What is driving M&A deals in India today?
The raging desire to achieve a growth in marketshare and the need to concentrate on core business are driving M&A deals in India today. In some industries, the objective of a deal is to prevent the entry of a foreign player. For instance, Gujarat Ambuja took over DLF cement and took stakes in ACC just to keep the French major Lafarge out. Reorganisation of multinationals' global operations is also driving M&A deals in India. For instance, it was global reorganisation that led to the merger-demerger exercise involving Sandoz and Ciba resulting in the creation of Novartis, Clariant and Ciba Speciality Chemicals.

What will drive M&A deals tomorrow?
The need to stay ahead in technology will drive M&A deals tomorrow. Five years down the line, we should see Indian multinationals picking up stakes in global biotechnology firms. Convergence of computer and television should also drive M&A deals tomorrow.

Which industries are ripe for M&A today?
Pharmaceuticals is ripe for more M&A deals. For, there are so many small units. Large companies such as Ranbaxy should soon take over many pharma companies which have decent growth and continue to be in business despite no great stockmarket valuation. If many M&A deals are not happening in the pharma industry, it is because quite often the buyer and the seller happen to be companies targeting the same segment.

Finance industry too is ripe for M&A. All mid-sized finance companies will be eventually taken over. Finance companies with strong fee-based operations are ideal M&A targets. Paper industry too is ready for M&A. Textile industry should also see M&A deals soon. Meanwhile, cement industry reorganisation is not over.

How do you sniff a deal?
At times, an investment banker has to realise the potential for M&A and drive the deal. If one of my clients is cash-rich, I should go ahead and make a representation on what he could do with the money. Buyouts could be one option for him. Secondly, if one of my clients comes to me for restructuring, I should find out the scope for disinvestment. And at least one of the parties, either the buyer or the seller, should be known to me. For, M&A is a relation-driven business.

Why is the open offer route generally not preferred in takeovers?
Open offers are not bad. But, the long-drawn open offer process acts as a hindrance to acquisitions. It takes in all 132 days and until then the target company cannot be taken over. So, most acquirers go for the preferential allotment route. The question they ask: why should I wait for more than four months while someone runs the company?