Globally, in the last two years, there has been a flurry of activity in the Mergers and Acquisitions (M&A) space. Industry experts have put it down to the fact that as multinationals have the funds, they want to expand their current businesses, and hence, there has been an acceleration in M&A deals. In 2015, the Walgreens buyout of Alliance Boots set the tone. What followed was Unilever, well-known for its brands, such as Dove and Axe, acquiring Dermalogica, yet another reputed brand in the professional skincare space. Pop went the weasel when Coty bought out Proctor & Gamble for a whopping $12.5 billion for its perfume, hair care, and make-up businesses, which includes brands, such as Wella and Clairol. This has laid the foundation for the perfume maker to be one of the world’s largest beauty companies.
The practice of mergers and acquisitions has attained considerable significance in the contemporary corporate landscape, broadly used for re-organizing business entities. After introducing economic reforms in 1991, Indian industries faced several challenges, both nationally and internationally. The cut-throat competition from international markets forced the Indian companies to opt for merger and acquisition strategies, making it vital for survival.
Hence, it comes as no surprise that India was one of the strongest markets for M&As in the first half of 2014, according to consulting firm KPMG’s Global M&A Predictor report. Says Vikram Hosangady, Head Transactions & Restructuring and National Leader Private Equity at KPMG India, “Confidence that the new government will strive to revive the investment cycle and focus on policy and fiscal reforms is expected to keep India very active on the global radar.”
Ajay Gehi, a business consultant with Mergers and Acquisitions, a legal firm dealing in M&As in Mumbai, is a formidable entity in the business consulting space, especially M&As. An MBA, Cost and Management Accountant and well-versed in Corporate Law, he explains, “There are many types of mergers and acquisitions that redefine the business world with new strategic alliances and improved corporate philosophies. From the business structure perspective, some of the most common and significant types of mergers are Horizontal, Vertical, Co-Generic, and Conglomerate. For the uninitiated, a merger is considered a process when two or more companies come together to expand their business operations. In such a case, the deal gets finalized on friendly terms, and both the companies share equal profits in the newly created entity. When one company takes over the other and rules all its business operations, it is known as an acquisition. In this restructuring process, one company overpowers the other company, and the decision is mainly taken during downturns in the economy or during declining profit margins. Among the two, the one that is financially stronger and bigger in every way establishes its power. Then, the combined operations run under the name of the powerful entity, who also takes over the existing stocks of the other company.”
M&A in the beauty space
According to a recent report released by KPMG, India’s beauty and wellness industry will be $13 billion by 2017. When our industry players are racing ahead, it seems to be a possible target to achieve.