|Speakers shared their thoughts on how two firms can co-exist and achieve success together after an M&A deal |
During the last panel discussion at Vietnam M&A Forum 2018, experts and corporate executives shared insights on the post-M&A integration process. According to the panellists, the tricky part is to seek mutual understanding, which includes the ability to compromise and work together for the long-term.
Nguyen Thi Tra My, deputy chairwoman and CEO of PAN Group, emphasised that before signing an M&A deal, the company will set out very clear goals and focus on corporate governance at the other firm. As PAN Group believes human resources can make or break a company, it always takes a good look at who runs the target firm.
“We are always careful about the human factor. After an M&A transaction, we want to make sure that employees at both firms feel valued and at ease with the new combined company,” said My.
She gave an example of the merger between PAN Group and Vietnam National Seed Corporation (Vinaseed), where staff members at the latter firm are much more experienced than those at PAN. According to My, it took great efforts from both PAN and Vinaseed to retain these talented employees and provide them with job security and respect.
Another matter is creating added values for both sides after a deal gets inked. Deputy CEO of HDBank Le Thanh Trung said that in his 10 years of doing M&A, he could see that the greatest deals often start with a thorough selection process, to ensure mutual determination to triple or even quadruple the successes that each side used to have prior to the merger.
Trung referred to the takeover between HDBank and Dai A Bank, a small credit institution headquartered in Dong Nai province. According to the banker, HDBank had already looked at a few banks based in Northern Vietnam to acquire, but in the end it chose to shake hands with Dai A Bank. HDBank reckoned that Dai A, with its strong presence in the south-eastern Vietnamese economic zone, can help grow HDBank’s business exponentially.
“Dai A also had a good management team and a desire to work together with us to achieve bigger success. At the end, we swapped shares on a 1:1 ratio, and both sides were happy with the merger,” said Trung.
This view was shared by Dr Young-sup Joo, former Minister of Small- and Medium- Sized Enterprises and Startups in South Korea. According to Dr Joo, following a merger, South Korean companies can share technologies with their Vietnamese partners, and in return, the Vietnamese firms offer a strong brand presence in Vietnam and a dominant market share.
“Korean firms are eager to branch out to the world, and they look forward to partnering up with Vietnamese businesses and sharing hi-tech skills,” said Joo.
The former politician compared post-M&A integration to a married couple, where both partners are supposed to tolerate each other’s differences and lift each other to new heights.
Other experts, meanwhile, believe in the power of matchmakers, or more formally deal advisors. Rick Marchese, founder of Lores Loreno Private Capital, stressed that advisors can help the two sides find compatible partners, thus having a greater chance at post-M&A success.
“It is a red flag if any of the sides do not have an advisor, because an independent advisor can provide unbiased comments for both sides. For example, the two biggest roadblocks in an M&A are usually buying the wrong company or doing deals at the wrong price, and advisors can help with this,” said Marchese.
Renee Kha, managing director at VietValues Appraisal & Consulting, gave an example in which an investor takes over a land bank only to find out later that it has not been given full land use rights. The investor may feel tricked, and this situation could have been avoided with the help of an advisor, said Kha.
Nguyen Cong Ai, partner at KPMG Vietnam and panel moderator, concluded that a clear mutual strategy is vital for post-M&A bliss.
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