Boutique M&A firms gaining ground

November 22, 2022 | 19:00
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The boutique M&A advisory model will be an important piece of the puzzle to help businesses and investors embrace the current wave of opportunities in Vietnam more effectively. Founder & CEO of ASART Binh Le explains the key aspects of this oncoming trend.

Merger and acquisition (M&A) activities is one area marking the most important transformation of the majority of businesses, whether with the goal of conquering new markets, gaining market shares, restructuring, divesting, or raising capital for growth. Given their financial and strategic significance, deals do not often occur more than once or twice in a typical business life.

Founder & CEO of ASART Binh Le
Founder & CEO of ASART Binh Le

Most business owners, major shareholders, or chief executives who do not have a background in M&A will not have the necessary in-depth experience to effectively lead this process. Even in the case of having the right experience or having an in-house M&A team, it is still a significant hurdle, if not to say an impossible task, as M&A is a process that not only needs a few people to perform, but also intelligent direction and skillful execution. The full-time coordination and support of a sophisticated team of advisors is essential to achieving a successful transaction that can maximise value for both sides of the deal.

The role of M&A advisors is therefore distinctly acknowledged. M&A advisory services are currently provided by four classic models: investment banks, audit firms, brokerage companies, and boutique firms. Each model has its own strengths and weaknesses.

However, the rise of boutique advisory firms which bring specialised and customised management consulting, investment management, banking, or niche strategic and financial services – has become an interesting topic over the past few years.

Bespoke branding

Boutique advisory services can usually identify critical issues quicker and complete transactions with better results. Transactions with reputable boutique firm’s presence are also being perceived more positively, and accumulated profits for both parties are also higher.

The position of an independent M&A advisor is therefore steadily enhanced across markets as they bring unique and elite values.

So, how can these boutique firms with minimal scale can execute deals of such complexity and high value? The answer is largely due to the background and experience of their leading generals. These generals are often specialised and came from giant investment banks or consulting firms.

M&A is an industry where firms with long-standing names and with tens of thousands of employees often have more advantages in terms of brand awareness. However, only a small percentage of employees in these giant machines have the sufficient knowledge and hands-on experience with M&A. These brand-name advantages, therefore, are being challenged by more reliable boutique firms as the aforementioned generals in these boutique firms often play a direct management role and actually perform these transactions.

So why did many of these generals give up their desirable careers at leading multinational firms to build their own brands? Well, most of them want to overcome the limitations of the current models.

M&A advisory at leading multinational firms, in many cases, is a secondary product and service besides their core businesses such as financial products, proprietary trading, securities, insurance, auditing, tax, and accounting.

With undeniable strengths such as a long history, brand name, and scale, these conglomerates on the other hand endure significant limitations such as potential risks of confidentiality, conflicts of interest, a lack of adequate and specialised professional, and a lack of flexibility. These limitations also come from the spread out of services and pressure to cross-sell other services.

Unveiling true intentions

The strength of boutique advisors is established by overcoming the above limitations. The boutique model focuses solely on M&A expertise, and all levels are closely coordinated and managed. A refined group of professionals in their network allows them to assure their clients of the right talent for the deal’s requirements while ensuring an effective and clear level of communication, optimal execution, and costs are worth the increased benefits that arise from this approach of doing deals.

With impressive growth rates over the year, Vietnam in particular has become an attractive destination for over a decade. M&A activities were previously a new and confusing concept in Vietnam, but have now become more practical and exciting. Nevertheless, many Vietnamese companies are still unsure when facing important decisions in raising capital and receiving investments, especially starting with choosing a suitable advisor.

Although the M&A advisory practice in this country is still very new, it shares many similarities with the general trends of the global landscape. In Vietnam, ASART is a pioneer in boutique M&A advisory services, founded in 2017. As a committed advisor in the M&A industry in Vietnam, I observe that there are still many difficulties and unmet client needs. M&A advisory services offered by multinational firms are still led mostly by regional personnel who do not have sufficient understanding of the local background and market, or by local personnel who lack hands-on M&A experience. Brokers or freelancers also often cause misunderstandings about the professional nature of this industry.

Our mission was to build a bespoke firm focused on M&A transactions and fundraising, pioneering combined principles of international standards, local insights, sustainable growth, and transparency. The boutique model is not perfect, and it has its own limitations; however, these limitations outweigh the benefits, and this model fits well with the current market background and culture in Vietnam.

One of ASART’s clients, a large multi-sector conglomerate and a long-time investor in Vietnam, stated that ASART helps them understand not only the details of specific projects but also trends and movements of certain industries such as healthcare and consumer market.

There are many well-known multinational advisory firms that bring many projects, but what clients really need is not the general information and trading conditions but rather the true voices and intentions of business owners. The Vietnamese are talented and proud people but some can be hesitant to share their true thoughts. ASART’s professional independent team aims to help open communication with clients.

Vietnamese businesses as well as investors need to be clear and honest in their strategies and financial management in expanding their business activities sustainably. Divesting, growing, or asserting positions by M&A is a rosy path full of thorns. Every step of growth require the right calculation and a clear vision – otherwise, there will be regrets and costly mistakes.

When an investor or a conglomerate speaks with any company, they often bring with them an experienced team to study and establish their position. Business owners and leaders also need a comparable team to be on par at the negotiating table. And that is where boutique M&A firms like ASART can really grasp the potential here in Vietnam.

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By Binh Le

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