M&A in fast growing countries: Traps and structuring opportunities

Complexity in the emerging markets

While contemplating transactions in fast growing economies* presents attractive opportunities to many investors, the acquisition process as well as the integration process are more complex than when conducting deals in mature economies. Our Transaction Services and Tax professionals in the 15 countries* covered by this study often encounter a number of risks threatening the success of the deal-making process in fast-growing markets or the success of the subsequent integration process. In this study, we shed light on transactional risks and opportunities based on our specialists’ experience from conducting due diligence and tax optimization in growing markets.

Due Diligence Traps

The main traps identified by our experts during the due diligence processes are related to:

• the accuracy of the financial information,
• ownership and governance practices,
• regulatory and legal issues.

Tax aspects

The tax aspect of a deal cannot be neglected, the tax optimization not only requires identifying and avoiding various tax traps (such as thin capitalization rule) but also benefiting from several tax incentives such as tax treaties and the rules for amortization of assets. Our specialists emphasized the importance of engaging with multiple levels of control of the information provided, enlarging the scope of the due diligence to address the critical areas and conducting work on the ground with local experts and advisors.

Supporting outbound M&A undertaken by Indian companies and investors

If you are an Indian company or investor planning to make acquisitions outside India, we can help you to execute your international development strategy together with our International colleagues from Mazars around the globe. We have a proven record internationally of helping businesses all over the world to create opportunities for growth and knowledgeable local teams to support strategic moves in all key markets including the fast growing countries.

We can advise you on:

• Market prioritization and market segmentation
• Identifying growth opportunities in emerging markets
• Identifying potential targets or joint venture partners
• Buyer due diligence
• Transaction tax due diligence and structuring
• Post deal services, including integration and valuation

Please do not hesitate to contact us for more details.

Supporting M&A undertaken in India by International companies and investors

If you are an International company or investor planning to make acquisitions in India or planning to develop your business through joint venture with Indian partners, we can assist you your Indian projects. Our Mazars India team is highly experienced in serving International clients in undertaking M&A projects as well as joint ventures in India.

Our services encompass all aspects of transactions from Pre-transaction feasibility assessment up to post deal services:

• Pre-transaction feasibility and structuring
• Market prioritization and market segmentation
• Identifying growth opportunities in India
• Identifying potential Indian targets or Indian joint venture partners
• Valuation
• Financial Due diligence (buy side)
• Tax Due diligence (buy side)
• Tax structuring
• Negotiations and closing of deals
• Post deal services, including integration and valuation
• Purchase price allocation
• Conversion from Indian GAAP to other GAAP (IFRS, US GAAP,…)

Our integrated team approach also means that we work very closely with our colleagues from your home country to deliver these services. Please do not hesitate to contact us for more details.

 *We took an extended approach to the notion of fast growing economies by including the five BRICS (Brazil, Russia, India, China and South Africa) and adding another ten promising and growing economies which may present attractive opportunities to investors (Algeria, Egypt, Indonesia, Malaysia, Mexico, Nigeria, Philippines, South Korea, Turkey and Vietnam).