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  • 02Sep

    Twelve months after hitting the trough in the worst global recession since the great depression, the world economy is recovering steadily on the back of unprecedented fiscal and monetary policy support by governments and central banks. However, unexpected dark clouds, in the form of the European sovereign debt crisis, falling stock markets and stubborn US unemployment, have gathered on the horizon. At the same time, the potential downside risks to the world economy of poorly timed unwinding of stimulus policies, over-regulation and asset bubbles have not abated.

    Are these mere passing showers or ominous signs of a world spinning headlong into the dreaded double-dip recessionary storm?

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  • 18Aug

    Business reorganisations free of tax under new EU regulations

    Owing to the globalisation of the world economy over the past ten years, many companies have been forced to grow in scale. For many years, megadeals have been a feature of the M&A (Mergers & Acquisitions) scene. Companies make such deals in order to grow, increase their profits and remain competitive in the global market. This often leads to the creation of huge multinational groups with extremely complex corporate structures, consisting of countless companies and divisions, sometimes in more than 100 countries. The recent economic recession has forced multinationals to cut costs in order to offset disappointing revenues. This has led to a new trend: corporate simplification. Corporate simplification is a way to achieve savings by making the decision-process more straightforward and cutting costs, in part by reducing the complexity of corporate structures. Recent EU regulations on mergers and reorganisations, which have now been incorporated in the national regulations of all 27 EU member states, including Belgium, are bound to encourage this trend. PwC therefore expects that in the coming years, following the wave of acquisitions in recent years, there will be an increasing number of business reorganisations that lead to greater integration and simplification, and hence cost savings.

    Size does matter…

    Since the start of the new millennium, the number of mergers and acquisitions in Europe has shown an upward trend, as has the average value of such deals. In 2007, the combined value of all mergers and acquisitions in Europe was some € 1,100 billion, compared with € 424 billion in 2003(1). Undeniably, mega mergers and acquisitions have dominated the M&A scene during the past decade. According to the same source, the total value of all deals worth more than € 500 million was no less than € 863.7 billion in 2007, compared with € 298.5 billion in 2003. The main reason for mergers and acquisitions is to achieve economic growth. Companies conduct mergers and acquisitions with the aim of increasing their market share or gaining access to new markets and activities. “A merger or acquisition is only the beginning,” explained Jan Muyldermans, Lead Transactions Partner at PwC. “We have established that it often takes businesses a long time to integrate a newly acquired business or group into their business, and often this simply does not happen. This could be for any of a number of reasons, for example so that it will be easier to sell the acquired company on in future if the group decides to do so. However, this can sometimes result in extremely complicated corporate structures with different entities and divisions in various countries, and mean that some of the benefits of the acquisition, in the form of synergies or cost savings, are not realised.

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  • 17Aug

    Q2 has been uncertain for borrowers, lenders, issuers and investors with the continuing euro-zone debt crisis and renewed economic doubts restricting supply in the debt capital markets and dampening the demand for new lending.

    UK corporate lending was therefore relatively quiet in Q2 with borrowers and lenders alike waiting for the outcome of the UK’s general election and emergency budget. There has been a steady flow of new Leveraged Buyout (LBO) deals over the last six months, but we should not forget activity levels are the lowest since the late 1990’s.

    On the debt restructuring front, payment defaults and new formal restructuring discussions are substantially lower than a year ago, covenant resets less so. This perhaps indicates we are through the worst of the restructuring cycle. However, whilst the maturity wall continues to be chipped away by new bond and leveraged loan issuance, we still expect that a significant pool of the more highly leveraged borrowers will require formal restructuring to address their gearing issues.

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  • 05Aug

    The diversification strategies popular in the first half of the last decade, have been replaced by pressure from both shareholders and regulators to focus on core competencies and retrieve cash. Whilst overall M&A activity has taken a nose dive since the lofty heights at the end of 2007, the level of ‘Carve Out’ transactions, involving the divestment of one or more non core asset, has remained relatively buoyant. Interestingly, the value of Carve Out transactions has fallen by over 60%, however the volume has fallen by only 15%. 

    This reinforces our recent experience that sellers frequently need to break up assets that they might once have sold as a whole, into smaller parts, in order to overcome limited bidder leverage. Bidders are also more frequently joining forces in consortium arrangements, particularly for larger deals and are more cautious now than ever before.

    For sellers to achieve divestments and maximise deal value, a different, more agile approach is required in this climate. Deal outcomes are more unpredictable and sellers therefore need to predict likely sale scenarios, including the types of bidders and their requirements and plan accordingly.  Continue reading »

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  • 30Jun

    The Belgian tax law enables companies to deduct a fictitious interest calculated on the basis of their shareholder’s equity, the so called notional interest deduction (NID). This measure reduces the cost disadvantage of equity in the capital structure of Belgian businesses and effectively lowers the corporate income tax rate.

    The applicable NID rate is determined every year, based on the average return on the secondary market of a Belgian government bond with a remaining maturity of 10 years (OLO10).

    Business plan practitioners may be confronted with the question which NID rate to use, especially in long term forecasts? The current NID rate is known, but what within 5 or 30 years? Making an accurate estimate for every year during the thirty years to come is practically impossible, so a thirty year average might be an easy-to-use alternative.

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  • 11Jun

    With the global economy recovering, foreign strategic buyers are re-emerging the surface of the Chinese M&A market and are actively looking for expansionary acquisitions. Entering the Chinese M&A environment is however challenging due to:

    • Industry structure and geographic scale
    • Constant changing regulatory environment
    • People versus systems
    • Partners and alliances
    • Compliance costs
    • Potential traps on financial & tax information
    • Proper structuring
    • Intellectual property environment

     Although the global economic recovery will entice foreign strategic buyers to look for Chinese investment opportunities, all parties involved are notably more selective in their investments and will look beyond the valuations in order to identify fundamentally sound companies. Absent local presence sourcing good quality deals in a highly fragmented and widespread market requires a combination of in-depth local knowledge and an integrated local network. Moreover the ability to implement operational efficiencies can be dictated by the quality of the relationship with management and is often constrained by minority interests.

    PricewaterhouseCoopers China – in close cooperation with the business development team and the Transactions practice of PricewaterhouseCoopers Belgium – can assist in this process of sourcing the attractive investment opportunities and to perform due diligence procedures to determine the optimal governance and operational structure post closing.

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  • 27May

    As the economy continues to move toward recovery, leading private-company owners and management are focused on strategic investments and innovation, while keeping an eye on improvements that will enable them to better manage risk within the evolving business and economic landscape. The goal is building a resilient yet agile organization that will be well equipped to take on the many opportunities and challenges the future holds.

    To that end, we are pleased to announce the latest release of Growing Your Business, which focuses on strategic growth, innovation and long-term sustainability as the bedrock of a successful business.

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  • 17May

    If you are confronted with:

    • a complex company structure that is no longer adapted to the current market environment…
    • covenant breaches and uncertainty about the magnitude of the impact of the crisis on the business of your company..
    • significant drops in the value of your equity incentive arrangements…

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  • 06May

    For FR version, scroll down.

    Bijna 4 op 10 bedrijven onderschatten integratiekosten na fusie of overname

     

    Economische crisis noodzaakt efficiënter management van fusiekosten en -processen

    Brussel, 5 mei 2010 – Onder druk van de economische crisis is het realiseren van de juiste synergieën en het optimaliseren van de rentabiliteit van cruciaal belang voor het succes van een overname. Een goede planning en efficiënt kostenbeheer van de fusie- en integratieprocessen na een bedrijfsovername spelen hierbij een doorslaggevende rol. Toch start 1 op 3 bedrijven de planning van het integratieproces te laat, pas na het afsluiten van de transactie. Bovendien overschrijdt 39% van de bedrijven bij een overname de geplande integratiekosten. Een meerderheid van de respondenten (62%) geeft de voorkeur aan een snellere integratie om zo kosten te besparen en onzekerheid weg te nemen.

    Dit blijkt uit het onderzoeksrapport van PricewaterhouseCoopers over fusie- en integratieprocessen na een bedrijfsovername. Het rapport bundelt de resultaten van bevragingen uitgevoerd in 2009, in acht Europese landen, waaronder België, bij meer dan 250 topmanagers die bij een integratieproces volgend op een bedrijfsovername betrokken waren gedurende de laatste drie jaren. 

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  • 03May

    The 7th and last session of this year’s M&A Academy cycle took place on 29 April looking at “HR integration after a merger”. Turbulent economic times are making many organisations undertake a transaction, whether a merger, an acquisition, a divestiture, a carve-out or a spin-off. Every transaction creates turmoil, uncertainty and opportunities for people.

    Peter De Bley, Partner at PwC Belgium, introduced the subject before handing over to our guest speaker, Wim De Wit, HR Director, retail & private banking Belgium, BNP Paribas Fortis, who presented his views on the strategic added value of HR in times of changes and the future challenges for his company.

    Download the presentation: “HR integration after a merger”

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