Mergers and Acquisitions Call for More Due diligence in Asia Pacific region

Alisdair Gillies
With the value of Asia Pacific mergers and acquisitions eclipsing US$77BN in Q1 2012, Faithful+Gould is seeing an increased demand for pre-acquisition due diligence services for real estate and other fixed capital assets.

Typically real estate assets account for 25% of an organisation’s total assets and sit second or third in terms of total annual spend. The once over-shadowed asset portfolio is now seen as a real opportunity to drive cost saving and efficiency within an organisation.

In uncertain global market conditions, the cross border mergers and acquisitions (M&A) outlook in Asia remains buoyant, with organisations looking to take advantage of the fast-paced growth of the Asian economies.

With best value and a strong bottom line at the forefront of the shareholder’s mind, advice beyond the pure economic fundamentals is now being considered. Faithful+Gould’s expertise and strong regional presence has allowed us to tailor our services to meet the bespoke needs of individual clients.

Leveraging on the back of the strong yen, a Japanese MNC recently asked us for assistance with its significant regional expansion plans. Our remit was to undertake a series of due diligence surveys throughout Asia to establish condition, risk and short term capital expenditure of various commercial premises. At the same time we also assessed longer term expansion feasibility of the sites.

Going beyond the standard depreciation formulas, we undertook a detailed analysis of the physical structures of the properties, lease obligations, health and safety risks, plant and equipment and local infrastructure availability. This in-depth study gave the client real-time knowledge of the assets to be purchased and assisted with leverage when the financial details of the deal were negotiated.

In emerging economies, historic information in relation to the construction and the maintenance of a building is often missing or lacking in detail.

In emerging economies, historic information in relation to the construction and the maintenance of a building is often missing or lacking in detail. We use our regional coverage and experience to ensure that the analysis of assets is undertaken by highly-trained professional staff, well versed in local construction techniques.

Although front-end cost savings are often the highest priority when undertaking an M&A transaction, Faithful+Gould is able provide advice relating to future financial commitments for property funds, Real Estate Investment Trusts (REITs) and other prominent commercial real estate owners. With our diverse local expertise, we are able to offer advice on:

  • Strategic portfolio planning and assessments
  • Life cycle costing
  • Production of assets registers
  • Risk reviews
  • New build, refurbishment and disposal financial estimating

With changing attitudes towards real estate assets, clients are witnessing first hand the value of diligent advice. Historically real estate assets were somewhat overlooked.  However, giving thoughtful consideration to these is now allowing corporations to demonstrate strong corporate and social responsibility whilst providing tangible cost savings to shareholders.