Starkenburg

In 2023 it’s time to prepare for success and to succeed prepared. M&As test a company’s willingness to change.

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After an incredibly active year 2021, Mergers and Acquisitions have slowed globally in 2022, and many companies in India seeking international partners are faced with the question of whether to go ahead or delay their expansion plans. They have good reason to thoroughly examine their options, especially when looking to Europe.

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The war in Ukraine and the resulting energy crisis have sparked unprecedented inflation and rising interest rates which skyrocketed costs for companies in industries from production to financing. In short, the world of finance and commerce has become even more unpredictable and seemingly impenetrable. Yet this sudden economic crisis also presents great opportunities for regional Southeast Asian companies to grow their businesses if they play their cards right. With the assistance of an experienced global consultant, this can become a winning strategy.

M&As are an important part of the growth strategies for many companies in the region. M&As permit organizations to gain knowledge, products, technologies, or capabilities to extend their business markets and their business power. Southeast Asian and European companies have a keen interest in finding partners in each other for international expansion. The present economic crisis in Europe therefore not only presents tough challenges but also real opportunities for Indian companies to go international.

For an M&A to be ultimately successful, it is crucial to prepare for the entire process from the start. A solid strategy based on the comprehensive analysis of strategic, financial, and sociocultural realities provides a strong framework for the choice of the right partner, the actual merger, and the following integration phase. Simply put, a company should actively seek out the right deal, using all the resources available. Of course, this is easier said than done. And when it comes to cross-border M&As the challenge only grows and many business owners who are ready to expand their business internationally wisely engage external experts to do the job. ?Starkenburg, a company based in Singapore, specializes in such complex M&As for countries in Southeast Asia, Germany, and the EU.

A holistic strategy derived from the detailed investigation of all aspects of a merger is essential for generating the desired post-merger growth and expansion. “In our experience, there is no successful merger without both sides coming together driven by the desire to make it work,” says Starkenburg founder A. Selvadurai Hallman. And he sees it as one of his major tasks to generate this desire. After more than 25 years of operating in India, Southeast Asia, Germany and the EU, Hallman has identified the key factors which need to be considered in an international merger and it is often a clash in culture that causes the biggest problems because, “many do not pay enough attention to the soft factors, when in fact they play into every other factor.” Hallman is aware that a sound strategy needs to start with highly specific expertise. For this, he built a team of advisors, diverse and committed, with years of experience in different industries and countries. These experts are uniquely qualified to analyse the circumstances of each company and country and assist in developing a tailor-made merger strategy. Starkenburg’s first-hand knowledge and personal relationships are real and hard-earned, and this, Hallman is convinced, makes the difference between a merger that looks good on paper and a merger that will work.

The initial analysis which includes the due diligence phase is crucial, not just spent to facilitate the merger, but also to set up actions that come after the deal. The one thing successful mergers have in common is that they diligently set clear goals of integration and synergies before the deal was finalized. This phase is also the time when outside expertise is most valuable because the company culture, policies, communication patterns, talent management, and behavioural rules are already an integral part of the company and alternative ways are hard to imagine. But in a merger, a judgment-free evaluation of best practices and ways to combine existing forces are essential for success. When these changes are openly communicated and supported before and during the integration phase a profitable merger will be the reward. Attending to details that can have a big impact, in the long run, is therefore imperative.

One such example is the decision-making style in a company. The way decisions are made is ingrained in a company’s culture, but often not considered in the proceedings for a merger. This is especially true for German SMEs and family-owned businesses everywhere. Yet to get the different styles and methods to cooperate and create a mutual understanding is essential for a successful implementation of the merged new company. Getting there requires a deep understanding of the cultures and where they are coming from as well as the knowledge of what it takes to bring them together. Starkenburg has assembled a network of experienced local and international experts who have first-hand intimate knowledge of these styles and the international experience to connect them. A strategy that is based on real procedures and processes without bias for or against one company will bring forces together and create synergies which turn into the driving forces in a successful merger. Starkenburg considers this a key point for any successful acquisition or merger and the lack thereof the most frequent reason for failure. ?If you get on the wrong train, no matter how fast that train goes, you will end up at the wrong destination “, says Hallman. What sounds quite simple is an endeavour that carries treacherous risks. When Daimler met Chrysler there was widespread consensus that this match would be hugely successful. But when they merged in 1998, success did not come. Instead, it became another story of a miserably failed merger in recent history. The assumption that American and German business and management and company styles cannot be very different from each other was at the root of the failure. The business world has learned a lot from this episode.

But even today, globalization is often overestimated as a creator of synergies. Many believe that all managers and companies operate within the same international business culture and the analysis of facts and figures is enough. So why not go to Germany or the EU and just do the deal? Some have paid dearly- quite literally- for this belief. M&A experts like Starkenburg insists from the start that both sides in a merger or an acquisition work out if and how both companies will create a mutual strategy, even if one side is only interested in technical knowledge or other seemingly formal procedures. With a deep understanding of formal and informal aspects and how they intertwine a clear strategy can be worked out and executed for the effective transition into a successful global company.?