- NEWSLETTER, INDIA
- August 9, 2024
Key Drivers of M&A in India
- Adjacent Market Acquisitions: Financial institutions strategically acquire businesses in related markets to enhance their capabilities and capitalize on cross-selling opportunities.
- Foreign Investments: Companies are increasingly exploring foreign investments to gain access to advanced technologies, boost capital, and adhere to global best practices.
- Regulatory and Profitability Pressures: The evolving regulatory landscape, combined with a strong focus on profitability, necessitates business consolidation and restructuring efforts.
Sector-Specific Trends to Watch in 2024
- Credit Sector: India's vast economy presents a significant opportunity for debt expansion. Banks and fintech firms are increasingly collaborating to adopt co-lending models, while Non-Banking Financial Companies (NBFCs) continue to consolidate to meet the growing demand for credit.
- Insurance Sector: Global insurers are entering joint ventures with Indian companies to enhance distribution and operational capabilities. Noteworthy transactions include Zurich Insurance Group acquiring a stake in Kotak Mahindra Bank's insurance arm.
- Asset and Wealth Management: M&A activity thrives as new entrants and established players aim to expand their market shares. Joint ventures like the partnership between Invesco and Hinduja Group highlight the sector's growth potential.
Emerging Trends in M&A
- Restructuring: Financial services companies are divesting non-core assets and non-performing loans to strengthen their balance sheets. While stable asset appraisals and better capitalization have reduced the immediate need for such deals, restructuring remains a crucial strategy.
- Environmental, Social, and Governance (ESG): ESG criteria increasingly influence investment decisions. Geopolitical tensions have heightened awareness of ESG risks, leading some investors to reassess their strategies.
- Technology and Digital Transformation: Digitalization and artificial intelligence (AI) remain top priorities for financial services companies. In the coming months, M&A activities will likely focus on leveraging data, improving operational efficiency, accelerating transactions, and enhancing cybersecurity.
- Private Equity: Specialized private equity investors target sectors like fintech, brokerage, and regtech. As leverage constraints and higher capital costs become more prominent, the focus gradually shifts towards value creation.
Conclusion
India’s financial services sector presents a dynamic landscape for M&A activities driven by economic growth, technological innovation, and evolving regulatory frameworks. IMC stands at the forefront of these developments, offering expert advisory services to help businesses navigate the complexities of M&A in India. Whether through restructuring, digital transformation, or tapping into new markets, IMC is poised to support your M&A journey, ensuring you capitalize on the lucrative opportunities.
Visit IMC M&A Advisory Services for more insights on how IMC can assist with Mergers and Acquisitions in India.
- NEWSLETTER, GLOBAL
- July 30, 2024
Global enterprises encounter fresh tax risks as the business paradigm shifts towards the remote and hybrid models. Governments have implemented the Pillar Two global minimum tax project in different countries led by the Organisation for Economic Cooperation and Development (OECD). One of the prime challenges is that companies deduct payroll taxes based on the location where their employees work or reside and now where they receive their payment. If a worker is present in an unknown jurisdiction, the business can be exposed to Pillar Two taxes.
Cross-border workforce mobility can have a dual impact on taxation. It creates a potential risk for tax and compliance demands, like the permanent establishment (PE). It also leads to the recalibrating of supply chains and operational models. Therefore, understanding the implications of Pillar Two tax and tracking the location of employees to comply with it is not just important but essential for preparedness.
The pandemic of 2020 exposed how fragile supply chains can be. It also highlighted the importance of resilience, bringing about changes in operational structures. Now, businesses face a fundamental question—whether their current operating models are still perfect for the purpose, considering factors like labour empowerment, the use of technology, and changing dynamics. Since Pillar Two introduced a global minimum tax rate, businesses are re-evaluating how attractive their principal locations can be.
Reviewing the priorities for businesses
For global enterprises, it’s imperative to understand the pivotal role that the workforce plays in executing Pillar Two strategies. Experts suggest that the real challenge lies beyond tax compliance. It is all about managing people, which turns out to be more vital and complex.
Leading companies like the IMC Group, which provides global mobility tax solutions, can help businesses move talent globally with minimal inconvenience and delay.
Understanding where your employees are working
For global businesses, it’s imperative to understand where their employees are working. The key challenges to address are the popularity of hybrid and remote work, particularly across borders, and the lack of proper tracking mechanisms.
Forward-thinking businesses must focus on the immediate demands of new tax regulations. This will help them remain proactive. Besides, they should address workforce policies like mobility, considering their potential impact on tax outcomes. Dedicated tax teams should ensure that employees work for the right entities, considering where they perform their activities.
Understanding complex compliance
Workforce Assumptions No Longer Adequate
Seeking Professional Assistance in a Complex Compliance Environment
- NEWSLETTER, GLOBAL
- July 29, 2024
Human resources continue to be the most valuable asset for any enterprise operating globally. With HR outsourcing expanding rapidly, organizations are collaborating with experts offering global mobility services to mitigate common challenges. Businesses expanding overseas outsource a wide range of services, including payroll management, recruiting, compliance, and benefits administration.
Outsourcing is a strategic approach to addressing the complexities of running global operations, including managing multilingual staff, diverse labour laws, and intricate tax regulations. Successful businesses entrust these responsibilities to outsourced service providers, thereby focusing on growth.
Overcoming Challenges with the Right Outsourcing Partner
The HR outsourcing market is projected to grow significantly by 2027, with an approximate increment of $13.6 billion. However, it’s imperative to choose the right outsourcing partner. Otherwise, the service provider can complicate operations with mismanaged data, substandard quality of services, and compliance issues.
This explains why global businesses look to partner with an experienced provider to benefit from their professional expertise. This approach ensures compliance with employment laws and streamlines the recruitment processes, instilling a sense of confidence and security. Ultimately, this enhances the satisfaction of your employees, besides freeing up resources to be allocated for core business activities.
Save Time and Cost
Forward-thinking businesses consider outsourcing HR functions to save both money and time. Tasks like hiring, employment law compliance, and managing complex tax systems can be delegated to third-party providers, leaving adequate time for businesses to focus on critical issues. Besides, outsourcing leads to significant cost savings, particularly for companies expanding globally, promoting financial security and efficiency.
Enterprises that outsource HR services can reduce expenses related to salaries, training, development and insurance. All these costs are associated with maintaining an in-house team. Moreover, outsourcing reduces costs like payroll, hiring, recruitment, and compliance.
Risk Management
Scalability and Flexibility
One of the prime benefits of HR outsourcing is the flexibility it offers. As businesses grow on an international scale, it’s imperative for them to align their HR policies with local employment laws.
Often, inhouse teams lack the necessary expertise to handle this complexity. Outsourcing provides the flexibility to scale operations and ensure global compliance, which proves crucial for successful expansion.
The Future Outlook for HR Outsourcing
For rapidly expanding global businesses, HR outsourcing proves to be a transformative force. Entrusting dedicated professionals to manage outsourced services, companies can stay ahead of changes in employment laws and regulations without investing significant time.
Interestingly, 32% of organizations in the US outsource at least one HR process, while 51% of businesses outsource benefits administration. This trend is picking up pace in all major global business hubs. In June 2023, the satisfaction rate for outsourced recruitment processes was remarkably high at 97%. With global operations and remote work evolving, the role of outsourced HR support becomes increasingly crucial.
Outsource Payroll Management Services to professionals
One of the prime benefits of outsourcing HR services and payroll management is the ability to address the diverse needs of global workforces without expanding the internal teams. As global firms struggle with compliance regulations and remote work changing operational paradigms, successful businesses look for outsourced payroll management services from specialists. The IMC Group continues to be one of the most trusted teams of outsourced service providers, standing out with their expertise. Global businesses entrust these experts with various processes and prioritize their core competencies.
- Publications
- July 24, 2024
On July 23, 2024, the Finance Minister, Ms. Nirmala Sitharaman, unveiled the Union Budget for the financial year 2024-25. As the first Budget of the newly elected government, it aimed to foster excitement and anticipation. This Budget focuses on achieving fiscal federalism while committing to fiscal consolidation to prevent inflation.
Key initiatives include rationalizing personal income-tax rates, enhancing social welfare, promoting inclusive development, boosting investor confidence, and facilitating ease of doing business.
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- NEWSLETTER, GLOBAL
- July 23, 2024
The financial services sector continues to face challenges for mergers and acquisitions (M&A) in the latter half of 2024. As geopolitical tensions and macroeconomic conditions lead to uncertainty, key players in the industry are under pressure to use M&A to drive transformation and growth.
Throughout 2024, this trend is likely to prevail in the M&A market. Particularly, organizations are increasingly finding it challenging to execute mega deals due to instability in the market and regulatory hurdles. Leading businesses are turning to established advisors like the IMC Group for professional mergers and acquisitions advisory services. However, certain factors indicate that M&A activity will have a positive medium-term outlook. Cross-sector trends like digitalization, sustainability, workforce challenges, and sector-specific pressures like cost management and asset quality are driving the need for transformation.
Strategic Importance of M&A
Global M&A Trends to watch out in 2024
1. Pent-Up Demand and Strategic Necessity
Following the pandemic, the prolonged period of reduced M&A activity has created significant pent-up demand in the private equity sector. With over 27,000 global portfolio companies and investments aging beyond the typical exit timeline, the pressure on PE firms to realize returns is mounting. This high demand is poised to drive a surge in deals as market conditions stabilize.
Corporate firms are also taking advantage of M&A transactions to accelerate growth and adapt to dynamic changes like AI advancements. Therefore, M&A activities are likely to revive even amid ongoing uncertainties.
2. AI as a Catalyst for M&A
Artificial Intelligence, particularly generative AI, is reshaping business models and creating new avenues for growth. Its potential to enhance efficiencies, generate new revenue streams, and disrupt traditional industries makes it a key driver for M&A.
Global enterprises are increasingly looking to acquire AI capabilities, talent, and technology to stay competitive. This trend is likely to drive different types of transactions, from traditional M&A to innovative partnerships.
3. Sector-Specific Drivers
Global M&A trends have varying influence on different sectors. For instance, sectors like energy and technology have witnessed substantial deal values due to high-profile megadeals. However, overall transaction volumes across most sectors have declined.
This inversion of sector trends reveals the uneven recovery and the specific opportunities and challenges within each industry. Businesses in sectors like technology and financial services are likely to pursue M&A transactions aggressively. In the process, they will maintain their competitive edge and drive innovation.
4. Geopolitical and Macroeconomic Uncertainties
High interest rates, geopolitical tensions, and political uncertainties have created a challenging environment for M&A activities globally. As a result, organizations approaching such deals have adopted a cautious approach, leading to a decline in the volume of deals.
However, as these uncertainties begin to resolve with reduced interest rates and greater political clarity after elections, M&A activity is expected to rebound. With these persistent issues getting resolved, dealmakers can confidently approach transactions, fuelling greater M&A activities driven by the pent-up demand in the market.
Professional advisory services for successful M&A transactions
Considering the complexities related to regulations and the importance of due diligence, it’s advisable to seek professional support from the experts at IMC Group for successful M&A transactions. Businesses must also check out their recent guide for successful M&A deals and seek professional support to be on the right track.
Mergers and acquisitions remain vital strategies for financial services companies to grow in a challenging industry. With experts on their side, businesses can understand current trends and strategic needs to better position themselves in the evolving market.
- NEWSLETTER, GLOBAL
- July 18, 2024
The Current State of Mergers & Acquisitions
Key Challenges Associated with M&A Transactions
The primary motivation for companies to pursue M&A is to accelerate growth. This growth may not be achievable as competitively or quickly through traditional processes. M&A deals are common in the technological sector. It is often used to differentiate or enhance product offerings and increase the market share by expanding demographic reach. Therefore, it’s imperative to have a clear objective for the acquisition so that businesses aren’t deprived of attractive secondary benefits.
For instance, if the objective of an organization is product expansion, the risk of failure increases if it tries to acquire a company with a product difficult to integrate.
M&A represents “inorganic” growth since it can rapidly pacify the growth trajectory of an organization. However, these transactions shouldn’t replace the steady progress of organic growth. Both these types of growth define a sustainable and balanced business strategy.
Why Is It Essential to Balance Organic Growth With Inorganic Growth?
A robust long-term business strategy requires balancing inorganic and organic growth. With organic growth, businesses benefit from stable and incremental progress. However, this might not always keep up with the dynamics in the market. Inorganic growth through M&A, on the other hand, can lead to rapid scaling, with new technologies at the disposal. One of the best aspects associated with inorganic growth is instant access to the market.
With this dual approach, businesses can seize emerging opportunities without overlooking their internal development. One proven strategy to balance these approaches is to progressively align partnerships, which allow organizations to test potential acquisitions and evaluate their compatibility in culture, technology, and operations.
Practical Considerations for the Success of M&A Activities
The high failure rate of M&A deals defines the importance of careful planning and execution. For CEOs and founders, merging or acquiring another company can be a major decision. Financial investors or large shareholders may push for M&A to boost short-term valuations, potentially disregarding long-term benefits. However, it’s imperative to weigh the primary reasons for the M&A and assess whether there’s a cultural fit between the companies involved. Misaligned cultures can doom a merger, even if all other factors are favorable.
It’s crucial for leaders to be transparent with their teams. They must define roles clearly and manage the expectations throughout the M&A process. Buy-in from the entire C-suite and board members is essential, as their enthusiasm and open communication often determine the success of an M&A deal. With clear objectives and understanding as the priority, organizations must approach M&A to ensure cultural compatibility. This calls for strategic business planning, as it enables businesses to deal with complex business problems successfully and optimize their growth potential.
Professional Mergers and Acquisitions Advisory Services from Experts
Mergers and acquisitions have the potential to be transformative, offering opportunities for faster growth and exploring fresh markets. Successful businesses seek professional mergers and acquisitions advisory services from reputed experts like the IMC Group to ensure a seamless transaction. With experienced advisors on the side, businesses undertaking M&A activities can navigate the complexities involved and make the most of the growth potential.
- Article, Global
- July 12, 2024
What Exactly is Operational Due Diligence
Why Does Operational Due Diligence Matter?
For various reasons, comprehensive operational due diligence is vital:
- Risk Identification: Investors can identify risks that might affect the target company’s performance after the sale by examining its operating framework. Some risks could be inefficient operations, old technology, or relying too much on critical employees.
- Value Realization: Finding ways to make things better can unlock value. For instance, simplifying procedures or modernizing technology can save expenses and enable more seamless operation.
- Alignment Strategically: It is crucial to ensure the selected firm’s activities match the strategic objectives of the one seeking to purchase it. Knowing this will support both a seamless transfer and long-term success.
Important Areas of Emphasizing in Operational Due Diligence
Several key elements of operational due diligence demand thorough investigation:
- Management and Leadership: It is essential to look at how skilled and stable the management team is. Investors need to know that the team can move the business forward. It is something they have to do, especially during the transition period.
- Processes and Systems: Checking how efficient and successful the business’s systems and processes are can help find places where they could be better. Production methods, IT systems, and supply chain management are all part of this.
- Organizational Structure: To ensure you’ll work well with the new company, you should know about its organizational system and attitude. This means examining the company’s human resources, employees’ happiness, and general work culture.
Best Practices in Operating Due Diligence Conducting
Following best practices is crucial for ODD to be as effective as it may be:
- Hire Professionals: Hire Due Diligence Services who know much about the business and how things work. Their opinions can help you learn more about the target company’s good and bad points.
- Comprehensive Checklists: Create thorough plans specific to the business and the steps involved. It ensures you do not miss any important detail during the due diligence process.
- Continuous Monitoring: Being careful with operations shouldn’t just happen once. After a purchase, ongoing tracking helps deal with any problems that come up and makes sure that operations are in line with strategic goals.
Conclusion
Operational due diligence is an essential part of the purchase process. It gives investors a clear picture of the chosen company’s business strengths and weaknesses. Using Due Diligence Services helps investors make wise decisions. Before merging or acquiring another firm, one must undertake extensive operational due diligence in today’s ever-shifting corporate environment.
At IMC, we provide comprehensive due diligence services, ensuring you have the critical insights needed to make informed and confident business decisions.
- Newsletter, Singapore
- July 11, 2024
With the mission to deliver higher monetary returns to their clients, family offices in Singapore are shifting their focus and investment strategies. A large number of family offices are opting to invest directly in private companies rather than through traditional channels. This shift marks a significant trend in investment tactics, driven by their unique competencies and the objective to grow long-term capital. The success of a single family office in Singapore defines its popularity among wealthy families and individuals.
The Rise of Direct Investments
A survey reveals that as much as 62% of family offices have made at least six direct investments in private companies last year. This approach involves purchasing stakes in companies or providing direct lending, bypassing traditional investment vehicles.
In 2024, 71% of family offices have decided to increase their direct investments or maintain their existing levels. This trend explains the role of family offices in private markets. These organizations have been potentially reshaping the dynamics of private equity, besides fostering innovation in investment strategies.
Benefits and Challenges
Co-investing and Strategic Partnerships
Family offices are increasingly co-investing alongside traditional private equity firms. This is a collaborative approach that reduces fees and enhances the potential for higher returns by sharing interests and diversifying portfolios.
Direct investments in private companies capture the illiquidity premium. This strategy falls in line with the long-term wealth preservation goals of family offices, thereby ensuring stability and sustainability across generations.
As family offices continue to evolve into formidable players in private markets, their strategic investments and partnerships are set to influence the future landscape of global investments.
The IMC Group continues to be a trusted partner for family offices investing. With dedicated assistance from experts, a professional consultation can put the investments in the right avenues.
- NEWSLETTER, U.A.E, INDIA
- July 11, 2024
In an effort to boost its commercial activities, the UAE is actively looking to expand its scope of trade with India under the CEPA (Comprehensive Economic Partnership Agreement). The Middle-Eastern country aims to strengthen bilateral trade, which comes as a positive development for firms expanding globally. The Chief Operating Officer of the Dubai Multi-Commodities Centre (DMCC), Feryal Ahmadi, expressed their ambition, highlighting the pivotal role of India as the largest trading partner of the UAE.
The UAE has made significant efforts to explore new commercial avenues under the CEPA, which was signed in February 2022. Particularly, the country is keen to establish trade ties with India, with merchandise like agri-commodities and critical minerals. Ahmadi demonstrated the strategic importance of expanding these sectors under the agreement, which is likely to foster deeper economic ties between the two nations. She also pointed out the increasing significance of the other Free Trade Agreements and trade corridors, which include the India-Middle East-Europe Economic Corridor.
Role of DMCC in Strengthening Economic Partnerships
Ahmadi, while speaking at the launch of the report of the DMCC, titled “The Future of Trade”, highlighted how CEPA facilitates the reduction of tariffs and eliminates trade barriers. This enhances the access to these regions in the market. The report highlighted that the UAE-India CEPA was a prime example of the trade benefits that such agreements deliver.
The report also pointed out the strategic demographic location of the UAE and its business-friendly strategies. All these factors position the country as a crucial hub for regional trade and economic integration.
Establishing Bilateral Trade Relations
With global economic dynamics evolving, the report identified new centers of economic activities emerging in Asia, particularly around China, India, and ASEAN. The multilateral agreements between the two countries significantly reduced tariffs and fostered regional economic cooperation. The proactive approach of the UAE in this regard demonstrates its commitment to fostering a sustainable economic growth environment.
The UAE continues to strive to consolidate its position as a key player in global trade dynamics. This is evident from its consistent efforts to broaden the scope of the CEPA with India. Naturally, international businesses are expanding to the UAE to capitalize on the growth opportunities.
Forward-thinking businesses eyeing a company formation in Dubai are closely coordinating with the IMC Group for professional consultancy and advice. With experts guiding them on the right path, enterprises can confidently embrace the growth trajectory and ensure legal compliance while expanding to the UAE.
- NEWSLETTER,U.A.E
- July 11, 2024
With a surge of new businesses in the UAE, immediate tax registration has turned out to be a crucial priority. Across the country, free zones are promoting their perks actively to draw investors, offering exciting incentives. New enterprises must carefully consider their corporate tax registration obligations and potential eligibility for a 0% tax rate. Forward-thinking businesses often consider seeking professional assistance from a leading corporate tax consultant in Dubai to remain on the right track.
Regardless of the location of the free zone, every newly incorporated business in the UAE must prioritize corporate tax registration. The tax authorities in the country have explicitly stated that businesses with mainland, free zones, or offshore licenses are required to register for corporate tax. This clearly defines the corporate tax registration requirements for businesses operating in the UAE.
Chambers of commerce and leading free zones in the UAE have reported an increase in the number of businesses looking for incorporation in the country. This is the result of the different Comprehensive Economic Partnership Agreements (CEPA) that the UAE has secured with multiple countries. As a result, the nation is witnessing a higher influx of new businesses of late.
Key Steps for New Businesses
New businesses in the UAE must file for tax registration within three months from their date of incorporation. Failure to meet this deadline will result in fines for non-compliance. In the UAE, new entities benefit when they integrate into an established tax regime. This makes it easier for them to understand the requirements of corporate tax.
Many businesses are currently confused over whether they can complete the tax registration simultaneously while obtaining their trade license. To clarify this point, they can’t carry out these two processes together.
On the other hand, existing businesses face challenges in understanding their corporate tax liabilities between mainland and free zone operations. A professional team of experts like the IMC Group, which specializes in UAE Corporate tax registration, can comprehensively assist both new and existing businesses in this regard.
Trade License and Tax Registration
FTA Guidelines and Deadlines
The UAE tax regulator has adopted a proactive stance while issuing updates and reminders for both old and new entities regarding registration and obtaining their TIN. The FTA has stated that it doesn’t want to amend any provisions of the legislation, maintaining the deadlines for various taxable persons, both resident and non-resident.
According to the latest decision of the FTA, the timeline for applying for exemptions remains unchanged. Therefore, all taxable persons need to submit their tax registration application to the FTA by the specified deadlines.
Professional Assistance from a Corporate Tax Consultant in Dubai
With an increasing number of businesses willing to expand to the UAE, the free zones in the country have ramped up their incentives to attract new enterprises. Initiatives like providing physical and digital access 24/7 ensure that all the transactions would be completed on schedule. Some free zones offer premium office spaces and multiple licensing options, including dual licenses for businesses holding a Dubai Department of Economy and Tourism license, as well as multi-year licenses for long-term setups.
The IMC Group continues to be a leading Corporate Tax Consultant In Dubai, partnering with both new and existing companies and offering comprehensive assistance. Foreign businesses expanding to the UAE can trust this group of experts to ensure a seamless incorporation and corporate tax registration process, adhering to legal norms.
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