M&A and Climate Change: The World Just Got A Lot Smaller

How far do merger and acquisition deals travel?

 

There was a time when people asked the same questions about food and wine and even mineral water. Today, my lamb comes from New Zealand, my asparagus from Peru


24 October 2013

M&A and Climate ChangeThe World Just Got A Lot Smaller

How far do merger and acquisition deals travel?

There was a time when people asked the same questions about food and wine and even mineral water. Today, my lamb comes from New Zealand, my asparagus from Peru, my beans from Kenya, my wine from Chile and my water from Italy. Somebody put the planet on a hot wash and it shrank

M&A today
On the other hand, good old mergers and acquisitions are still in the wagon age for the most part - rolling along rutted paths, ineffectually cracking the whip on a ragged process, as the air freight world leaves pure white vapor trails high overhead. We need to adopt a few lessons from the supermarket world by attracting buyers from all over the globe.

Simplistically, you might be forgiven for saying that people actually like staying local and Alice Waters has led a re-think about food miles. But more M&A miles are here to stay. A report by Grant Thornton published this year on “The Rise of the Cross-Border Transaction” found compelling evidence for heightened interest and activity from the BRIC countries (Brazil, Russia, India and China) within a general global expectation of more cross border deals.

Cross-border interest in deals
People often ask what size of deal justifies cross-border or cross-regional interest. It is true that the effort to get on a plane and visit requires a target worth the investment, but increasingly it is about “fit” and “footholds” and not pure numbers. The first move can be tentative, a toe-dipping exercise.

The logic for a deal can be about acquiring “western” brands, or access to customers, distribution or technology. An assumption that a deal is too small for international marketing without testing the market are increasingly unsophisticated, dangerous and divorced from reality. The simple truth is that you have to ask the question, or at least use some means to access buyers.

The other danger is that the owner, your client, may well have ideas about interest from far flung places. You may think it is a bit of a fantasy, but that is what people now believe and “perception is reality”. So, one way or another, the deafening scream of long-haul aero engines is a new fact of life. Take off your Bose noise cancelling headphones and smell the kerosene.

Packaging deals for local markets
We can borrow other elements from the food industry. We need to package our deals for the local markets. If you are going into BRIC markets, have you considered the lead times this might require to run a process?

The approval procedure for a Chinese State Owned Enterprise to make a foreign investment is complex and lengthy. If everyone receives the same start gun, you have effectively excluded all those new buyers who cannot operate to a local private equity timetable. It all requires a radical rethink.

Quite apart from the timetabling considerations, how will you find your way to these new buyers and the decision makers? Good luck if your plan is to ring the switchboard. You could of course use the hot wash of the M&A world, an intelligent deal network. The evolution of a deal sourcing and marketing network shrank the world to help you identify a global audience of buyers, so you can now build a comprehensive buyers list effortlessly and intelligently.

I think we might have forgotten a red sock somewhere because our Dealnexus clients always come out tickled pink with what we do for them.