M&A is Key to Reaching Younger Market

Whether it is a food manufacturer acquiring a start-up that specialises in organic goods or a media company making an investment in app development, there is little doubt that a number of M&A deals are being driven by businesses wanting to make that shift to attracting a younger market.

Accessing new markets through M&A enables businesses to build a safety net, or ecosystem, to ensure they are protected when times get tough. But, more importantly, these investments guarantee growth even when the industry containing their core offering has slowed.

The perfect example of this comes from one of the biggest deals of this summer when Microsoft purchased LinkedIn for $26.2 billion. Not only did this deal provide a clear valuation of what a social media network is worth (something we did not have visibility of before), more importantly, it means Microsoft now possesses one of the world’s most influential digital media companies.

In a previous blog post we discussed the 2006 acquisition of Pixar Studios by Disney, which propelled the company into the 21st Century with a fresh approach that catered to the changing tastes of a modern cinema-going audience. Fast forward to 2016 and we are seeing businesses, particularly those in the consumer goods sector, look to M&A to grow and reach new customers.

Indeed, consumer goods businesses continue to grapple with the importance of ecommerce and the challenge of competing in this new world without having to rely too heavily on margin-squeezing giants like Amazon. These challenges certainly make M&A the ideal tool for growth, but also customer engagement, as demonstrated by Walmart’s $3.3 billion purchase of Jet.com, a shopping website less than a year old, and the $1 billion purchase of Dollar Shave Club by Unilever. Most recently, rumours have circulated that Honest, the personal care company co-founded by actress Jessica Alba, is gearing up for a sale following its recent valuation of $1.7 billion, with multinational manufacturer Proctor & Gamble said to be interested. With 40 per cent of its business coming from retailers and the remainder generated online, Honest is an attractive option for a business that uses traditional routes to market like Proctor & Gamble does.

By acquiring brands that resonate with a younger market, consumer goods businesses are able to reopen the channel of communication to their customers, having previously forfeited any direct contact due to their reliance on retailers.

With customer habits continuing to change and the organic growth of the consumer goods industry slowing, M&A provides an excellent way for businesses to increase profitability, reach new and younger audiences and remain relevant in what is still an incredibly competitive and challenging area.

With experience in a number of key sectors and representation throughout the Americas, Europe, Africa and Asia, Benchmark International can connect you with the right opportunity. To find out more, visit http://www.benchmarkcorporate.com.

Fintech M&A Quells Post-Brexit Fears

Despite uncertainty surrounding Britain’s decision to leave the European Union in June, the British Fintech sector continues to grow and a flurry of M&A activity made last month one of the sector’s busiest months yet.

The surge we saw in August comes on the back of what was a somewhat disappointing period directly following the Brexit vote. In July, only one deal of more than £100m in value was announced, in comparison to the typical average of three or four.

As the tech industry continues to boom, the specialist area of Fintech is enjoying a meteoric rise and is singlehandedly driving significant change within the financial services sector. Traditional banking platforms are now being disrupted by innovative, rapid advances in technology, and Fintech start-ups are benefiting greatly from investors wanting to share the success.

The rise of Fintech has also presented a threat to financial incumbents, who are now acknowledging the shift in the market and responding with their own investments and partnerships. Santander has awakened to this trend and now refers loans to FundingCircle, whereas in the US, the country’s largest banks have made serious investments in a large number of Fintech businesses. Such investments and partnerships are indicative of a ‘seal of approval’ from the financial world, as technology continues to dominate not only processes, but infrastructure, advisory and customer services.

Fintech M&A is forecasted to grow even further as we reach the end of 2016 and enter 2017, and the sector’s eyes will firmly be on the large software companies, who will be targeting emerging companies in an effort to add new technology to their service offerings and modernise in order to maintain a competitive edge.

One of the sector’s largest deals in Q3 of 2016 was the £140m purchase of Cofunds by Aegon, in a deal which secrured not only Cofunds’ Investor Portfolio Service, but also its retail and institutional business. Deals of a similar size are expected to be announced in Q4, with the rumoured £5.5bn flotation of banking software group Misys set to lead investments in the sector.

Technology is an evolving industry, and subsequently the sector’s appetite for M&A is far from diminished. Fintech M&A interest ranges right across the spectrum: from start-ups to large, renowned organisations, a vast number of varied businesses are continuing the sector’s deal-making momentum.

With experience in a number of key sectors and representation throughout the Americas, Europe, Africa and Asia, Benchmark International can connect you with the right opportunity. To find out more, visit http://www.benchmarkcorporate.com.

Post-Holiday Boost Predicted For M&A

Following a summer of uncertainty post Brexit, investors all over the world are returning from summers spent on the beach, ready to do some serious M&A business to close out the year.

We have seen a comparatively quiet year for M&A when you look at the figures for 2015, with deal values in the UK around half of the $215 billion that were announced at the same time in 2015 (Thomson Reuters data). On the face of it, the 2016 figures are disappointing but there are a number of factors that went into 2015’s record year. Plus, in September, it is far too early to rule out the year just yet. In fact, 2016 might be just getting started.

Oranges and apples

First of all, we need to address those 2015 figures. There is a good reason why the $5 trillion from 2015 deal-making will not be beaten this year. Analysts and investors have labelled these figures as ‘out-of-the-ordinary’ with deals finally picking up after a long post-credit crisis lull. There was also a size-able shift in the types of companies being acquired, from the more traditional manufacturing and industrial businesses which formed the backbone of the M&A market to telecoms, media and consumer goods businesses. As with most sectors that experience a rapid flurry of M&A activity, it has leveled in 2016.

Also, 2016 has seen the world get to grips with Brexit and a looming US presidential election, both of which, as well as other global events, have greatly impacted deal-making. Now that the dust has started to settle on the European front, M&A activity is expected to dramatically increase.

Big deals

Just when everyone thought it was all over for 2016, August saw the $14 billion mega-deal between Pfizer and Medivation announced causing investors all over the world to sit up and take notice. The long rumoured mammoth deal between the pharma companies not only signaled that big deals are back on the table, it suggested something that investors all over the world had been hoping was true; deals that were put on hold at the start of the year in light of market turbulence were starting to be, not just revisited, but closed.

Also, bankers have predicted that, while IPOs are expected to rise in the final months of the year, private equity deals may well see a welcome boost to see out 2016.

Exciting sectors

We live in a digital age and digital transformation, whether that is cloud, mobile, social or big data technologies, has already spurred on high-value deal-making so far in 2016 and does not look as though it is coming to an end any time soon with companies using M&A to accelerate their transformations.

In fact, technology M&A is expected to take off towards the end of 2016 in part because private market valuations have been stalling for start-ups, meaning they have become attractive targets for strategic buyers.

In short, major M&A activity is still expected for the rest of 2016 and those who are still trying to compare it with the unusually heightened levels in 2015 should remind themselves of the reasons why it is not a fair contrast.

With experience in a number of key sectors and representation throughout the Americas, Europe, Africa and Asia, Benchmark International can connect you with the right opportunity. To find out more, visit http://www.benchmarkcorporate.com.

Monster M&A Appetite for Recruitment Industry

The reported record levels of profit generated in the global recruitment sector in the last few years has worked as a catalyst for high levels of M&A activity. The great news for recruitment is that this appetite looks set to continue as we approach the final quarter of 2016.

Unsurprisingly, recent deals that have made the headlines have come from the major players in the market. August saw Randstad reveal its plans to buy global job site Monster Worldwide in a deal worth $429 million. The deal will see the group expand its portfolio of HR services as well as its ability to offer digital and technology services to candidates. It follows Randstad’s purchase of RiseSmart, a digital platform that helps departing employees find new jobs, in a deal worth $100 million, and Monster’s own acquisition of mobile job discovery app, Jobr in June.

Randstad’s biggest rival Adecco has also been busy on the M&A front, following its acquisition of UK-based Penna Consulting plc in a deal in the region of £105.3 million. The move was to boost Adecco’s presence in the thriving UK market, which is currently the third largest in the world after France and North America.

Not to be left out, the last of the ‘big three’ recruitment powerhouses, US-based Manpower Group has been active in the M&A market too. In a similar move to Adecco, Manpower Group had its sights firmly set on Germany through its acquisition of temporary business 7S Group in September 2015. The $100 million deal has already gone a long way to bolster Manpower’s position as the third largest staffing firm in the German market.

Aside from the industry’s key players, Japan’s Recruit Holdings has been on something of an M&A spending spree since raising a staggering $1.94 billion on the Tokyo Stock Exchange in 2014 and it is now embarking on a quest to become the world’s biggest temporary jobs provider by 2020. Its largest deal so far is the €1.61 billion purchase of USG People of the Netherlands earlier this year in a move that they hope will allow them to expand into the lucrative European market.

Indeed, current M&A activity in recruitment is dominated by corporates that are looking to expand their reach geographically or enter into new markets, so much so that such deals made up around 80 per cent of deal flow in the last five years. The next 12 months are set to be an interesting period for the sector with these corporates getting to grips with their new acquisitions as well as looking for more opportunities in a market where buyer and seller appetite remains strong.

With experience in a number of key sectors and representation throughout the Americas, Europe, Africa and Asia, Benchmark International can connect you with the right opportunity. To find out more, visit http://www.benchmarkcorporate.com.

Will 2017 Be A Battle For Media M&A?

Media M&A has picked up significantly over the last few years in line with the structural changes to the industry. With the increasing development of technology that is now readily available to consumers has come a growing appetite to digest media through a number of channels.

In today’s world the power of print is dwindling, and virtually all newspapers and magazines now engage their readership through apps and, in some cases, subscription websites. On demand television and live streaming have seemingly replaced the traditional television set, and advances in technology development will bring about even more channels for consumers to view and read media in the near future.

With that in mind, a number of industry experts are calling for traditional media companies to consider their M&A strategy in order to stay ahead and not get left behind as the media industry continues its momentum of progress. Arguably, these traditional organisations that have not yet expanded into other channels may be at risk of being bought in a wave of consolidation if they do not think proactively and acquire up-and-coming, innovative media start-ups.

As the future of these businesses ultimately hinges on their appetite, or attractiveness, for M&A, forecasters predict that 2017 is set to see a media M&A frenzy. Rumoured activity include Apple’s potential deals with either Netflix or Time Warner, and the Walt Disney Company’s talks with Vice Media, of which it already owns an 18 per cent stake, while Paramount Pictures remains hungry for a strategic investor that will build its digital capabilities.

While next year is tipped to be one of the most successful years for media M&A yet, quarters one, two and three of 2016 have already producing some significant deals for the sector, including:

  • IBM’s purchase of UStream, the live streaming video service, for $130m. The technology giant’s acquisition is one of the year’s largest transactions, indicating the growing dominance of live streaming technology.
  • Comcast’s $3.8bn acquisition of DreamWorks Animation in Q2. A comparatively small acquisition for the media conglomerate, but an important addition to strengthening Comcast in the animation market.
  • Warner Bros. acquisition of Korean Streaming/Subscription Video on Demand (SVOD) service DramaFever for an undisclosed figure. An influential deal in the Asian market which will pave the way for Warner Bros. to launch new over-the-top services.
  • Dalian Wanda Group’s purchase of Legendary Entertainment for $3.5bn in Q1, and the following announcement of the Group’s $1.1bn bid for Carmike Cinemas. The largest China-Hollywood deal to date, the acquisition of Legendary Entertainment significantly expands Wanda’s presence in global entertainment. The Carmike acquisition, through Wanda-owned AMC, will create the world’s largest cinema chain, further extending Chinese influence in the film industry.

 With experience in a number of key sectors and representation throughout the Americas, Europe, Africa and Asia, Benchmark International can connect you with the right opportunity. To find out more, visit http://www.benchmarkcorporate.com.

Germany on track to M&A success

In the first week of September, German companies announced M&A deals amounting to $72bn – a significant contribution to the country’s global share in M&A, which has now doubled.

So far in 2016, German organisations have been linked to 8.1 per cent of M&A deals across the world. This makes 2016 the most successful year for German M&A since 2002, and almost triples the country’s global M&A market share from this same time last year. Interestingly, where German deals have continued to grow year on year, deals across the rest of the world have fallen by 27 per cent. So, what are the Germans doing so well?

Certainly, economic factors have contributed. Interest rates have been incredibly low in Germany, and the country’s large corporate organisations have access to plenty of cheap financing. In particular, German businesses have completed a number of deals with Chinese companies, who also continue to have a stellar M&A year. Over the last few years German-Chinese relations have evolved dramatically, and since 2002 China has been Germany’s second largest export market outside of Europe and, at present, Germany is China’s largest European trading partner.

While German M&A continues its upward trajectory, the German government has, this month, put in place a bill that will amend the criteria that determines whether a transaction is subject to German merger control. The new bill will screen deals that are unlikely to result in anticompetitive effects, and therefore should not be subject to costly and time-consuming procedures. The changes will seek to implement the more effective regulation of deals, however experts suggest that they are unlikely to derail any future transactions.

Germany is set to have one of its most positive M&A years to date, and all factors, from its economy to its foreign relations, appear to be aligned to support its deal successes. In addition, the evolving attitude of German organisations is significantly contributing to the record deal announcements; it is speculated that Siemens may separate its healthcare activities from its main organisation, while the industrial group ThyssenKrupp is expected to completely split its steel-making division. This divide and conquer strategy is strengthening German businesses and presenting them as far more appealing prospects for M&A.

With experience in a number of key sectors and representation throughout the Americas, Europe, Africa and Asia, Benchmark International can connect you with the right opportunity. To find out more, visit http://www.benchmarkcorporate.com.

China Sets Sights on M&A Gold

Chinese Olympians managed to scoop a total of 26 gold medals at the Rio Olympic Games. Although the country’s medal haul was not enough to match its astonishing tally in Beijing in 2008, China finished a commendable third place behind the US and the UK in the medal table.

While being usurped by teams USA and GB may have been disappointing for China, when it comes to M&A the country has its sights firmly set on gold, particularly on sporting asset deals. Sporting M&A continues to score highly and Chinese investors are completing a steady stream of deals in the sector. While the US still leads in terms of sector deal volume, with a recent acquisition of the Ultimate Fighting Championship (UFC) for an astonishing $4bn, we all know that M&A is a marathon, not a sprint.

China’s influence on the world’s sporting stage is gaining more momentum and analysts suggest the number of Chinese buyers among the many bidders for UFC was influential in driving the record setting price paid for the mixed martial arts franchise. In addition, Chinese President Xi Jinping has openly voiced the country’s ambition to host the FIFA World Cup in the near future, having spent several years building a convincing campaign through China’s investment in international football.

Here are the sporting deals that are leading China to pole position in M&A:

  • Wanda Group – $51m investment in Club Atlético de Madrid in 2015. China’s first major deal with a top European football club.
  • China Media Capital and CITIC – in Q4 of 2015 both investors acquired stakes in Manchester City Football Club for $400m.
  • Suning Holdings Group – in June 2016 the electronics retailer completed the $306.5m acquisition of Inter Milan, following its 2015 purchase of local Chinese Super League team, which it subsequently renamed Jiangsu Suning FC.
  • Shanghai Jinxin – the investment fund announced in May 2016 its agreement to acquire the world’s top soccer rights agency, MP & Silva Ltd, for $1bn. The company distributes sports programming to over 200 broadcasters across the world, including Premier League football and Formula One.
  • Recon Group – July 2016 saw the Chinese conglomerate announce its intention to acquire Aston Villa in a deal worth $101m.
  • Fosun International – another Chinese conglomerate to acquire a British football club, Fosun purchased Wolverhampton Wanderers in July 2016 for $59.7m.
  • Alisports – owned by the Alibaba Group, Alisports signed a partnership deal with The National Football League (NFL) in quarter one 2016, in an attempt to create a new market for American football in China. In the same period, Alisports announced a new corporation with World Rugby.

Sports M&A shows no signs of slowing down and Chinese investors are at front top of the pack when it comes to deal making.

With experience in a number of key sectors and representation throughout the Americas, Europe, Africa and Asia, Benchmark International can connect you with the right opportunity. To find out more, visit http://www.benchmarkcorporate.com.