Infosys is sitting on $3.5-billion in cash, that´s enough to buy out Ericsson in cash. According to Peter Schumacher and a recently published article in Indian Times “Indian IT services firms should focus on acquiring smaller and medium-size European IT services firms with e50-200 million in annual revenues. He adds that the Nordics offer more attractive acquisition opportunities when compared to Germany.” As I have made investments together with Indian IT companies, I have also made some insights. Below I have compiled a list of does and don´ts for Nordic vs Indian companies. Have fun!
If you are a Nordic small or midsize company getting approached by an Indian company that want to buy your company or start up a joint venture:
1. Remember that it is very difficult to get accurate figures for Indian companies. There is an unstable political and fiscal situation and if your payment is not in cash (like shares or options) be carful
2. It is high degree of corruption, do not accept anything else than legally and fiscally correct deals. No off-balance sheet arrangements, no complex transfer mechanisms of payments etc.
3. Indian companies are very skilled in negotiations and will always earn more than you, otherwise they do not enter the deal
4. Indian management styles is very different from the Nordic management style, it is more outspoken, less sophisticated, less strategic, very tangible, and extremely monetary driven.
5. It takes approximately 25 years to handle a legal clam in India, meaning it is not considered as an issues ending up in court.
If you are an Indian company that want to buy or start up a joint venture in the Nordic companies:
1. Be very clear on your expectations and your future plan for the organization
2. After a deal, do not appoint an Indian executive
3. After a deal, do not approach the market from India without informing and asking for permission from the Nordic branch, subsidiary/JV
4. Respect local laws, company acts, and governance codes
5. Do not try to transfer profit to India hidden in a to high price list on deliveries
Now, if someone wonder: Will I do more ventures in India? Yes of cause! I am already helping both Indian and Nordic companies to work out deals as well as finding target companies.
