SBM ITB’s Master of Business Administration invited the Director of Mergers and Acquisitions of Asia Vela Software International Inc, Faris Iman Nurcahyo to an online guest lecturer session in the Financial Management and Policy course Saturday, November 12, 2022.
“Mergers and acquisitions happen almost every day globally; in Indonesia, on average, there are 5-6 deal closings every month,” said Faris in a lecture.
Mergers and acquisitions (M&A) are an integral part of the growth strategy. An M&A is a transaction in which ownership of a company, other business organization, or operating unit is transferred or combined. Not only about acquisitions but can be in the form of mergers, fundraising, share divestments, or share dilutions.
In 2021, M&A will occur in many large companies in Indonesia, such as the merger between Gojek and Tokopedia to become GoTo or Medco, which acquired ConocoPhillips with a transaction value of US$3.5 billion or equivalent to IDR 19.36 trillion. Many more companies in Indonesia are intensively conducting mergers and acquisitions.
This M&A activity occurs throughout the company cycle. According to Faris, the motivation for business actors to conduct M&A transactions is to expand the geographic market, acquire special capabilities or technology, diversify into other industries, fund expansion, and obtain permits.
In conducting M&A, a series of transaction processes must be followed, such as understanding the objectives to determine what the seller wants to achieve from this transaction, finding suitable buyers, listing parties who may be interested in acquiring a business or company, and preparing marketing documents that outline high-level information from the target.
After the seller distributes the marketing documents, the prospective buyer performs a high-level analysis of the target. Those interested in submitting a non-binding offer, conducting due diligence, negotiation and valuation, and finally closing the transaction.
Furthermore, Faris explained that, in practice, financial advisors play an essential role in every M&A transaction. Buy-side and Sell-side legal have a role that will later formulate document transactions or sale and purchase agreements to benefit both parties until an agreement is reached.
In addition, transaction advisors in M&A are needed because some companies lack experience with M&A, have no access to buyer networks, lack sector or market knowledge, and have limited time or resources. The end of guest lecture session was closed with a question and answer session and a group photo.
