Access To Diamonds

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Another benefit of M & As is the opportunity
to take advantage of international
partnership which allows for a global
presence Global market pressures have led
to a rise in cross-border merger transactions.
For instance, Nigerian brands are sought
after internationally, with a number of
them partnering with global retail brands
and stores. Such international partnerships
could be strengthened through possible
mergers, particularly those within the African
continents of which Ghana and South Africa
are examples of emerging frontiers.
As we are all aware, technological innovations
are recorded daily of which the industry giant,
Apple continuously reminds consumers
about the limitless world of computers, by
unveiling new products regularly. Hence, the
demand for whizkid Chief Executive Officers
has skyrocketed and been recognized as a
major consideration for several cross-border
corporate mergers.
A vibrant market for corporate control also
improves the statistics of mergers and
acquisitions. The possibility of successful
bidders replacing poorly performing
executive directors in order to enhance the
profitability of corporations augurs well for
any economy, thus encouraging dynamic
business arrangements.
One cannot mention M & As deals without
discussing the complications that accompany
this procedure. As with marriages between
human beings, divorces of corporate entities
are not unheard of. To sustain M & A deals,
great responsibility is therefore placed on
deal advisers particularly lawyers, ensuring
not only the success of birthing a new entity
but also of sustainability.
Business experts believe that no two M &
A deals are alike, which implies that high
degree of legal expertise and innovation is
required on the part of (Nigerian) solicitors
dealing with business intricacies of M & As.
More importantly, in a transactional setting,
lawyers should carefully analyze all available
and relevant data including the statutes and
professionally advise clients on how best to
structure their business affairs in a bid to
comply with relevant provisions.
The deal flow of all acquisitions is standard,
notwithstanding the uniqueness of
each bargain. The process starts with an
introduction, followed by the negotiation,
then the due diligence (D.D) process which
if successful leads to the obtainment of the
board, shareholder as well as regulatory
approvals. A well carried out due-diligence
exercise is a prerequisite for a successful
merger, hence the need for advisers to ask
the right questions from the onset. The D.D
process can be likened to an inspection
carried out by a mechanic prior to the
purchase of a car, an exercise aimed at
determining whether the vehicle is worth its
asking price. In essence, due diligence before
a merger is like a courtship before marriage.
A merger, if well-coordinated, is expected
to expand business opportunities. However,
before embarking on this exercise, taking
note of the number of employees the
merging partner has is important, what
risks has the business been exposed to, the
legal and financial structure as well as the
debt exposure of the relevant business. No
entrepreneur wants to pay for a shell or end
up like the lady who thought her husband
was a billionaire but soon found out after
marriage that he was living a borrowed life.
The merger transaction is rounded up by
signing and closing. As soon as negotiations
are launched, legal and financial advisers
are engaged in structuring the deal and
determining a fair price for the sale. The
target has a vested interest in ensuring that
it receives the best selling price while the
bidder’s management is keen on a transaction
that is indeed value for money.
In arriving at the true worth of a company,
therefore, advisers should not only protect
the interest of their clients but also ensure
that the valuation results give an accurate
and fair view of the firm’s worth and that
the due diligence is conducted ethically.
Legal advisers particularly have a role to play
in drafting water-tight agreements which
will stand the test of time in balancing the
interests of the buyer and that of the seller.
It must be mentioned that having examined
the incentives for business combinations
certain factors inhibit the growth of such
transactions in these parts of the world.
Culturally, we hold on to investments
irrespective of how logical it is to do so and in
consequence would rather be the sole owner
of a tottering business than be a part owner
of a bigger cake.
The notion of “it’s my business”, I started
it and must not allow anyone to share
in my business successes”, must change.
Another reason for the slow growth of M &
As activities in Nigeria is that the relevant
regulatory system is underdeveloped.
The financial industry is also lagging in its
response to credit requests, a situation which
impedes the process of negotiations.
A merger is not just the coming together of
two businesses. It is the amalgamation of
corporate cultures. The culture and structure
of Business A should be similar to Business
B and should be synergized sufficiently to
ensure a smooth running of the resultant
entity. This is why it is important for startups
founders to be clear about the mission and
vision of their companies because, in reality,
you cannot give what you do not have.
Equally, the management and employees of
the merging entities must be carried along
in the process. It can be scary to be asked
to be part of new business as an employee.
Therefore, it is the responsibility of the parties
negotiating the deal to ensure that staff
welfare is paramount. Realistically, however,
only the best hands and the brightest brains
can be retained in a change of structure
transaction.
The customers of both entities must not
be overlooked, also. Hence the customer
enlightening sessions being carried out by
the relevant entities in the proposed Diamond
Bank Plc and Access Bank Plc merger is
laudable because it has to a large extent
helped in assuaging the fears of concerned
customers.
The result of a merger is a bigger and
stronger brand. The shortcomings of megasized
brands have been identified mainly
as the inefficiency of size and variations in
corporate culture among merging entities.
These challenges do not overshadow the
economies of scale associated with globally
competitive businesses.
It is, therefore, evident that under the
philosophy of the survival of the fittest,
Mergers and Acquisitions will continue to
thrive. Africa will do well to join in the trend
actively. Nigeria can take the lead, particularly
with the recognition given to some Nigerian
companies recently by the London Stock
Exchange.
These nominations evidence the fact that the
small brand of today has the potentials to
become an international brand if corporate
governance and accountability are given
priority. A good way to end this piece is by
celebrating all the companies that were listed
as part of the Companies to Inspire Africa,
as compiled by the London Stock Exchange.
Indeed, Mergers and Acquisitions are for big
and small companies.
“A merger is not
just the coming
together of two
businesses. It is the
amalgamation of
corporate cultures.”
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