advised a European company on buying out the majority in a privately owned
Our initial mandate was to explore the alternatives of an acquisition or a
greenfield entry, the latter giving us a clear understanding of the cost
structures of the industry. The client's preferred route to invest in India was
through acquisition, and we identified and reviewed a number of potential
candidates, focusing on a company based in South India.
Valuation expectations were high on the vendors' side, and we sustained the
discussions over a prolonged period, eventually reaching agreement some 12
months after the initial contact. We assisted in a detailed due diligence and
the obtaining of regulatory consents. The process gave the client valuable
experience in a new market.
Subsequently we have assisted the company in a number of issues related to
financing and personnel.
Indian vendors do have high expectations of value, based on the growth that
India is experiencing, and there are many cases where their interest in price
can outweigh the long term commercial interests of the business – lengthy
negotiations can often have damaging effect on the underlying business. It is
also important that the buyer understands the negotiation dynamics and that
expectations as to the outcome are well managed.