Foreword

Asia can be a tricky place to do business. With its multitude of cultures and languages coupled with the fragmented nature of its markets and the diversity of its customers, the risks here are incredibly varied. The potential pitfalls are many, whether for a company intending to expand into Asia or an Asian company that is hungry for growth via acquisitions. Having run Asian businesses for several Western companies in the past decade, I have had direct experience with the challenges of operating in the region and, in particular, doing deals.

Yet it is hard to imagine a multinational corporation that would not have “expansion in Asia” somewhere near the top of its list of priorities. Indeed, after the significant downturn in most Western markets, Asia is the only sustainable growth story. Besides being the home of manufacturing for most of the world’s products, domestic demand in Asia has also seen a step increase as urbanization grows and more Asians get wealthier. This presents the perfect environment for game-changing acquisitions.

With all of these aspects in mind, this excellent and accessible guide to mergers and acquisitions (M&A) in Asia by Vikram Chakravarty and Chua Soon Ghee is timely, essential reading for anyone either within Asia considering growth through acquisition or outside Asia wondering how best to get in. With the distinction of being the first book on the subject over the past six to seven years, coinciding with a time when Asia has been on the rise, this book is a practical “thought map” to guide your M&A strategy for the region, punctuated with well-placed case studies that offer a quick grasp of the key issues.

In the first part of the book, the authors make the case for how a wave of Asian M&A will define the next decade and how companies that ride this wave will emerge bigger and bolder than ever before. Statistics, examples, case studies, and market comparisons give weight to this proposal. In the second part, the authors go on to identify what it takes to win in Asia and give a step-by-step guide on how companies can get it right. Years of consultancy experience, coupled with high-quality analysis, have resulted in conclusions that are compelling and include insights that corporations will do well to consider and adopt.

The authors take the opportunity to share their extensive analysis of emerging prospects for M&A in the government-dominated sectors of Asia. Their insights into the need for more acquisitions in these sectors, both where it is appropriate and where it never will be, give both executives of state-owned enterprises and those seeking to do business with them a great basis for where their strategies should be pitched.

As Vikram and Soon Ghee point out, A.T. Kearney research has shown that fewer than half of all M&As are successful and only 25 percent of mergers in Asia deliver on their value promise. However, the right combination can reap great rewards. As leader of the global integration of Dyno Nobel following its 2005 acquisition by Orica, I know firsthand how significant value can be created if a company can get its integration and synergy delivery right. Techniques such as the 100-day plan and establishment of a clean room described in the book have been found to be critical in expediting the entire integration process. Readers will be able to relate to issues around leadership and management structure, communication challenges, seamless transfer of customers, cultural integration and the like. The difficult subject of managing cultural differences is explained in depth. Identifying and managing all of these issues and many others is essential in a good M&A implementation strategy and is dealt with in an excellent manner, with real-life examples and innovative suggestions on how to avoid pitfalls and accelerate value capture. Research has also shown that most of the value of an integration exercise needs to be captured in the first 12 months, failing which it becomes an uphill task to deliver the promised benefits. The preparation and planning described in the book are therefore vital to success.

Vikram and Soon Ghee’s message is clear. The time for M&A in Asia is now. Asian companies have gained stature and confidence, and dealing with them from both within Asia and outside requires unique skills and techniques. This book provides the insights necessary to help achieve that winning combination, an understanding of why M&A in Asia is different, and then strategies for leveraging those differences to add value and opportunity to your deals. It is a compelling read, and I recommend it to anyone considering M&A in Asia. Enjoy the book and equip yourself to achieve outstanding, value-creating deals.

Sanjay Dayal

Chief Executive, Asia

BlueScope Steel Ltd.