" Next year, there would be a dip in the activity due to the continuing credit market tightness and uncertainty in the global economic scenario. The rationale for mergers and acquisitions in India most likely would be the desperate sale by the needy companies to strong companies," said Jagannadham Thunuguntla, equity head of Nexgen Capitals, the merchant banking arm of brokerage firm SMC Global

1. Fewer mergers in 2008 as companies hold on to cash
Published: December 23,2008
New Delhi
Not so long ago, it was highly fashionable to raise a toast to mergers and acquisitions, but champagne
was mostly banned from boardrooms in 2008 as business expansion became a bad idea in an era of
economic uncertainty.
The total number of deals announced till December 15 stood at 445 and its combined value was USD
30.72 billion, according to global consultancy firm Grant Thornton said. It hardly a match to last year&'s
676 deals worth USD 51.11 billion.
Though the pace of global Market is likely to slow down in 2009, largely due to the lack of credit, volatile
equity markets and weak confidence among companies to pursue transactions, an unprecedented
decline in valuations would spark some opportunistic buying, industry experts say.
Deal Activity in India in 2009 would no doubt be impacted by the global economic slowdown. Key
challenges are the lack of financing available for outbound transactions, and continued unreasonable
valuation expectations in the private markets,auditing firm PricewaterhouseCoopers Executive Director /
Partner, Transactions Group Sanjeev Krishan said.
Due to the credit crunch across the globe, many companies would find it difficult to sustain themselves,
and this would lead to an opportune time for other companies with strong balance sheets and availability
of liquid cash balances to do aggressive shopping, market analysts said.
quot; Next year, there would be a dip in the activity due to the continuing credit market tightness and
uncertainty in the global economic scenario. The rationale for mergers and acquisitions in India most
likely would be the desperate sale by the needy companies to strong companies,quot; said Jagannadham
Thunuguntla, equity head of Nexgen Capitals, the merchant banking arm of brokerage firm SMC Global.
However, amid the global economic slowdown, opportunity surely exists for Indian companies that have
cash or who can organise finance and be able to leverage on this opportunity, industry experts said. One
interesting factor that has surfaced in the present scenario is the fact that despite the slowdown in the
global economic scenario, the Asia Pacific region is showing signs of resistance.
According to data compiled by Grant Thornton, of the total cross border deals, there were 193 outbound
deals wherein Indian companies acquired businesses outside the country with a value of USD 13.15
billion and 81 inbound deals where international companies or their subsidiaries acquired Indian
businesses with an announced value of close to USD 12.48 billion.
Krishan further argued thatquot;it is critical to understand that growth plans cannot be deferred forever and if
we have to maintain our overall growth numbers, there would be a need to feed businesses with capital,
technology, management expertise, which would result in M&A activity.quot;
Similar views were echoed by Grant Thornton Partner, Specialist Advisory Services CG Srividya said:quot;
Irrespective of the volatility in economy and market. After several years, we have seen a significant
amount of high value inbound deals, showing the increasing interest in and the attractiveness of Indian

2. businesses to international companies.quot;
Meanwhile, KPMG India Corporate Finance Group Executive Director Gaurav Khungar has also
reiterated similar sentiments and said:quot; Overseas companies will increasingly prospect opportunities in
India. However, given the global liquidity issues, the gestation period from beginning discussions to
completing a transaction will be much longer.quot;
Indications are that the year 2009 may see several proprietary conversations on transactions, however,
fewer completed deals.
Khungar further said Indian corporate, while going for overseas transactions, should have the knowledge
of international regulations, process designs, years of accumulated experience, strategic and commercial
intelligence so that they do not stretch themselves to do merger and acquisitions by taking extra leverage
on their balance sheet, are already feeling the heat.
Many high profile deals such as last year's Tata Steel-Corus transaction, this year's Tata Motors-Jaguar
Land Rover deal and Suzlon-REPower deal are putting pressure on the ratios of the acquiring
companies, such as - Tata Steel, Tata Motors and Suzlon amid the credit market crisis and capital
market correction.
Source: PTI