Myroslav Alexandrovich, your company “MT-Invest” is the operator of merging and acquisition market in Ukraine. Tell please in your opinion, who was the main buyer of the assets of Ukrainian companies in 2009?
Unfortunately, in 2009 Ukrainian companies seldom were acted as a buyer of assets.
The crisis has forced the majority of local companies to move from strategy of development to the strategy of survival, so the major buyers were foreign companies. A number of European, Asian, American companies, even though the global crisis, continue to pursue a strategy of development and increase its presence in various markets, including the Ukrainian market. Speaking about the most attractive area for buying assets – among our client the most popular are the producing of food products, agro-industrial complexes, oil and gas industry, metallurgy, construction materials. Serious interest of foreign investors also causes resource companies, mineral deposits.
Market M&A in 2009 can be characterized as a buyer’s market. During the crisis investors have strong opportunity to influence the seller, to dictate its own conditions and rules of the game, so, in my opinion, the main complexity of transactions in 2009 was to achieve understanding and agreed price of any assets being sold. Many sellers of inertia using methods pre-crisis asset valuation and it is a major mistake. Methods of pricing which was dominated the market from 2006 to 2008 no longer operational. The main criterion of today’s approach - the ability of businesses to generate cash flow, includes - generating profit. In this case, is taken into consideration as the actual statistics of the financial results of activity and forecast outcome.
In addition to business profitability, today’s potential buyer wants to see a transparent way of business organization, with the appropriate skill level of management and organization of high corporate governance. And these are the factors that are so lacking many Ukrainian companies.
How would you describe seller’s market assets in 2009?
Clearly 2009 was not a very good one for the sale of assets for a selling side. In the market took place mainly so-called forced selling - these are companies that, for reasons of economic crisis, it was difficult to service the loan portfolio, and the only exit from this situation was selling part of the assets or the entire company. However, if the owner can still somehow solve their own problems without recourse to such methods, in terms of current prices for Ukrainian assets - better to postpone the sale until the market become more active and more acceptable to the seller’s price.
Any owner of the assets when investing in a particular area, at the very beginning of creation the company has to take into account the basic steps, which in future must be done for to comfortable and profitable selling the business. To be able to get the maximum value for its assets, you need to worry about the competitiveness of the company, its products, sales, distribution system and the transparency of corporate governance - all those factors which affect the profitability and become the main criteria for its evaluation in the future. To ensure these criteria should be effective and competent management, and this factor is also one of the most “painful” for Ukrainian business.
In my work I often meet sellers who do not fully understand the essence of the procedure of purchase and sale business. Many companies are not ready for the European evaluation in terms of legal, economic, accounting, environmental auditing, etc. Our mission is precisely to regulate the relationship between the seller and the buyer, to avoid or to mitigate conflict situations, be a communicator and directing every Party of transaction to the negotiations. Our goal is to reach a full understanding of the parties and to prevent disruption of transaction due to communication problems.