytm, <strong><\/strong><\/li><li>OYO acquired&nbsp;a Gurugram-based coworking start-up&nbsp;named\nInnov8 for INR 220 Cr, i.e., $31.84 Mn, in an all-cash deal.<strong><\/strong><\/li><li>ShopClues, an Indian start-up,was&nbsp;acquired in a stock\ndeal&nbsp;by a Singapore-based company named Qoo10 Pte Ltd.<strong><\/strong><\/li><li>ClearTax, the fintech start-up,has\nacquired&nbsp;a Mumbai-based audio\nstreaming platform&nbsp;named Dose FM for an\nundisclosed amount.<strong><\/strong><\/li><li>Printo, a Bengaluru-based printing retail\nstart-up, has acquired a custom online printing marketplace named Inkmonk for\nan undisclosed amount.<strong><\/strong><\/li><li>Lastly, Medlife, a Bengaluru-based e-pharmacy start-up,has\nacquired a medicine delivery&nbsp;start-up named Myra&nbsp;Medicines\nfor an undisclosed amount.<strong><\/strong><\/li><\/ol>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Key_Events_and_Trends_of_2019_that_Dominated_Mergers_and_Acquisitions\"><\/span>Key Events and Trends of 2019 that Dominated Mergers and Acquisitions<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>Firstly, the global economic slowdown and secondly, the growing tensions\ncoxed by the US-China trade war triggered a likely controlled approach regarding\nthe&nbsp;M&amp;A activities&nbsp;in\nthe world. Further, this uncertainty around the geopolitical landscape led to a\nconsequence effect negatively impacting the previous year\u2019s investment\nactivities. In addition to the above, the sentiments of the Indian investors\nwere also conscious because of the country\u2019s 17th Lok Sabha elections.<\/p>\n\n\n\n<p>Furthermore, apart from IBC (Insolvency and Bankruptcy Code), the key\ntrends ruling M&amp;As were the dynamism and vigour of the present government\nto strengthen the economy by way of its business-friendly initiatives. These\ninitiatives were introduced by way of reforms in the regulatory regime is\napparent to offer a much-neededmotivation to the Mergers and Acquisitions\nactivities in the country going forward. The following listed are few of the\nreforms introduced all through the year which may boost the activities\nconcerning M&amp;A &#8211;<\/p>\n\n\n\n<ol><li>SEBI\u2019s (Security Exchange Board of India) new framework on the issuance\nof Shares with Differential Voting Rights. This framework provides an effective\ntool to receive investments, that, too, without losing control.<\/li><li>The Foreign Exchange Management (Cross Border Merger) Regulations, 2018,\nhappens to be one more first of its kind piece of legislation.<\/li><li>The Code of Wages, 2019, consolidates four existing Labour Laws into one.<\/li><li>The Foreign Investment Regulations, 2019 (<em>classified as the Debt and\nNon-debt Regulations<\/em>), replaces the previous TISPRO Regulations, 2017, along\nwith the Acquisition of Immovable Property in India Regulations, 2018.<\/li><li>Tax incentives and exemptions to the registered start-ups.<\/li><li>Various Reforms introduced in the manufacturing sector advocating the campaign\nof \u2018Make in India.\u2019<\/li><li>Lastly, the Quintessential reform regarding the reduction in the\neffective corporate Income Tax Rates results in placing India onto the map of\nan attractive investment destination at par with most of the topobserved\ninvestment destinations of the world.<\/li><\/ol>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Important_Legal_FacetstoPonder_While_Exploring_M_A_Transactions_in_India_along_with_the_Ways_to_Streamline_Its_Process\"><\/span>Important Legal FacetstoPonder While Exploring M&amp;A Transactions in India along with the Ways to Streamline Its Process<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>In the\nera of rising corporate frauds and overnight bankruptcy and insolvency cases,\nthe crucial aspect before negotiating any M&amp;As transaction is an efficient\ndue diligence activity. Thus, more often than not, diligence is known as a \u201cmeasure\nof prudence,\u201dwhich can rock the sails of any transaction to a prudent\ndirection.<\/p>\n\n\n\n<p>However, it\nis significant to note that diligence is not the sole basis but only a\nfacilitator to undertake any transaction concerning M&amp;A in India. Besides\nthe exercise of diligence, the degree of corporate governance exercised by the\nentities in their ordinary course of business is another significant tool to\nmeasure the synergies of any deal concerning M&amp;A. &nbsp;Further, today\u2019s\nage is the age of technology, and its effectual integration would set a\nforward-looking trail in our continuous endeavor to streamline the process of Mergers\nand Acquisitions activities.<\/p>\n\n\n\n<p>Further, it\nis noteworthy to note that the most recent initiative unleashed by the\ngovernment for expediting M&amp;As is the process of&nbsp;\u201cdeemed approval\u201d&nbsp;under&nbsp;the\n\u201cGreen Channel Route\u201d&nbsp;by the Competition Commission of India (CCI) for\ncertain categories of M&amp;As. Lastly, these regular initiatives of the\ngovernment, has led India to move 14 places up at the 63<sup>rd<\/sup>&nbsp;rank\nin the \u2018Ease of Doing Business\u2019rankings by the World Bank.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Expected_Outlookfor_M_A_in_2020_during_COVID_-19\"><\/span>Expected Outlookfor M&amp;A in 2020 during COVID -19<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p><div class=\"shadow4\"><em>At the commencement\nof the year, various projections were made by the M&amp;A experts, that the\nyear 2020 will surpass 2019 in terms of M&amp;A deal activity. However, due to\nthe outbreak of the coronavirus epidemic,things have changed noticeably, with\nthe unpredictability of the magnitude and the uncertainty of its potential\nimpact considerably impacting the deal environment.<\/em><\/div><\/p>\n\n\n\n<p>Further, not only the Indian market but also the global\nbusiness environment is presently witnessing an unparalleled challenge.\nAlthough the restricted social activities and lockdowns are essential to deal\nwith the current epidemic, but this will result in the enormous disruption in the\ncash flow issues, supply chains, and funding gaps, drop in consumer spending,\nand encounters in the unchartered and unimaginable territories for most\nbusinesses and communities.<\/p>\n\n\n\n<p>Hence, it is difficult to predict the actual consequences of\na global epidemic and long-term lockdowns, that are affecting every aspect of\ndaily life. Further, with such uncertainty and unpredictability, post-crisis\nthe attention of the business owners and managers is likely to be on managing and\nrecovery of the core business. As a result, any inorganic activity concerning Merger\nand Acquisition&nbsp;may take a backseat.&nbsp;<\/p>\n\n\n\n<p>However, it is noteworthy to note that the shock of <strong><a href=\"https:\/\/www.mygov.in\/covid-19\/\">Covid-19<\/a><\/strong> may drivethe global M&amp;A activity, as businesses will pursue to raise more capital and also to find opportunities created by the adversity. This is donein order to make acquisitions of assets or businesses at a more reasonable or distress valuation and also to consolidate with the players in the supply chain as well as the previous competitors, as a mutually advantageous strategy in order to survive, sustain and grow.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Conclusion\"><\/span>Conclusion<span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>Earlier it was expected that <em>the year 2020 would surpass\n2019 in terms of M&amp;A deal activity with the <\/em>expectant efforts of the\ngovernment along with the favouring acquisition market conditions.However, <em>due\nto the outbreak of the coronavirus epidemic, <\/em>investment activities by way\nof mergers and acquisitions are not favourable in the year 2020.<\/p>\n\n\n\n<div class=\"read\"><p><b>Also, Read:<\/b> <mark><a href=\"https:\/\/swaritadvisors.com\/learning\/analysis-of-merger-and-acquisition\/\" target=\"_blank\" rel=\"noopener noreferrer\">Analysis of Merger and Acquisition<\/a><\/mark>.<\/p><\/div>\n","protected":false},"excerpt":{"rendered":"<p>Coming from a strong year of 2018, the global market of Merger and Acquisition slowed in 2019. While the worldwidemarket announced that the volume of transactionswas in line with the year 2018 (driven by the increased volumes of transactions in North America), but the deal count for the deals greater than $250 million was down [&hellip;]<\/p>\n","protected":false},"author":17,"featured_media":10234,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":[],"categories":[546],"tags":[608],"_links":{"self":[{"href":"https:\/\/swaritadvisors.com\/learning\/wp-json\/wp\/v2\/posts\/10233"}],"collection":[{"href":"https:\/\/swaritadvisors.com\/learning\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/swaritadvisors.com\/learning\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/swaritadvisors.com\/learning\/wp-json\/wp\/v2\/users\/17"}],"replies":[{"embeddable":true,"href":"https:\/\/swaritadvisors.com\/learning\/wp-json\/wp\/v2\/comments?post=10233"}],"version-history":[{"count":14,"href":"https:\/\/swaritadvisors.com\/learning\/wp-json\/wp\/v2\/posts\/10233\/revisions"}],"predecessor-version":[{"id":10248,"href":"https:\/\/swaritadvisors.com\/learning\/wp-json\/wp\/v2\/posts\/10233\/revisions\/10248"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/swaritadvisors.com\/learning\/wp-json\/wp\/v2\/media\/10234"}],"wp:attachment":[{"href":"https:\/\/swaritadvisors.com\/learning\/wp-json\/wp\/v2\/media?parent=10233"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/swaritadvisors.com\/learning\/wp-json\/wp\/v2\/categories?post=10233"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/swaritadvisors.com\/learning\/wp-json\/wp\/v2\/tags?post=10233"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}