Oh baby it’s a Wild World

25.9.2019

A common question from our clients looking to sell or raise capital is whether foreign investors should be considered. When the answer is yes, the obvious follow up question is how can we get access to those investors?

Since the beginning of 2018, 908 transactions have been completed in Australia over USD 5m. Of these, 58.3% involved an Australian buyer, and 41.7% an international counterparty. This can be further broken down as investors in the Americas (15.6%), Asia (12.7%) and Europe (12.6%), with the balance from Africa and the Middle East1.

The reasons for approaching foreign investors include:

  • Price. Cross border transactions often attract premium pricing, as investors pay a strategic premium to enter new markets, listed companies take advantage of pricing discrepancies (where trading multiples are higher in their country, enabling EPS accretion), or where certain industries are better understood (eg. Silicon Valley companies investing in technology businesses that aren’t well understood in their local market);
  • Experience. Where companies are looking for an investor rather than an exit, foreign investors can offer access to existing distribution channels, experience expanding in new regions and navigating different legal and regulatory systems, as well as capital;
  • Numbers. Looking globally increases the number of potential investors, improving the chances of finding a good fit and helping to create competitive tension.

Of course, not all companies are suitable for cross-border transactions. Companies that are too small, in industries that don’t align with other countries, or where there is limited strategic benefit from expanding cross-border, are more likely to find a home locally.

Turning then to accessing foreign investors, this is clearly a crucial piece of the puzzle. While it’s easy enough to find a name on LinkedIn or a switchboard number on the website, there is no substitute for getting a warm introduction to the right person.

InterFinancial is the Australian partner of Clairfield International. Clairfield is a partnership of 35 independent offices across the world specialising in mergers and acquisitions (over 650 transactions completed in the last 5 years). Offices are located in Europe, Asia and both North and South America. Of those deals marketed internationally though Clairfield, approximately 80% of transactions were completed with an international counterparty.

As an example of the power of this partnership, last week we were looking for a contact for a Swedish investor. We called our partner in the Netherlands and found the target is located just two offices away on the same floor and has regular lunch dates with our partner. This allowed us to get a timely, detailed, and highly confidential response from the decision maker, something that simply wouldn’t be possible with a “cold call”.

Local knowledge is also invaluable once the transaction is in motion. Having someone on the ground who understands the local legal system, regulatory environment, customs, who speaks the same language, and who often has an existing relationship with the investor, helps to remove potential barriers to a transaction and improves the chance of success for all parties.

In all, cross border transactions can be glamorous and lucrative for business owners, but access to investors and local knowledge is key. For more information on Clairfield International, see http://www.clairfield.com/en/.

  1. Mergermarkets.

Authors: Michael Kakanis & Mark Steinhardt

24.1.2020

Welcome Brent & Lachlan

We are delighted to formally announce the addition of Brent Wall (Associate Director) and Lachlan O’Rourke (Analyst) to the InterFinancial team.  Brent has joined the team full time after working as a Consultant for IFL in 2019, and was instrumental in the recently announced National Veterinary Care transaction. Brent has over 20 years of experience in […]

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22.1.2020

Sector Dashboards January 2020

Our monthly dashboards cover seven key sectors of focus, with each sector built up by several subsectors that cover similar companies based on; products, end markets, services, assets classes or other characteristics. The publications include all companies listed on the Australian Stock Exchange that are actively traded and covered by research analysts, and hence have […]

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22.1.2020

M&A 101 – back to basics

Being a new year, we thought it would be timely to provide a refresher on some key M&A concepts. Of course, there are a long list of things that go into making a successful transaction, but the following are some of the most important tips from our team to consider before entering a transaction process. […]

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17.12.2019

Sector Dashboards December 2019

Our monthly dashboards cover seven key sectors of focus, with each sector built up by several subsectors that cover similar companies based on; products, end markets, services, assets classes or other characteristics. The publications include all companies listed on the Australian Stock Exchange that are actively traded and covered by research analysts, and hence have […]

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16.12.2019

IFL advises National Veterinary Care on sale to VetPartners

ASX-listed National Veterinary Care Ltd (NVL) has announced that it has entered into a binding Scheme Implementation Deed with VetPartners. VetPartners is set to acquire 100% of the issued share capital of NVL by way of scheme of arrangement (Scheme). Under the terms of the Scheme, NVL shareholders will be entitled to receive AUD 3.70 […]

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26.11.2019

Sector Dashboards November 2019

Our monthly dashboards cover seven key sectors of focus, with each sector built up by several subsectors that cover similar companies based on; products, end markets, services, assets classes or other characteristics. The publications include all companies listed on the Australian Stock Exchange that are actively traded and covered by research analysts, and hence have […]

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22.11.2019

What’s in a multiple?

Every month we get questions about the earnings multiples we publish in our Sector Dashboards. People want to know which sector their business fits in, how they compare to the benchmark, and taking a step back – what do the multiples even mean?? Accordingly, this month we thought it would be worth giving a brief […]

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23.10.2019

Sector Dashboards October 2019

Our monthly dashboards cover seven key sectors of focus, with each sector built up by several subsectors that cover similar companies based on; products, end markets, services, assets classes or other characteristics. The publications include all companies listed on the Australian Stock Exchange that are actively traded and covered by research analysts, and hence have […]

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22.10.2019

Clairfield partners gather in Birmingham

Clairfield held its partners meeting in Birmingham last week with best practice forums, workshops on the building products, technology, services, and healthcare sectors, as well as some expert views on Brexit. The highlight of the meeting was the reception held at the Birmingham City Council House, a beautiful historic building that serves as the seat […]

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21.10.2019

European Chemicals & Plastics Report

Clairfield’s UK partners note that M&A activity in the chemical and plastics sector remained steady in 2018 and forecast a bump in activity in 2019, driven by smaller, specialist deals in a fragmented market. The Clairfield industrial team is led by Chris Gregory. Read the full report here: 2019H1 European Chemicals and Plastics

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