The deal market is now driven by acquisitions of smaller companies for enhancing capabilities compared with yesteryears when transactions were mainly closed for revenue accretion, said panellists at News Corp VCCircle Mergers & Acquisitions Summit 2017.
While deals are closed for different purposes, the string-of-pearls strategy is considered less risky, they said.
Hundreds of deals have been closed in the past several years by global players such as Amazon and Google to enter new areas of business, said Sunil Mishra, group chief strategy officer of PropTiger.com, Housing.com and Makaan.com. PropTiger’s acquisition of Housing is an example of a real estate broking firm entering the classified space, Mishra said.
Anirudh A Damani, managing director, Artha India Ventures, said some deals such as Future group buying FabFurnish or Mahindra Group buying FirstCry are considered successful than others such as Ola buying TaxiForSure or Snapdeal buying FreeCharge. These acquisitions are actively funded by investors who have a strong belief in the scope of the consumer internet space, Mishra said.
Padma Parthasarathy, senior vice president and global delivery head at Tech Mahindra, said Tech Mahindra’s acquisition of Satyam resulted in several challenges, including legal issues, class action suits and intellectual property violations. However, the integration became successful due to the active collaboration of both the firms. In order successfully close a deal, several challenges, including cultural differences, need to be ironed out, she added.
Chandru Chawla, head - corporate strategy, M&A and new ventures at Cipla, said M&A itself cannot be a strategy but is an element of the overall strategy. Larger impactful deals take place at a later stage compared with early- or growth-stage deals. Cipla is witnessing several deals where companies are built from an exit perspective, Chawla added.
Shafaq Uraizee Sapre, executive partner of Lakshmikumaran & Sridharan, said the role of lawyers in deal-making is very different now. “Previously, lawyers used to enter transactions at the consummation stage which is not the case now,” he said.
