Indian firms have bought up 120 overseas firms at $32 billion this year. Though Indian acquisitions have been successful overall, the trend now shifts to smaller firms with less exposure to the international markets. As these companies acquire overseas partners, what pitfalls should they avoid?
You are a niche firm in the Indian market and need to find an overseas foothold to consolidate and take your products to the international markets. However, you really do not have much exposure in the countries you could expand into. What details should you be paying attention to?
Get the right people…
Why have you chosen to acquire this particular firm? Will it complement your present core competence? You have the technology; will it give you the skilled people? Are you getting people who will help you sell your product?
Consider the costs…
What will it cost you? Is it worth what you’re paying for; will you recoup the costs? Don’t end up paying too much just for an international footprint. There were suggestions that the Tatas were paying too much for Corus, but the firm felt that the price was right for their strategy. Be sure in your turn.
Learn the people, the culture…
Do you know the country’s people, the culture, the market and the regulatory environment? If not, learn before you venture there. See if you can enlist either locals or non-resident Indians in that country to help you do that.
Think about how you’ll integrate your new acquisition with your company and people. Try and find similarities in culture and highlight them. You may have to modify your management style to suit your new friends.
Have you spoken to the staff and the investors of your new partner? Make a note of their perspective and include it in your future plans. Ensure that you send the right signals; don’t lose good people to bad projection.
Are the brand values compatible? Will your purchase sink your stock? Are you seen as good value there?
Are Indian overseas acquisitions effective? Are there areas that need improvement and how should Indian firms do that? What lessons have you learnt as an NRI who has seen both sides?