Paytm on Wednesday announced the
acquisition of Nearbuy and Little, two deals platforms that focus on local
restaurants as well as commercial establishments. In a statement, Paytm said it
arranged a merger of the two well-funded start-ups and made a “strategic”
investment in the resultant entity for a majority stake. Sequoia Capital India,
a large investor in Nearbuy (formerly Groupon India), continues to be a
shareholder in the merged entity. Paytm did not say whether Sequoia sold a part
of its investment in Nearbuy to Paytm Nearbuy, which was founded as SoSasta,
was acquired by NASDAQ-listed Groupon Inc. in 2011.The company was later
renamed as Groupon India, in 2013.In 2015, Sequoia Capital India and the
current chief executive officer (CEO) Ankur Warikoo bought a majority stake
from the US-based parent of the firm and named it Nearbuy.Little app (Little
Internet Pvt. Ltd), on the other hand, was launched in 2015 with initial
backing from Paytm, which wanted to test the waters in the hyperlocal deals
business.The app started with a $50 million investment from Paytm, SAIF
Partners and Tiger Global Management (SAIF is also a large minority shareholder
in Paytm).
After a somewhat choppy 2017,
many experts are calling for a busy 2018 in the M&A space. The Predictions
and Reports suggests that the pace of M&A activity will increase in 2018,
based in large part on “a combination of gradual acceleration in global
economic growth, low inflation in advanced and emerging economies, buoyant
asset markets and low-interest rates that continue to bolster the M&A
markets.” While there are concerns that
could impact the potential increase in deal flow (such as a rise in economic
protectionism or a global equity sell-off) the prevailing view is that the
positive conditions for M&A activity will continue to rule the day and
drive increasing deal making.
One of M and A Experts says “The State of the
Deal-M&A Trends 2018” report takes a similar view. The report, based on a
survey of business executives, notes that a significant majority of respondents
expect M&A deal flow to increase over the next 12 months, while deal size
is expected to increase as well. The
report cites acquiring technology, expanding customer base in existing markets
and expanding/diversifying products and services as the leading drivers for
M&A deals. Among other positive factors,
the report notes that cash reserves are up significantly at potential
acquirers, and that the primary intended use of that cash is for acquisitions.
Family-owned businesses should
see an uptick in M&A interest as we move into 2018.
Buyers are always on the watch
for well-run businesses with quality earnings and customer bases. Family-owned businesses that are looking to
grow should see an opportunity to acquire other businesses. Those businesses that want to take advantage
of a favourable market should start to take steps now to prepare, by working
with management and advisors to get the business “in shape” for a
transaction. Several upcoming posts on
this blog will discuss specific items that come up in almost every deal and
steps business owners can take to prepare for a sale, such as dealing with
financial statements, contracts management and HR/ERISA issues.
Alcor M&A is a leading advisory
firm providing financial services with an emphasis on customized solutions in
the areas of M&A advisory, Joint Venture Advisory, Financial Advisory, Private Equity, Debt Financing and International
Business Development. These
services leverages insights, relationships and a culture that
emphasizes a strong orientation towards excellence.
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