TORONTO, Dec. 04, 2017 (GLOBE NEWSWIRE) -- The international network, M&A Worldwide, brought together more than 80 members/consultants in mergers and acquisitions (M&A) from all over the world to Barcelona on October 26 and 27.
For 2 days, top M&A experts met together with executives from large companies and groups to forge large-scale corporate deals and to study possible cross-border business transactions.
At this, the 27th Rainmaker Summit, various sectoral panels including: Agriculture, Food and Beverage, Biotech, Pharmaceutical, Health Sciences and Information Technology were held to examine the challenges and opportunities that exist and are to be discovered in relation to the M&A business industry. Directors and executives in charge of such deals in their respective markets were also present.
An interesting presentation was initiated by the conference chair to have a number of members comment on the geo-political influence various countries political/governance has on the M&A profession.
As the exclusive member representing Canada, it was fascinating to hear perspectives from around the world regarding our changing world.
A quick look at geo-politics and the effects and risks of political interventions
as they relate to M&A practices in various countries:
Business is returning to the “new normal” after the Trump election. The day after and for weeks following the election existing contracts were closed and new mandates decreased by 90%. However the M&A business is returning to normal activity levels. It is noted that no laws relating to M&A have been passed in Congress and “Trump’s twitter” is not government. With the exception of the odd challenge the M&A business has largely returned to normal.
The US election did cause one large transaction between a US PEG and our partners in Mexico to go off the rails. The firm suffered greatly and had to lay off employees etc. They were not able to join us in Barcelona because of the difficult year they have had but they are now on the rebound.
Despite the unstable political situation as a result of Brexit, the M&A outlook has been more positive in recent weeks. Although there has been some impact on currency rates, there has been little or no impact otherwise on M&A transactions.
Turkey has experienced a very challenging M&A environment over the past couple of years, lower foreign investment and smaller deal sizes. The political unrest and the influx of refugees has definitely hurt the M&A business. However, the growth rate remains at 5-6% with the primary interest in investments in multinational technological firms.
Cross border M&A activity is closed due to western world sanctions.
The government’s main concerns are to protect the security of its people. Its laws are focused primarily in areas of industry, labour laws, housing and education. These laws affect the entire economy including M&A.
Although geo-politics and the electronic network dominate business worldwide, M&A remains very much a people business based on trust and relationships. Although progress in recent years has been slow to develop Hungary has 77 active company transactions in 40 countries and the future appears promising with a steady increase in cross border deals.
Realistically China has no free trade and no free flow of capital. The reality is that Communism is viewed as the only true success. Chinese financial institutions are stressed. Chinese company investments are restricted and will be more restricted in the future. There are strong foreign exchange rules on currency, in fact there were problems changing enough Chinese currency to Euros for the M&A Worldwide member to attend the conference. The goal is to strengthen, merge and fund government owned corporations not private companies.
All M&A companies must be government approved. The Chinese government must pre-approve transactions. In essence the M&A business is government controlled.
The government is “forcing” companies to sell foreign investments: i.e. Waldorf Astoria Hotel purchased in 2015 at what is believed to have been an over-valued price of $2B, the hotel closed in March 2017 for renovations that will take 2-3 years to complete. Now the government wants the insurance group that purchased the hotel to sell it at what would likely be a huge loss and reinvest the money in something that would promote the government’s interests.
Has a need to attract capital and investment. There are government programs available to support infrastructure and as a result contracting and building industries are strong. Free trade exists with Korea, Japan and much of Asia.
From discussions with a pharmaceutical company based in Catalonia, the interim political situation is hurting investment in the Catalan region – for example, some anti-separatist doctors refusing to prescribe drugs from Catalan based companies. This seems like it is more “heat of the moment” decision making and should return to normal after the dust has settled.
Global politics, the government of various countries, as well as regional concerns all affect South American countries. Although regional investments vary, the main focus is on agriculture and minerals and the ability for companies to have a minimum of 3-5 years of stability.
Change is both constant and inevitable, and one must be aware of the changes and the impact, both immediate and longer term, governments will have on our clients and ultimately our practices.
Contact us for a list of the opportunities we have available outside of North America through our exclusive membership in M&A Worldwide.
Robbinex® is a mid-market business broker and Canada’s exclusive advisory firm to M&A Worldwide, the leading global network for mergers and acquisitions. Robbinex® has specialized in helping owners of mid-sized companies with business transitions since 1974.
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