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"The big ticket items will start happening in the M&A space once more as Indian companies become larger and actually reach the $2-5 billion mark."

Kolkata , Jan. 20

HERE'S a prediction by a professor at New York's Stern School of Business that Indian companies cannot ignore: outbound acquisitions by local corporates are set to turn bigger and more elaborate, even as potential acquirers start looking at deals that are $100 million-plus in size.

Prof Marti G Subrahmanyan, who spoke at length at CII's partnership summit on issues involved in crossborder M&As, also presages that Indian companies will soon have a busy time preparing their overseas shopping lists. This will be a marked shift from the deals that have been concluded so far - most of them small by global standards.

There has been a spurt in the number of acquisitions, both inbound and outbound, the professor remarked, adding that many outbound transactions have been in the $20-40 million bracket.

For the record, local corporates are being motivated by a variety of factors when it comes to M&As concerning foreign entities. These include the need to secure better raw material and a wider access to markets. The necessity to acquire new clients is also driving Indian firms, especially those in the IT services space.

On the other hand, auto ancillary companies are seeking to access efficient R&D inputs, while financial services companies are eyeing licensing and regulatory approvals. Bharat Forge, for instance, has taken over a German company partly for the latter's R&D strength.

"The big ticket items will start happening in the M&A space once more as Indian companies become larger and actually reach the $2-5 billion mark," said Prof Subrahmanyan, while referring to deals that may well be backed by stock (rather than only cash).

Indian companies will have to learn to `integrate' their local operations with newly-acquired overseas businesses in every sense of the term, it is pointed out. In the post-acquisition phase, leveraging the brand created by an overseas outfit is a significant matter.

Recruitment of non-Indian managers will be an important issue for the managements; the latter are known to have shied away from this area. "No one has truly integrated foreign managers," is the considered opinion. However, airlines and hotels have started sourcing HR talent from abroad.

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