What are the matchmakers’ targets?

The last few years have witnessed an incredible increase in the number of ‘acquisitions’ and ‘partnerships’ in Turkey. In addition to demand from abroad, there has also been intense activity inside the country. Behind these transactions, which including privatizations have totaled 40 billion dollars, lie the ‘matchmakers’ or consulting companies. Some of these companies handle business worth 15 billion dollars, others a few billion, but all shared the same goal of being ranked among the leading companies in 2006.

Last year there were around 60 privatizations of various sizes and nearly 90 mergers and acquisitions of companies. Privatization transactions realized revenue of 25.5 billion dollars, while private sector sales generated revenue of 12.3 billion dollars. It was a hectic time for companies which provide consulting services and competition between them increased. The acceleration in mergers and acquisitions during 2005 has continued through 2006. This year mergers and acquisitions are expected to continue in the banking, energy, retailing, housing and tourism sectors.

Companies are trying to find and make the most of the best opportunities in mergers and acquisitions. The companies which are providing consulting services for these transactions are engaged in a fierce competition to see who can close the most deals. But there can be major discrepancies between the statistics in the tables that are produced by rival companies. Consulting companies draw up rankings using different criteria to try to show that the volume of business they have realized is as high as possible and demonstrate their market strength.

What Is Happening In The ‘Merger League’?
But there are also independent companies which track those providing consulting services for mergers and acquisitions. One of these is Merger Market. Most consulting companies agree that Merger Market is the most trustworthy of the companies which publish reports about the market.

According to the tables published by Merger Market the ten leading companies in terms of the volume of business they handled in 2005 were: Rothschild, Ernst & Young, Citigroup, Morgan Stanley, ABN AMRO, PDF, M & A, BNP Paribas, Antika Partners and UBS.

But this list is not perfect because not all of the transactions and volumes attributed to the companies in the list belong to 2005. Many of the mergers and acquisitions were initiated in 2005 but were not conclude until 2006. For example, the acquisition of Telsim by Vodafone was initiated in 2005 and concluded in 2006 but is included in the list for 2005.

The table produced by Merger Market includes the number and volume of the transactions but does not state whether or not the transaction was completed in that year. This has made some companies uncomfortable. Companies which completed the consulting services they provided in 2005 before the end of the year think that it is unfair that rivals which did not complete the services they provided in 2005 have been ranked higher than them in the list.

For this reason, we allowed every company to have their say. We asked them whether or not they accepted the Merger Market league table. We listened to what they had to say about the transactions they had completed in 2005 and their targets for 2006.

Leader Rothschild Still Ambitious
Rothschild, which ranks first according to the Merger Market league table, provided consulting services for mergers and acquisitions to three companies. The total value of these transactions was USD15.628 billion. Eric Lanthiez, one of the consultants at Rothschild Corporate Finance, does not object to the Merger Market League. He has the following to say about the transactions they handled last year.

“We provided sales consulting services to the Savings Deposit Insurance Fund (SDIF) during the acquisition of Telsim by Vodafone. The second transaction we handled was the sale of 25 percent of Garanti Bankası to General Electric. The total size of this transaction was USD1.805 billion. The other transaction for which we provided consulting services in 2005 was the acquisition by BNP Paribas of a 50 percent stake in TEB for USD216.8 million.”

Ernst & Young’s Target For 2006
Ernst & Young ranks second in the Merger Market league table after providing consulting services for 13 transactions with a total value of USD1.041 billion.

Can Deldağ, head of the Ernst & Young Corporate Finance Department, confirms the figures in the table. He says that in 2006 they provided consulting services to SDIF for the sales of Limaş for USD45 million and Metaş for USD40 million. He says that they are targeting a total transaction volume of USD2-3 billion by the end of the year.

Nilüfer Gözütok
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