Ingredients to unlock opportunities in M&A market
Philippe Lajat is one of the advisors in the M&A sector who still wants to keep an optimistic view on the future of the merger and acquisition market in Romania. There are three ingredients that could unlock opportunities in local M&A landscape.
First of all, Lajat says, we will see more force-feeding deals of large Romanian entrepreneurs that will decide to partially or totally relinquish their business.
Second of all, there will be deals driven by financing or refinancing considerations. The global downturn of the economy has deteriorated companies’ cash flow generation, putting pressure on how to face borrowing commitments or inducing increased needs for financing. “However strange as it may seem, liquidity currently may exist but on a very selective basis. This is confirmed by some of the most important and largest lenders in the market place. Depending on their historical risk policy and current exposure, some lenders will reconsider bringing financing solutions to projects. Again, lenders’ decision will be based on how convincing business cases and financial analyses are as well as on relationship issues. That is why we stress preparation phases to entrepreneurs (strategy assessment, scenarii analyses). This also contributes to illustrate management quality”, the Ernst & Young’s M&A partner adds.
Third, trust and confidence. The lack of trust accelerated the crisis. Confidence among business partners, trust in the (financial) system need to be restored.
“In the meantime, most of our clients are focusing on securing their present and their assets. And we clearly invite them to do so in the current difficult environment”, Lajat said. He had met with entrepreneurs who decided to manage their asset portfolio with pragmatism, assessing what was core and not core to their business, where did management bring value and where less. “They clearly ask for support and they value our capacity to assist them on how to evaluate the situation, how to be the most efficient, and how to best allocate scarce financial resources to their group’s development / sustainability”.
First of all, Lajat says, we will see more force-feeding deals of large Romanian entrepreneurs that will decide to partially or totally relinquish their business.
Second of all, there will be deals driven by financing or refinancing considerations. The global downturn of the economy has deteriorated companies’ cash flow generation, putting pressure on how to face borrowing commitments or inducing increased needs for financing. “However strange as it may seem, liquidity currently may exist but on a very selective basis. This is confirmed by some of the most important and largest lenders in the market place. Depending on their historical risk policy and current exposure, some lenders will reconsider bringing financing solutions to projects. Again, lenders’ decision will be based on how convincing business cases and financial analyses are as well as on relationship issues. That is why we stress preparation phases to entrepreneurs (strategy assessment, scenarii analyses). This also contributes to illustrate management quality”, the Ernst & Young’s M&A partner adds.
Third, trust and confidence. The lack of trust accelerated the crisis. Confidence among business partners, trust in the (financial) system need to be restored.
“In the meantime, most of our clients are focusing on securing their present and their assets. And we clearly invite them to do so in the current difficult environment”, Lajat said. He had met with entrepreneurs who decided to manage their asset portfolio with pragmatism, assessing what was core and not core to their business, where did management bring value and where less. “They clearly ask for support and they value our capacity to assist them on how to evaluate the situation, how to be the most efficient, and how to best allocate scarce financial resources to their group’s development / sustainability”.