Wael Jabsheh Quoted in Financier Worldwide’s Discussion of M&A in Emerging Markets

Akin Gump cross-border transactions partner Wael Jabsheh recently participated in Financier Worldwide’s panel discussion “Q&A: M&A in emerging markets – managing risk and creating value.”

Jabsheh shared his views on a wide range of questions, among them:

• M&A activity in emerging markets over the last 12 months: “While global M&A values reached significant levels in 2014, much of that activity was dominated by mega-deals in the US and other developed markets. The picture in emerging markets was mixed. Although regions such as Latin America experienced very strong growth in M&A values, emerging markets elsewhere underperformed, driven partly by concerns regarding geopolitical and economic uncertainty. However, the outlook for global M&A in the foreseeable future appears healthy.”
• Factors motivating buyers: “An increasing sense of confidence by buyers in the overall stability of the global economy appears to be one of the main motivating factors. With global equities markets at or near all-time highs, there seems to be a general consensus that the global financial crisis of the past years has been overcome. This confidence is driving M&A levels upwards and causing buyers to more aggressively look for growth opportunities. Buyers are therefore making deals to access new markets, expand their geographical footprint and benefit from the increasing spending power of the emerging markets’ growing consumer base.”
• How companies in these markets can add value: “Buyers often understate the cost of assimilating a new business into their existing operations, and therefore fail to adequately account for those costs as part of their valuations. Unless buyers can adequately quantify those costs and feed them into the M&A valuation process, their investment may yield less than anticipated financial returns. Buyers who adopt a tactical approach to these issues are often those who create the best long-term value and positional advantage.”
• How to manage dealmaking risks in emerging markets: “A comprehensive due diligence exercise is an essential part of any M&A deal and this is particularly true in emerging markets...Engaging local lawyers who are well versed in the target’s industry and who are plugged into the market’s latest political, legal and regulatory developments is critically important. It is also advisable for buyers to initiate a dialogue with local authorities early and often throughout the transaction in order to align expectations and minimise the risk of unpredictable regulatory or legal action at a later stage.”