This edition honours, in the first place, the Miami convention organisers. It was a great event because more members joined the organization – reinforcing us as one of the biggest M&A networks in the world – but also because of the chance to interact and learn from the excellent keynote speakers, to meet new potential clients, to contribute with ideas, efforts and projects for the benefit of the organization.
This edition showcases PYI (our Asian member that covers Thailand, Vietnam and Laos), the Deal of the Year and then, the Featured Market - Brazil.
We announce as well two new members that just joined us, to cover Ireland and reinforce our network in Japan. We welcome them here.
The Agri, Food & Beverage Report Q4 Edition is here presented as well and Tania – our admin manager – introduces herself.
As the upcoming IT platform is due to be launched at the 30th M&A Worldwide convention in Lisbon, José Correia starts here a journey to unfold a cool feature per edition. Let´s see what he´s working on.
In this edition, we launch a new permanent section: a space for the younger generation of good professionals. The group of young talents brings good fresh air to our organisations, and we thought that by giving them some space this should encourage more good people to feel inspired by these examples and join us.
Finally, you can glimpse the next edition for the first time.
So, there are loads of reasons to take a more in-depth look and enjoy.
More than 100 professionals, including M&A Worldwide members and corporate guests, gathered in Miami (USA) for the 29th M&A Worldwide Convention – Rainmaker Summit. It was a great venue with lots of opportunities for interaction and connection, to learn and to start a good deal.
The program included several elements:
This convention, organised by our American member Focus Investment Banking, was held in Miami and, as all agreed, was staged with German precision, an Italian style, American pragmatism and Portuguese hosting style (honouring the upcoming convention site). Gathering so many different influences into a unique venue was a great achievement as the attendees had the chance to experience a well-organised and accomplished agenda, full of content, experiences and practices. The corporate guests brought a good amount of experiences, and the sponsors honoured the event with their support.
The roundtables and speed meetings allowed endless deal opportunities. It was also normal to see some occasional informal meetings. This is the M&A Worldwide spirit we always envisioned.
The organisation also welcomed two more members, from Ireland and Japan. Their representatives publicly presented the respective organisations and surprised the attendants with an excellent mood and openness. This acceptance will allow the network to have a more profound presence in Asia and Europe, and surely that will be appreciated by our clients. Both Ireland and Japan are two significant markets and sources of good deals so that these new members will bring more opportunities to the network.
There was time as well for a keynote speaker to share his world-class knowledge and practice in the Negotiation field. The audience had the chance to develop a case and learn out of that. It was a unique chance to listen to this expert from Wharton.
The Executive Director took the stage to update the members on the latest staff developments, achievements and the Road Map to be followed. Besides the Yearbook, the convention App, and several other projects concluded or started, Rui Delgado highlighted the Orbit: the future platform will get every member connected, increasing the deal flow. This project is due to be launched officially at the Lisbon Convention.
Finally, the Chairman – Bjorn Voigt – remarked on the 2018 milestones – developed, discussed and approved by the AMS convention last April. Bjorn Voigt walked through the important proposed goals, pointing out that since then, three more staff members had been identified, interviewed and hired (since last July), that an integration process took place in between and the results are apparent. The Chairman reiterated that this is an ongoing process as the challenges for the organisation become increasingly more demanding. However, the Chairman felt quite comfortable with the journey the organisation has been through so far, and even more with the projects, the plans, the people and the members, as well as with the Road Map status.
All these activities occurred in a perfect environment that helped to keep up the excellent work.
For this edition, Pathom Yongvanich became our host. He takes us on a journey inside his company, PYI Capital Company Limited, explains to us the trends and main characteristics of the Thai Market, the influence of the political environment and explains the value M&A Worldwide adds to his business.
Q: Can you provide us with a short presentation of PYI Capital Company Limited?
A: PYI is a boutique M&A advisory firm, headquartered in Bangkok, Thailand and has offices in Hanoi and Ho Chi Minh City, Vietnam. Recently, Laos has also become a focal point for new business opportunities. PYI provides core advisory services; buy-side and sell-side, capital raising, cross-border transactions, private placements, project finance, valuations and due diligence.
Q: In which sectors are PYI more involved?
A: The company’s core industry focus is real estate, renewable power, oil and gas, hospitality, healthcare, construction material, food and beverage, agriculture and technology/e-commerce sectors.
Q: What are the most important trends in the Thai market?
A: There are five significant trends currently affecting the Thai market:
1. Infrastructure: The Government has invested heavily in mega infrastructure projects across the country (e.g. road, rail, maritime, airports and Eastern Economic Corridor - ‘EEC’).
2. Tourism: Thailand’s booming tourism market is expected to attract 38 million foreign visitors in 2018. Thailand is ranked the 9th largest tourist attraction in the world for 2018.
3. Ageing society: Thailand will enter into an ageing society by 2022, in which 13.1 million or more than 20% of the total population are ageing, leading to an increase in healthcare and real estate opportunities.
4. Exports: Global economic recovery has enhanced Thailand’s manufacturing exports. Net exports of USD 960 million were recorded during January-July, 2018.
5. Technology: Thailand's 4.0 initiative is to promote a cashless society within the next three years. Thais are spending more time online with smartphones. Mobile banking and online payments gateways have started to penetrate the Thai society. E-commerce is gaining momentum in the Thai market, with leading firms such as Alibaba and JD.COM establishing a presence. The number of online transactions is still relatively low when compared to conventional shopping methods, but transactions are increasing yearly as Thais become more confident and trusting of online shopping.
Q: What is the importance of M&A Worldwide for your activity?
A: M&A Worldwide encourages M&A boutique firms globally to develop a strong network amongst its members by sharing information relating to deals, trends and best practices in each country.
Q: The actual political environment is a pro or a con for your M&A activity?
A stable political environment with no civil unrest or government protests promotes stability and aids existing businesses to operate as usual.
Fast decision-making process helps to impose new laws or sanction approvals, such as the mega infrastructure projects mentioned above.
1. Under the current junta government, some countries/funds are restricted from investing in Thailand. Moreover, Thailand has a negative perception on the world stage due to its history of military coups, with the last one being in 2014.
2. Due to the delay in formulating a democratic roadmap, Thais are somewhat cautious in their outlook. Some multinationals are reluctant to invest in Thailand until elections are held, and a clear roadmap is developed.
3. The longer Thais wait for the election (scheduled in Feb 2019), the riskier that political unrest will become. This may lead to a disruption of M&A activities in Thailand, should that be the case.
Q: In your opinion, what is the recent M&A Worldwide’s Asian Group's added value?
A: M&A Worldwide Asia Pacific Group was explicitly formed to work more closely and collaboratively with members in exploring cross-border opportunities with an emphasis on doing cross-border deals and being proactive.
Rickitt Mitchell led a team of M&A Worldwide members in the sale of Burnhart Holdings (trading as WEC Group) to Amari UK Inc for a total consideration of £70m. This deal won the prize for the Deal of the Year, competing against three other cross-border deals.
Who were the other M&A Worldwide members (companies) and people (of each M&A Worldwide member) involved in the transaction (buyer and seller)? What was their role?
Focus, Active M&A, Aeternus, MBA Capital and Morgen Evan all assisted in the pitch process, provided feedback on the information memorandum and acted on the active marketing (buyer research and contact phase). Several other M&A Worldwide members provided further market insight and lead generation on a finder’s fee basis.
The seller had wanted to consider only a trade exit but Focus’s insight into the high values being offered by US Private Equity firms opened the seller’s mind to this route, and it was the price competition from this that allowed us to maximise the value achieved. The net result was to increase the end valuation from ~4.5x EBITDA to approximately 6x.
Give us an idea of the deal complexity, e.g. hurdles, unexpected events and the way these were taken care of, solved or renegotiated.
Initial bids were in the £40m - £50m range as WEC Group had no clear buyers (it was the largest business of its type in the UK with no directly comparable competitors). Flexible management of the deal timeframe and Focus’s introduction of PE bidders enabled a competitive auction to drive up the price. We allowed an earn-out to maximise the total value being offered.
WEC Group had a complex shareholding structure with many minority shareholdings in subsidiaries and no overall shareholders’ agreement to define how a sale of the group would be shared amongst all shareholders. In addition, there was consideration of a property portfolio (£20m+) and of two helicopters that the majority shareholder wanted to keep, requiring us to undergo a pre-sale group reconstruction to enable the sale to go ahead.
To what extent was the deal structure creative or were the solutions creative/ out of the ordinary? Please describe.
As part of the pre-sale reconstruction, the majority shareholder required a share transfer that was presented as a ‘family transfer’ as he was related by marriage to another shareholder whose value entitlement was considered to be c£4m too high. This created a need for significant emotional support through the latter stages of the deal!
Can you say something about the level of the transaction costs?
They were too low at £521,000, of which 30% was shared with the M&A Worldwide members who formed the core team. The UK is highly competitive for M&A transactions of this scale, and so fees are often a low percentage of deal value.
How did the cooperation between M&A Worldwide members lead to a better result for the seller/buyer?
Focus created a robust target list of U.S. strategies and financials and pursued extensive networking efforts to expand the horizons of the search. Its identification of the ultimate investors behind Amari UK Inc (a midwestern family office) provided the ideal buyer for WEC, enabling the current management team to remain in the day to day control of WEC whilst cashing in their investment in full. The buyer has a track record of investment and growth in its portfolio companies and offers an industry-leading management profit share, which gave great comfort to the majority shareholder who was very attached to his business.
How did you use your deal for marketing, pitchbooks or acquisitions?
Unfortunately, both the buyer and seller required the transaction to be kept confidential and as such, we have not been able to use the deal for marketing purposes.
However, the experience gained from the combined pitch effort has been used to improve our approach to pitching for larger prospects where cross-border interest is likely. One of our goals for the Advanced Manufacturing & Automation Group is to use these lessons learned to generate a coordinated marketing pitch for globally marketed sell-side and buy-side opportunities.
The outlook for global M&A activity this year is broadly positive, with an uptick in both deal volume and transaction amounts expected. Some international operators project that the number of worldwide announced M&A deals in 2018 will increase by around 2 per cent year-on-year, with Latin American growth predicted to be around 3 per cent. According to Angela Bouzanis, senior economist at FocusEconomics, recently released data “indicates that GDP grew for the first time in over three years in Q2, confirming that the [Brazilian] economy has turned a corner”, led by falling inflation and export growth. These factors, together with historic lows in the benchmark SELIC interest rate, which is currently at 7 per cent, emerging discourse over political and fiscal reform and economic growth, have fuelled investor optimism and capital flows into Brazilian assets. Uncertainty, led by concerns of a return of ex-president Lula as a candidate for the left-wing workers’ party, had kept markets on eggshells during 2018. This uncertainty, which was potentially holding back further upside pressure in financial and M&A markets, was cleared up early in 2018 and greeted warmly by investors.
According to data from Bain & Company and PitchBook, 2017 global M&A activity grew to $3.3 trillion in total deal value, with 38,500 deals (resulting in an average deal size of $85.7 million). Concurrently, Brazil had a 9% growth in the number of companies being bought and sold, achieving a record of 856 transactions with a combined deal value of approximately $87.3 billion, according to Fusões & Aquisições. This also represents a 4.8% increase in Brazil’s deal volume compared to 2016. Brazil’s average deal size of $101.9 million in 2017 was strongly affected by more than 10 multibillion-dollar deals announced in that year. According to Fusões & Aquisições, before 2017, historically, the average deal size ranged from $30 million to $40 million. Opportunity for growth also awaits Brazil’s private equity and family office investments. In 2017, global private equity activity represented some 13% of the M&A value and 8% of the number of completed deals, and family offices represented some 3% ($100 billion) of the total M&A value. According to PwC, private equity was involved in some 15% of the announced deals in Brazil over the past 7 years. Regarding family offices, it is likely that the same four-fold increase observed globally — from $25 billion in 2011 to $100 billion in 2018 — will be seen in Brazil in the coming years.
However, organic growth in Brazil is more challenging than in many other countries. Therefore, a natural way to overcome those cultural, legal and regulatory barriers to entry is to acquire or to partner with an established Brazilian firm, that has already some solid background of tax, labour and regulatory compliance, perfect adaptation to the cultural and business environment and evidence of sound financial evolution.
Acquiring the right position, at the right price, making the right deal and following the right path can save loads of time and resources and diminish obvious risk.
It's also necessary to clarify that the latest political developments had as a consequence the boosting of the Brazilian currency and stock exchange and the M&A expectations are now higher than before.
The next graphic exposes the Brazilian M&A market which has been growing over the last 15 years
The most significant transactions of 2018 so far have been driven by industry consolidation in search of cost savings. The acquisition of pulpmaker Fibria Celulose SA by rival Suzano Papel Celulose e Papel SA and the takeover of for-profit education company Somos Educação SA by rival Kroton Educacional SA are some examples.
Cross-border deals have also featured Brazilian companies expanding into neighbouring countries to avoid harsher antitrust scrutiny at home, where antitrust watchdog Cade blocked recent deals in education and oil and gas.
Raízen Energia SA, a joint venture between Brazil’s Cosan SA and Royal Dutch Shell Plc, acquired Shell’s downstream operations in Argentina, including a network of gas stations and a refinery, for $1 billion.
The investment banking unit of Itaú Unibanco Holding SA was the most active by the total value of deals, considering only Brazilian targets.
Focus Capital Partners is a fast-growing boutique corporate finance firm that provides a broad suite of corporate financing and capital raising services.
With offices in Limerick and Dublin Focus Capital Partners provides Corporate Finance Services to clients across the country. While it has extensive experience across all traditional corporate finance activities, Focus specialises in four key areas: Debt Funding, Equity Fundraising, Mergers & Acquisitions and sourcing Foreign Capital. The team of approx. 30 (including 20 senior staff) is comprised of highly experienced individuals, including Chartered Accountants, Tax Consultants, Investment Bankers and former CEO’s.
Focus Capital Partners was represented at the Convention by:
Robert AdamsManaging Director
Growin' Partners' motto is to support growth (Growth) and success (Win) of all the people involved in the company, including customers and staff.
Growin' Partners Group has staff with diverse backgrounds such as certified public accountants strong in accounting tax, people from financial institutions and IT consulting firms, CFOs from business companies, business planning department, finance and accounting department, etc.
The staff works together to support the growth and success of the client companies, building with them strong and permanent relationships of trust.
Since its founding in 2005, Growin' Partners has consistently committed to the growth and success of their client companies as a professional team of management chiefs.
Growin' Partners was represented at the Convention by:
Satoshi TakihiExecutive Director, Head of M&A
Kosuke HarutaSenior Associate
Please meet Orbit — the upcoming platform, due to be launched at the 30th M&A Worldwide Convention in Lisbon, which will replace the current one (Mawbrain). The Orbit intends to be the hub where the members gather to interact with the organisation on a more interactive, better and faster way. It’s a whole new system designed and developed by the M&A Worldwide team, considering the specific needs of our members. The Orbit is still under development. However, a group of members volunteered to test the features allowing timely adjustments. So, thank you, Jordi Blasco, Martin Mayer, Allan Kelly, John Slater, Brian Higgins, Paul Herman and Rudolf Rentsch for the effort.
The interface is entirely new. The system to upload, receive and follow deals was completely redesigned. The users will find a significant difference: when a deal is uploaded, a particular member (or group of members) can be invited to join the deal (besides the notification). This is a significant step forward to increase the number of cross-border deals as more members will feel encouraged to analyse and participate in more deals.
Orbit will have all the libraries available in a more intuitive way. Also, the registration of users and members will be more user-friendly, though more detailed, since the system requires more user/member's information for the benefit of the reports and to customise information.
Orbit will also provide reports and enable queries. It will allow endless opportunities for an in-depth analysis of the information available. As an example, a user could want to know who are the partners that closed more deals within the pharma sector over the last three years, with an average size deal above 20M€ and involving American buyers. This sort of query and many others will be possible. The system will also, and automatically, inform the member, right after uploading a deal, of the list of deals closed in that sector over the last years, the researches done and the members/users operating in the sector.
From this edition onwards, we will present a simple cool feature per edition. Meanwhile, we’re looking for your best comments/suggestions. Please send them to email@example.com . Don´t hesitate to share your ideas and suggestions.
Now, we would like to share the Chat. Not only will this tool allow a user to click on a photo to start contacting another user, but (most importantly) it will also enable linking that conversation to a specific deal (or group of deals). This feature is essential because we all know the amount of information lost on a call or over WhatsApp, Skype or other. With this chat, the user will have access to all the conversations related to a deal, and nothing will be missed.
In the next edition, we will present another cool feature; surely you will find it useful.
Tânia is the M&A Worldwide admin manager.
Q: Give us a summary of your academic and professional path until you got here.
A: I started with a degree in nursing in 2003. I practised for eight years until I decided to change career. I finished my MBA in 2012 and then worked for a small multinational recruitment company, opening up and managing a company branch in Portugal. Later, I became a business analyst, strategist and then operations manager for the main company based in Ireland.
Q: What are your duties and how can you help the members?
A: My primary duties in M&A Worldwide are member support, administrative issues, marketing and IT team assistance and daily support to the executive director. To support the members, I receive and arrange for solutions for any situation they need, mainly related to information and access to our intranet. Another ongoing responsibility is our database update and also any other issue that involves coordination with IT and MKT team.
Q: What projects have you been involved in since you arrived?
A: So far, I have been involved in the new Yearbook edition, the newsletters, ongoing member support and various admin projects.
Q: What difficulties did you encounter?
A: The main difficulties can be to try to support several activities at the same time and obtaining responses from so many members. However, this constitutes mainly a challenge that I enjoy. It has been wonderful to work with so many different people from all over the world and working with this great team.
Q: How do you evaluate this period with M & A Worldwide?
A: It has been a really great experience. The start was difficult due to the uncertainty a new project carries and the need to meet expectations. However, I have found that the incredibly supportive and positive environment within the team and the network are the essential ingredients to work out any solution. Now we are more prepared for the challenges to come and I’m looking forward to them.
Pedro Mol is an Aeternus Corporate Finance Consultant.
Q: Give us a summary of your academic and professional background
A:After studying for 1.5 years at a Dutch university, I transferred to UNCW in the USA to study and to play college tennis. I finished with my bachelor’s in international business and my MBA in Finance & Investments, for which I also studied for a semester in Valencia, Spain. Professionally, I worked for a Venture Capital firm in the US and EY Mergers & Acquisitions in the Netherlands before joining Aeternus in January 2015.
Q: How has been your experience in the M&A industry, so far?
A:I see a lot of differences between the American and the Dutch / European markets, regarding deals but also regarding mindset. The last few years have been increasingly strong for us, and I believe this is a great time to develop M&A skills as a young professional.
Q: What is the excitement about your job?
A:Attracting and retaining new clients, and consequently successfully structuring a transaction, is what I enjoy the most. In the process itself, I enjoy the negotiations and guiding my clients (emotionally) throughout the complete M&A process.
Q: How important is for you to get inspiration from other foreign M&A Worldwide members?
A:Thanks to my international background, I truly enjoy working with our international colleagues. Especially their sector knowledge can be very useful while working on certain projects. I believe we have a very strong network with quality partners that can make each other stronger by working together. This does not only help us but most of all, it helps our clients.
Q: Which phase of a deal process do you like the most?
A:There are two phases in the process which I enjoy the most:
1)Thinking about potential buyers/targets with the client; this means you truly have to understand the business and the market and know the players that are (trying to be) active in this particular market.
2)Negotiations - getting the most out of the deal for your clients while also thinking about the broader perspective of the transaction for both parties.
Q: Which fields do you consider need more training?
A:I think there should be more training in the M&A search process. Younger M&A professionals are usually good with excel and following procedures, but they are not always able to think strategically and to identify buyers/targets from other markets.
I also think there should be more training in sales/customer relationship management. Younger M&A professionals should learn how to attract and retain clients too.
Q: Tell us your best experience in the current job.
A:A few years ago, I was in the final phase of a long negotiation with our client and a financial buyer. The deal value was approximately €15 million, and in the negotiations, we were stuck in the last €50k. Both my client and the buyer did not want to move anymore, and the deal was very close to breaking up. I worked together with a colleague, and we decided to call both parties at the same time, bluffing them that the other party was willing to concede another €25k if the other was willing to do so as well. Then they both at the same time agreed to the deal, and we finalised the negotiations!