Home' A Plus Magazine : Jan 2013 Contents of the target's electricity bill. "Find out the
bank balance -- that's harder to falsify than
bank statements," he advises.
However, a new stumbling block that
many carrying out due diligence are in-
creasingly facing is sellers that give critical
information only to certain suitors. "It is be-
coming very difficult to get the more valu-
able commercial information before enter-
ing an exclusivity phase when a preferred
buyer gets access to management," says
Jack Clipsham, a partner and head of Asia
Pacific corporate finance at Mazars and an
Such a preferred-party system might
require a phased approach to the due
diligence, Clipsham adds. Initial due dili-
gence might ensure key concerns and po-
tential risk areas are covered, but full due
diligence wouldn't be engaged unless the
parties were seriously involved, enabling
potential acquirers to control associated
Teamwork is the key
While accountants are essential to an M&A
due diligence exercise, other input is neces-
sary. "Accountants tend to look at what in-
formation they have. You need other people
to look at what information you don't have,"
says Law. That, he adds, means hiring law-
yers, business consultants and, if necessary,
private investigation companies.
Lawyers are there to examine documents,
company structures and other legal and regu-
latory aspects of the target company. "You
will need to develop a sense for what aspects
of non-compliance or non-conformity are
deal breakers and which can be fixed," says
Mark Schaub, a partner with the King & Wood
Mallesons international law firm in Shanghai.
One common hiccup is focusing on the
commercial matters at stake without think-
ing of the wider regulatory environment that
could affect a deal. "Due diligence should
also examine the increasingly complicated
approval road map, including anti-monopoly
and national security clearances being re-
quired in some cases," Schaub says.
That is even more important when one or
both of the companies concerned is in China,
he says, adding that the Chinese regulatory
environment has many grey areas.
Working together, everybody needs to
The good and bad of M&A
Ten notable global transactions of the past 15 years for
the right -- and wrong -- reasons.
"You have to ask: 'Can I trust these
people, and do they have the
wherewithal to execute... their business
January 2013 21
Despite the occasional stinker of a mega-deal, the
Americans are generally very good at mergers and
acquisitions. Large markets, technological know-
how and effective due diligence have made them the
masters of the art. It's no surprise that some of the
most successful multi-billion dollar
partnerships involve both acquirers
and targets from the United States.
Exxon Corporation (U.S.) and
Mobil Corporation (U.S.), 1999,
This merger formed the largest
company in the world and reunited John
D. Rockefeller's Standard Oil Company of
New Jersey (Exxon) and Standard Oil Company
of New York (Mobil), which had been merged in
1870 and broken up by the U.S. Supreme Court in 1911.
Chase Manhattan Corporation (U.S.) and J. P.
Morgan & Co. (U.S.), 2000, US$28.6 billion
The ultimate evocation of the idea that "big is beautiful,"
the deal that resulted in JPMorganChase maximized the
synergies of consumer banking (Chase) and investment
banking (Morgan) through a largely seamless transaction.
Broken Hill Proprietary Company (Australia) and
Billiton (U.K.-Netherlands), 2001, US$57 billion
The biggest mining industry deal to date was agreed to
not by market dictates but by the personal desires of
then-CEOs Paul Anderson of BHP and Brian Gilbertson
of Billiton. The resulting BHP Billiton is a
behemoth in an industry where size
DBS Group Holdings (Singapore) and
Dao Heng Bank Group (Hong Kong),
2001, US$10 billion
DBS was criticized for overpaying Guoco for
Dao Heng, but a decade later the acquisition
looks smart. No longer dependent on Singapore
for the bulk of its revenues, the deal catapulted DBS
into the major regional leagues.
The Walt Disney Company (U.S.) and Pixar
Animation Studios (U.S.), 2006, US$7.4 billion
Widely hailed as one of the shrewdest Hollywood
deals in memory, this merger brought together the
resources, access and history of Disney and the cutting-
edge innovation and risk-taking of one of the greatest
animation and special effects studios.
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