Transcript Financial Advisory Services in the Middle East

Creating Value through mergers and acquisitions
Contents
M&A activity
Growth objectives
The three P’s
M&A process
Post-merger integration
How advisors can help
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Financial Advisory Services
Creating value through M&A
Rising M&A activity
Financial Advisors league table
Global M&A Activity
16000
Number of deals
14000
Rank
No. of
Deals
Deloitte
1
451
KPMG
2
426
Rothschild
3
365
PwC
4
359
Ernst & Young
5
305
Lazard
6
178
DC Advisory Partners
7
165
M&A International Inc.
8
165
BDO LLP
9
144
Grant Thornton Corporate Finance
10
126
Mid-market – (USD250m) – Jul 2005 to June 2011
12000
10000
8000
6000
4000
2000
0
2006
2007
2008
2009
2010
2011
GCC M&A Activity
350
Number of deals
300
250
200
150
100
50
0
2006
2008
2009
2010
2011
KSA M&A Activity
45
40
Number of deals
2007
35
30
25
20
15
10
5
0
2006
2007
2008
2009
2010
2011
The increasing volume of
transactions suggests that appetite
for mergers and acquisitions is
returning
Source: Mergermarket and Capital IQ
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Financial Advisory Services
© 2011 Deloitte Corporate Finance Limited. Private and confidential
Creating value through M&A
Meeting growth objectives
Common growth objectives
M&A vs. Organic growth
M&A
New technologies
Focus on core
skills
New markets
Diversification
Responding to
market ( e.g..
consolidating)
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New lines of
business
Increase
profitability (cross
selling / cost
saving)
Financial Advisory Services
 Speed of entry
into a new
market
 Rapid launch of
new lines of
business or
technologies
 Elimination of a
competitor
 Acquire human
and intellectual
capital
 Economies of
scale
 Improved
earnings and
efficiency
Organic
 Less expensive
 Takes time and
occurs over a
period of time
 Occurs through
innovation and
sustained effort
 Lower stakes
and risks of
failure
 No clash of
cultures.
 Typically less
debt
 Less
organizational
stress
© 2011 Deloitte Corporate Finance Limited. Private and confidential
Creating value through M&A
The three P’s of a successful M&A
Reasons for failure
Weak
strategic
rationale
Unplanned
process
(Bad timing)
Unstructured
execution
Poor fit /
mismatch
Paying too
much
The three P’s
Prior to commencing any M&A
activity, the rationale and
acquisition strategy must be
well-defined to ensure suitable
deal identification
Planning
A structured plan needs to be designed
and implemented to improve the
likelihood of complete integration into
current operations
Process
Ineffective
integration
Comprehensive due
diligence, reasonable pricing
and acceptable deal terms
are key components of an
organised M&A process and
are essential for the
successful completion of
transactions
Post-merger
integration
(PMI)
Deloitte Corporate Finance can support you throughout the entire M&A process and
provide the expertise required to increase the probability of a successful transaction
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Financial Advisory Services
© 2011 Deloitte Corporate Finance Limited. Private and confidential
Creating value through M&A
Planning
Identify the in-house team with (Buy-side
the
example)
appropriate range of technical skills and
Poolexpertise
of potential
targets
industry
and
assess the effect it
Portfolio
Develop
Timing
willreview
have on their current
responsibilities
strategy
Develop
M&A
strategy
In-house
management
team
Too
 Define strategic rationale
diversified
Growth
Business cycle
Acquire for growth
 Formulate high level acquisition strategy
which will typically be based on:

Screening of potential
targets ‘short list’
Financial Advisory Services
Shortlist
targets
Cant develop
• specialised
Funding capacity
industry
Other

Lead
advisor risk to
Concentration
certain sectors
t
High-level
researchto
and
capabilities and
 Highly
correlated
analysis
of shortlisted
advisors
• focus
Market
conditions
market
movement
opportunities
Disposal
to reduce
 Unable
to maximise
 Restricted growth
costs
• cross-selling
Regulatorybenefits
factors
opportunities
Acquire at attractive
acquisition
 DifficultSuitable
to manage
at
valuations
 Ensure
Define
screening
criteriacompliment
and selection
opportunities
an executive
leveladvisors
selected
the
Contraction
Assemble
the right
team
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potential opportunities
assets
• Business strategy
Risks
Screen
targets
Too
specialised
Develop
‘initial list’ of
Sell non-core
process
skills
of the in-house team and provide the
necessary assistance to minimise
disruption to management
© 2011 Deloitte Corporate Finance Limited. Private and confidential
Creating value through M&A
M&A process – Buy-side
Lead
advisor
role
Other
advisors
How
Deloitte
can help
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Planning and
structuring the
approach
Assess and
approach shortlisted targets
Initial
negotiations and
indicative offers
• Assist creating an
acquisition plan
• Create and
maintain a
structured
approach
• Evaluate
negotiation
strategy
• Contact selected
targets
• Arrange meetings
• Execute NDA
• Gather information
• Analyze and reassess strategic fit
Due diligence and
deal structuring
Final negotiations
and completion
• Present indicative
bid
• Request Due
diligence (DD)
information
• Negotiate key
terms and
exclusivity
• Manage DD
process
• Evaluate potential
deal structures
• Renegotiate or
finalize negotiation
• Conclude
negotiations
• Signing and
closing
• Communicate with
stakeholders
• Completion
accounts
• Legal advisors to
prepare initial legal
documentation
• Introduce PMI
team
• Undertake
detailed financial,
commercial, tax
and legal DD
• In-house
valuations team to
provide technical
guidance on
pricing parameters
• Strong existing
relationships with
legal advisors
• Broad transaction
experience with
complex deal
structures
• In-house DD team
to issue report and
identify key risks
• Legal advisors to
prepare legal
documentation
(e.g. SPA and
shareholders
agreement)
Deloitte provides lead advisory services whereby we manage the entire process to completion
• Proprietary market
intelligence
• Experienced deal
team
Financial Advisory Services
• Extensive global
network
• Access to decision
makers
• Draw on expertise
of specialist SPA
negotiation team
© 2011 Deloitte Corporate Finance Limited. Private and confidential
Creating value through M&A
M&A process – Sell side
Planning and
structuring the
approach
Lead
advisor
role
Other
advisors
How
Deloitte
can help
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• Agree timelines for
transaction
including key
milestones
• Identify potential
investors
• Gather information
Preparation for
sale
• Price expectations
• Assist with
preparation of
business plan
• Easy fixes
• Prepare
presentation
material
Targeting of
potential
investors
Bid management
• Short-list potential
investors
• Contact selected
investors
• Execute NDA
• Present structured
information
• Evaluate
indicative bids
• Negotiate main
terms and
conditions
• Coordinate due
diligence
• Potentially
undertake Vendor
due diligence
(VDD)
• Legal advisors to
prepare initial legal
documentation
• Undertake
detailed financial,
commercial, tax
and legal DD
• In-house
valuations team to
provide technical
guidance on
pricing parameters
• In-house VDD
team
• Access to decision
makers
• Strong existing
relationships with
legal advisors
• Broad transaction
experience with
complex deal
structures
• In-house DD team
to issue report and
identify key risks
Completion
• Deal structuring
• Final negotiations
• Complete legal
documentation
• Payment of funds
• Communicate with
stakeholders
• Legal advisors to
prepare legal
documentation
(e.g. SPA and
shareholders
agreement)
Deloitte provides lead advisory services whereby we manage the entire process to completion
• Extensive global
network
• Experienced deal
team
Financial Advisory Services
• Draw on expertise
of specialist SPA
negotiation team
© 2011 Deloitte Corporate Finance Limited. Private and confidential
Creating value through M&A
Post-merger integration
The majority of merger failures are due to
poorly executed
integration
Successful
integration
Clarity of
purpose
Integration gap
Benefits weren't
delivered!
Clear
understanding
of the rationale
for the merger
across all areas
of the business.
Control
Managing the
process without
diverting
attention from
day-day
operations
Managing
people
Implementing
the new
organizational
design as
quickly as
possible and
preparing HR
team
Within the integration phase, Deloitte
delivers value through a three step
approach
True value
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Financial Advisory Services
Actual Value
What we actually
achieved
Blue Printing &
Design
Preparation
Implementation
& Tracking
© 2011 Deloitte Corporate Finance Limited. Private and confidential
Creating value through M&A
How advisors can help
How we can add value
Our MENA coverage
Unique regional/ global network
We can leverage our unique global network with on-the-ground
audit, consulting and advisory teams across the GCC and in
Qatar
Diversified sector team
We have diversified sector teams covering the Middle East
supported by global specialists who have full coverage of all
segments of the industry
Integrated service
We have the skills and resources to support you in this
engagement as well as drawing on the expertise of our inhouse professionals (consulting, financial due diligence and
valuation)
Leading mid-market adviser
We have consistently been the leading financial adviser
focusing on middle market transactions over the past five
years, in EMEA and globally
Lebanon
Syria
Iraq
Jordan
Libya
Egypt
Saudi
Arabia
Kuwait
Bahrain
Qatar
UAE
Oman
Yemen
Strategic relationship building
We are a partner driven organization with a focus on
relationship building through active involvement of leadership
team during the engagement
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Financial Advisory Services
Fact sheet
• Employees: over 2,200
• Partners, Principals, Directors: 130
• Countries: 15
• Offices: 26
© 2011 Deloitte Corporate Finance Limited. Private and confidential
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