The use of digital technology in the education sector is growing at a remarkable pace in India. With news reports giving Byju’s, a Bengaluru based learning app, a valuation of over USD 2 billion in its latest round of investments, the investors’ interest in the education technology (edtech) sector is on the rise. Continue Reading M&A Trends in the EdTech Sector
Partner in the General Corporate Practice at the Mumbai Office of Cyril Amarchand Mangaldas. Yashojit has experience in managing mergers, acquisitions, foreign investments and private equity transactions. He regularly advises international and domestic clients on inbound investments into India and outbound investments from India. Yashojit has also been named as a ‘Recommended Lawyer’ by Legal 500 for transactions relating to investment funds. He can be reached at firstname.lastname@example.org
M&A activity in India has reached USD 46.5 billion in 2017 and is predicted to hit USD 52.8 billion in 2019. There are many reasons for this spike, and one important reason is consolidation among domestic players. The potential opportunities driving consolidation among domestic players are as follows:
- Expansion of customer base
Post the proposed Vodafone-Idea merger, the combined subscriber count of the merged entity is expected to be around 39 crores with 35% of the market share, making the combined entity the largest operator in India and the second largest in the world. Its nearest competitor, Bharti Airtel, currently has 24.21% of the market share.
The acquisition of BSS Microfinance by Kotak Mahindra Bank led to Kotak’s entry into the micro-lending sector and provided it access to approximately 271,000 customers of BSS.
In the pharma sector, the recent acquisition of Strides Shasuns’ drug brands in India by Eris Lifescience will enable Eris to break into the league of top 25 companies that have a market share of more than 1% in the pharmaceutical sector.
Mergers are compared to marriages. As a union of companies, they require patience and understanding, but they also involve a large amount of paperwork. Mergers, like marriages, can flourish with the right synergies, but if there are differences between the entities, the arrangement can often collapse. The recent breakdown of the Snapdeal – Flipkart transaction, can provide a useful context to understand the reasons for the success/failure of M&A transactions.
The success of a deal depends on the companies, the individuals, the business climate, as well as the different regulators involved in the transaction. A few common reasons for deals breaking down are – valuation differences, different expectations between the parties involved, regulatory roadblocks or a lack of consensus regarding the exit horizons.
While these are reasons general to any corporate transaction, there are some requirements specific to M&A deals that must be met in order for the deal to survive.