Offshore M&A: Could Indian buyers set the standard?

The wave of international mergers and acquisitions has continued unabated, however, a new trend may be emerging: the Indian buyer as the preferred international acquirer.

Internationally, private equity funds abound. There are over 200 funds with assets in excess of US$1 billion. These funds have developed a divergent reputation: for some as saviours, for others, as greedy pirates. They are actively competing in most of the international deals in the US, Europe and Asia.

Private equity downfalls

The US House of Representatives, in a subcommittee hearing on private equity last September, was told the tale of Hastings Manufacturing Co, a Michigan auto parts supplier. Facing economic pressures the company negotiated significant wage and benefit concessions from its unionized workforce. It was not enough. The firm filed for bankruptcy and was taken over by a private equity fund. The new owners cut health benefits further, altered working conditions and decimated retiree benefits. The claim was made that value was created, however, not by better management or business innovation, rather by extracting it from the employees and retirees.

Wayne Rogers is a senior adviser in the international law firm of Sonnenschein Nath & Rosenthal, where he specializes in international trade and cross-border transactions. He may be reached at +1-202-408-6478 or wrogers@sonnenschein.com.