Careful targeting key to Philippines M&A – AVCJ Forum

"It will be difficult to talk to companies that are inward looking, those that are very happy with their family business and family money, running on their own," said Michael Guarin, a partner at KPMG, stressing the importance of building up trust. "But if you look at the more mature companies that are more open to accepting third-party investors, local or foreign, you'll have a higher probability of closing."

Guarin joined a panel that concluded the demand for quality, late-stage investments to leverage the Philippines' encouraging macro story was outstripping M&A market supply. PE openings in this environment were found to rely on investor attention to the specific growth goals of local companies.

Fabien Banaletti, head of M&A at Sumitomo Mitsui Banking Corporation, noted that in light of the competitive debt funding available from Filipino banks, value-add proposals from foreign capital providers should emphasize opportunities for regionalization. "If we look at outbound acquisitions over the last two years, those acquisitions were not made to move up the value chain or acquire specific technology – they were made to diversify risk and find pockets of growth," he said. "That's were we can help accelerate."

Filipino companies' ambitions to diversify through internationalization, however, are in doubt. Although corporat leaders in the country are said to have a more internationally-oriented perspective than many of their Southeast Asian counterparts, a relatively high degree of risk aversion continued to supress inbound M&A potential.

"CEOs and founders tend to be a little bit less aggressive in the Philippines versus their counterparts in other markets," said Emmett Thomas, head of Asia for Advantage Partners. "That tends to results in less aggressive business plans and a difficult environment for people like us to underwrite a business, especially at a high price point."

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• Topics
• Southeast Asia
• GPs
• Buyouts
• Philippines
• M&A
• AVCJ Events
• Sumitomo Mitsui
• Advantage Partners
• KPMG