Navigating the complexities of cross-border M&A transactions: The winner of the BDO Mid-Market Transaction of the Year Award

BDO was delighted to sponsor the inaugural Mid-Market Transaction of the Year Award as part of this year’s INFINZ awards. This year, the award went to Cameron Partners for its role in supporting the sale of a 70% stake in Fertility Associates Limited to a consortium comprising Pioneer Capital, NZ Super Fund and White Cloud Capital in December 2021.

This was a complex, cross-border, M&A transaction with varying shareholder objectives, regulatory challenges and competing interests, and was further complicated by significant COVID-19 lockdown uncertainty.

Understanding the complexities of cross-border transactions

Fertility Associates has operations in both New Zealand and Malaysia, and Fertility Associates was increasing its ownership stake in the Malaysian subsidiary as part of the transaction. The due diligence exercise was further complicated because some of the Malaysian subsidiaries were not wholly owned. The due diligence exercise included a focus on the Malaysian growth outlook, subsidiary look-through cash flows, ownership arrangements between shareholders, and future regulatory settings.

Navigating multiple stakeholder interests

There were four broad “generations” of Fertility Associates shareholders, all of which had different priorities. Cameron Partners helped craft the sell-down arrangements for each generation to drive appropriate “partnership” outcomes with the consortium post-transaction. Cameron Partners also supported the development of incentive and retention arrangements with key management to ensure continuity through the transaction process.

As a partnership deal, it was essential that the specialists at Fertility Associates would have a good relationship with their investors – while this would typically be done face-to-face, lockdowns and travel bans meant that these essential conversations had to be carried out online.

A great deal for New Zealand

Toby King, Cameron Partners’ lead adviser on the transaction, said: “This deal is great for New Zealand – the major investors are New Zealand based, so it’s an excellent example of NZ capital being put to work in a fast-growth New Zealand business. This deal also highlights the attractiveness of the healthcare sector for M&A globally.

Covid has highlighted the strength of the health sector as an investment class – it’s extremely resilient and the growth outlook is particularly compelling as the population gets older and wealthier, and technology improves. Continued innovation will drive the way healthcare businesses can provide help to people. This is a really attractive sector for investors.”

Simon Peacocke, BDO Corporate Finance Partner, said: “This was a highly complex transaction completed during a time of great uncertainty, and the way in which Toby and the team navigated the intricacies of multiple stakeholder interests, an emerging market with a less mature regulatory environment, and the need to ensure strong relationships between parties, has been exemplary. The transaction is an excellent showcase of the strong expertise available to support mid-market M&A transactions in New Zealand.”

BDO provides a full spectrum of corporate finance advisory services, including M&A, capital raising, tax assistance and corporate restructuring. Get in touch with your local office today to find out more.