As experts in cross-border M&A, and having sold a significant number of companies to Indian, Chinese and other Far Eastern acquirers over the past few years, we were asked to contribute to a recent feature in Unquote, the specialist European private equity journal.
The article considers the sale of WCI Consulting to TAKE Solutions of India; Livingstone advised the shareholders of WCI, including private equity backer ECI Partners, on the sale.
Daniel Domberger, Partner at Livingstone, explains: “The relationship side of things is very important. Trade buyers in India and China may be willing to take part in a process, but they prefer to build a relationship that pre-empts that process and to deal one-on-one if possible”.
Sean Whelan of ECI agreed: “As TAKE were ultimately buying senior management, it was crucial they had a rapport. This doesn’t come overnight by issuing an investment memorandum on the desk and asking for a bid within a month.”
Another question the article considers is whether UK-based private equity houses should open their own offices in India and China:
“It depends on the goals”, says Domberger. “If a GP intends to be very operationally involved with a target and it is seeking or has business in China or India, then it can make sense for that GP to be on the ground. It will also depend on the volume of investments the house makes.” This is one reason it might make sense for LDC and Baird to have local presences. “Baird, for example, works closely with portfolio companies on manufacturing in China. If this is an important part of the business, then an investment from Baird, all other terms being equal, may be more attractive to a target than an equivalent offer from another private equity house.”