A detailed evaluation of M&A deals, the potential target sectors and roadmap to foray into M&A advisory business; IFCI Limited

Abstract

Background: India in the recent years has showed tremendous growth in the M&A deal. It has been actively playing in all industrial sectors. It is widely spreading far across the stretches of all industrial verticals and on all business platforms. The increasing volume is witnessed in various sectors like that of finance, pharmaceuticals, telecom, FMCG, Shipping and ports and Mining Sector. The volume of M&A transactions in India has apparently increased to about 54.31 billion USD in 2011 from 24.02 billion USD in 2009. This increasing percentage is mainly attributed to the increasing cross-border M&A transactions. Over that increasing interest of foreign companies in Indian companies has given a tremendous push to such transactions. Large Indian companies are going through a phase of growth as all are exploring growth potential in foreign markets and on the other end even international companies is targeting Indian companies for growth and expansion. Some of the major factors resulting in this sudden growth of merger and acquisition deal in India are favorable government policies, excess of capital flow, economic stability, corporate investments, and dynamic attitude of Indian companies. Report Structure: The first part of the report gives an overview of mergers and acquisitions in India and the motive behind M&A activities. Major deals in different sectors have been analyzed and their different financial ratios (EBITDA, PAT and Sales ratio) have been reported along with the pricing and other details of the deals. For each deal, the financial and legal advisors for the deals have also been reported. Next, the stages of a typical merger and acquisition process have been explained in detail starting from M&A advisor team building to concluding the deal. In next part of the report, due diligence process and the valuation, pricing financing and negotiation of the deal is explained in depth. Since IFCI is planning to foray into M&A advisory business, various sectors have been analyzed and listed for the potential of M&A advisory business in those sectors. The focus sectors which are reported are Pharma, IT & ITES, Real Estate and Infrastructure, Banking and Financial Services, Telecom, Mining and Shipping and Port. Finally, the roadmap of skill building process has been suggested to IFCI which mainly includes HR development, financial capabilities, legal expertise, Integration capabilities, Analytical capabilities, Restructuring Expertise and Domain Knowledge.