- In an interview with ET, Sanjeev Krishnan – Chairperson of PwC signaled a dramatic uptick in M&A activities following a period dominated by IPO fervor. What does this mean?
- Girish Vanvari, ex-KPMG Tax Head and Founder of Transaction Square revealed groundbreaking insights into the imminent surge of small and mid-sized M&As across India.
- He also cheekily reminded us not to overlook the dazzling allure of Family Offices; apparently, that’s where the real party’s at!
- Here are excerpts from the conversation:
Tell us about Transaction Square.
Transaction Square is a proper accounting, tax, and regulatory firm, however, we have excelled in two areas besides the regular work we do.
- M&A restructuring: We have been in the top 5 for the last 5 years and ahead of a Big 4 last year.
- Family office-related tasks: Other than wealth management, we take care of whatever a family office needs; Liberalised Remittance Scheme (LRS), migration of residency, trust bills, family charter, family settlements, and so on.
We help businesses conduct M&As, valuation, due diligence, structuring, and a lot of preparatory and restructuring work before an M&A.
Say, there are concerns related to the Foreign Exchange Management Act (FEMA), accounting, or other factors involved in mergers and acquisitions, that’s when we step in.
We guide clients in effectively managing the tax, regulatory, accounting, and valuation aspects of the transactions.
Give us a quick rundown on what is M&A.
Mergers facilitate companies joining forces to amplify growth synergies. So merger is two or more companies joining hands together to take the businesses forward.
Acquisition is the process of taking control of a company, changing the management, and taking it forward.
Notable recent examples include KKR’s strategic acquisition of JB Chemicals, illustrating varied strategies for market consolidation.
You can see these transactions taking place frequently nowadays.
Is there an upswing in the small and midsize M&As? Highlight the current M&A trends.
M&As are happening as we are talking, but it’s not booming.
The boom is in the IPO markets. You see every day, IPOs hitting the market.
Whenever the stock markets are booming, valuations are high…M&A activity tends to drop!
Last year, the IPO market took off significantly, so instead of raising capital through M&As, IPOs became the preferred route for fundraising, and this trend continues today.
This pattern was evident in 2023 and the first six months of 2024.
Additionally, uncertainties surrounding Indian elections impacted business sentiments, despite robust market conditions, keeping M&A activities subdued.
Once the market sobers down, which it will in the next few weeks/ months, and the IPO market will not be as hot as it is today, then people will go back to M&As.
Why do you think small and mid-sized companies will witness a surge in M&A deals?
Technological disruptions are rampant – AI is transforming various sectors, including manufacturing, with innovations like AI-assisted bridge construction and precise fertilizer applications based on field images captured by tractors.
Such advancements are reshaping industries, making it challenging for everyone to invest in this rapidly changing landscape. As a result, businesses are likely to merge and consolidate to stay competitive.
In this evolving environment, we anticipate significant consolidation through M&As. However, for this trend to fully materialize, market conditions need to stabilize.
What’s the real story behind M&A roles? Is it as glamorous as people think?
(Girish drops some truth bombs)
M&A has this allure because seeing your deals in the newspaper gives you a sense of accomplishment…There’s an over-hyped glamour attached to it.
But if I break down M&As into categories:
- 95% is about processes; valuation, diligence, court mergers, open offers, buybacks, and rights issues. It can be as tedious as filing a tax return or conducting an audit.
- 5% is where the judgment or exciting part comes into play deciding whether to proceed with a deal and at what price. That’s where the real expertise lies.
So, to someone on the outside, it might seem thrilling, but in reality, it’s about mastering these processes.
If you aspire to build a career in M&A, you must be prepared to dive into the grinding. Mastery of these intricacies doesn’t happen overnight; it takes years of experience.
Having been in this field for 30 years, I have seen how all these aspects converge into an informed judgment.
What are some most exciting opportunities today for Finance Professionals?
It’s not just M&A or restructuring—the real party is at Family Offices. (Girish’s eyes light up when he talks about family offices!)
I was advising my son who also works with me, I have made sure he works in family offices now because that’s where the maximum excitement is.
Managing the wealth generated from business sales and investments
Ensuring compliance with regulations
Exploring international opportunities like the Liberalised Remittance Scheme (LRS), Overseas Direct Investment (ODI), and Gift City are what truly excite me
Celebrity management
Different kinds of stuff for high net worth individuals, even doing a family settlement, trust bills, family charters, and so much to do.
There is a lot of scope in Family Offices as they represent the future.
While M&A restructuring is an essential part of our business, family offices offer a different level of excitement and diversity.
I have concluded that M&A is just a fraction of what family offices entail.
Managing fortunes, navigating international tax mazes, and setting up trust funds – now that’s where the real action is!
Also read: [COVID-19] How this Chartered Accountant and Founder of an Advisory and M&A Firm Manages Crisis
How do you get clients in the Family Office space?
A family office is very intimate; it’s about deep trust. If you’ve been around long enough and provide excellent service to your clients, word-of-mouth marketing happens.
There’s no Big 4 competition in family offices because people trust individuals, not constructs!
