Tuesday, April 06, 2010

Mergers & Acquisitions (M&As)

In my investing career, I have benefited immensely from M&As. Some of the counters that quickly come to mind are: IAC, MIDF, Amanah Cap, Austral Enterprise, FFM, Ranhill Utility, and VADS.
The purpose of M&As is to enhance shareholders value. Whenever there is an announcement of an acquisition or merger, the target company will have a very quick run up in price. If you have the ability to pick counters that are ripe for acquisition or merger, focusing your attention in this area alone can make you rich. Buy and hold is the strategy.
Corporate governance in the capital market is of the utmost importance. Overprotection by giving more powers to the minority shareholders may be bad. No protection is worse. Thus the Securities Commission (SC) must think of ways and means to protect the minority shareholders and at the same time encourage M&As.
Datuk Seri Nazir Razak, the CEO of CIMB, is probably right when he says that M&As activities will drop if the rules are too stringent. If there are no more M&As, then how is the minority shareholder going to benefit.
In this respect, I hope the SC will really come out with something great for both parties. A win-win situation is what is needed.
Accounting fraud is one of the worst type of white collar crimes. Those found doing it should be severely dealt with irrespective of whether they are big fishes or small ones.