The dealmaker
Merger and acquisition (M&A) activity is considered an important indicator of the health of the economy and provides insight into how organizations recalibrate their business strategies to stay competitive. M&A consultants meticulously assess market dynamics, evaluate target opportunities, and mitigate potential risks for companies seeking to improve their market position or expand their product range.
Q&A with Shawn Han
Shawn Han, M&A Consultant at Well Blue Advisory (HK) Ltd.
What does a typical day look like for you?
In the morning, I will organize project materials, which includes finding suitable target customers, conducting company background checks and organizing meeting minutes. As most of my clients are in Europe, meetings with clients are usually in the afternoon given the time difference. If I am on a business trip, I will arrange visits to target companies alone. If both the target company and the client are willing to carry out an M&A deal, I will visit the company more with the client to promote the project.
What are the challenges of your role?
I mainly work on the buy-side of M&A. The main challenge is finding suitable corporate targets for clients in Mainland China. With clients that are foreign companies, I need to explain in detail the differences between Chinese and foreign industries, help them adjust the M&A standards, and find suitable targets in a practical way. After finding the target, I need to explain the synergy of the M&A to both parties for the deal to go smoothly. This involves a lot of industry and financial analysis, the evaluation of corporate prices, and designing transaction structures.
What are the opportunities of your work?
I can work with management in different industries and consider M&A and market entry opportunities from the perspective of corporate development strategies. This involves having in-depth communications with the CEO or CFO of the company, which is a rare opportunity. At the same time, I have to deal with a large number of companies in different industries, understand the development trends of the industry, the different SWOT of each company, and have detailed discussions with the bosses of target companies.
What key trends or threats are having a major impact on your work?
With the political developments affecting China and the United States relations, some industries have seen a decrease or stagnation in cross-border M&As. However, I mainly focus on certain industries that use M&A as a means of expansion, and are relatively less affected by political and economic factors. As government reviews of cross-border M&As become stricter, deals in the areas of national security, confidentiality, and energy face challenges, which require M&A consultants, clients, and lawyers to work together.
What are your current priorities as an M&A professional?
My main goal is to serve my clients as well as possible, complete M&A projects as quickly as possible within a limited time, and serve my clients well in the subsequent post-merger integration to add value to the synergy of the enterprise. Establishing long-term cooperative relationships with my clients is another focus of mine, as well as bringing in new M&A opportunities for myself by actively proposing appropriate M&A opportunities and directions to my clients.
How did the Qualification Programme (QP) or training as a CPA prepare you for this role?
The QP corporate finance knowledge allows me to reasonably analyse a company’s valuation and the feasibility of future development. Being a CPA also gives the client confidence in my professional ability.
What key advice do you have for CPAs?
Mergers and acquisitions require you to be able to quickly research the industry, understand the industry’s scale, trends, major companies, and quickly find suitable target companies in a short period of time. After finding a suitable company, you must have strong persuasiveness to contact the other party’s management, and convince them to consider and accept the deal. This requires you to have good communication skills and the ability to clearly explain the logic behind potential synergies. You also need to have the ability to manage and resolve contradictions between the two parties, and control the direction of the entire project.
The strategic navigator
With a close eye on market forces, such as government policy and geopolitical events, and solid strategic thinking skills, investment professionals make investment recommendations, conduct analysis, or advise on investment strategies. CPAs in this area can utilize their accounting and audit background to address accounting issues related to diverse financial instruments within investment portfolios.
Q&A with Ryan Mak
Ryan Mak, Regional Head of Investment Planning, Controlling and Reporting at Assicurazioni Generali S.p.A. – Asia Regional Office
What does a typical day look like for you?
Typically, my workdays begin with providing updates on the performance of financial markets in the Asia region, which our group covers, to the senior management team. I promptly address any questions they may have. The remainder is occupied by meetings with colleagues from different departments and work streams across our group, regional and local offices, revolving around strategic initiatives, projects, and day-to-day investment management operations.
What are the challenges of your role?
A significant challenge is effectively positioning ourselves to address the frequent changes in requirements initiated by various stakeholders. Our group is committed to continuously improving information exchange and dataflow processes and hence my role is to ensure successful implementation of these changes across local offices, so that stakeholders in our group, regional and local offices are well-informed to make strategic decisions. Consequently, we must have a comprehensive understanding of the operations and practices in different local offices which could be changing frequently.
What are the opportunities of your work?
Engaging with senior management and actively participating in strategic meetings and discussions involving departments from our group, regional and local offices has given me invaluable insights from diverse perspectives. This has strengthened my strategic thinking and critical reasoning skills, ultimately enhancing my decision- making abilities. Working in a regional office role also exposes me to different cultures, which enables me to compare and learn from colleagues in various offices, as well as incorporate best practices to enhance the effectiveness and efficiency of my work.
What key trends or threats are having a major impact on your work?
In recent years, the growing geopolitical tensions in various regions and the volatility in global financial markets have emerged as significant threats that greatly impact my work. These factors have the potential to create adverse effects on our management of investment portfolios in the Asia region. It is crucial for us to promptly assess and respond to significant events, ensuring that relevant stakeholders are well-informed in a timely manner which facilitates informed decision- making regarding management actions.
What are your current priorities as an investment professional?
A primary focus of mine is to support our local offices in improving the risk-adjusted investment returns of their portfolios. Simultaneously, it is essential to ensure that our support given to local offices can fulfil our group’s commitments regarding environmental, social and governance initiatives and sustainable investments.
What key advice do you have for CPAs?
Having a growth mindset as a CPA serves as the foundation for continuously adapting to the steep learning curve in investment management. This includes areas such as asset and liability management, and strategic and tactical asset allocation.
How did the QP or training as a CPA prepare you for this role?
My training as a CPA has provided me with a meticulous and rule-based mindset, ensuring that my work is accurate and free from material misstatements. I prioritize supporting my work with sufficient evidence and high-quality data. My previous experience as an audit manager has equipped me with strong technical accounting and auditing skills. This background proves invaluable when addressing accounting issues related to the diverse financial instruments within our investment portfolios, allowing for more efficient and effective collaboration with the finance departments across group, regional and local offices.
The benchmarker
Business valuation specialists could discuss the value of a client’s company with its CFO, provide an expert witness report about a fair and reasonable valuation for a business under commercial dispute, or assist a start-up seeking private equity investment to determine a fair range of pre-money valuation. Understanding the business, and performing a comprehensive analysis of the financial statements, are equally important.
Q&A with Max Tsang
Max Tsang, Director of Valtech Valuation and Consulting
What does a typical day look like for you?
On a typical day, I review financial models, provide guidance to the team, and join technical discussions regarding accounting standards and key valuation judgements. I also answer clients’ queries on valuation, and may take part in valuation model development in new markets such as valuation for tokenization. If I have spare time, I explore ideas with my team on new functions, training materials, or tools to add to our valuation app.
What are the challenges of your role?
A challenging yet satisfying aspect of my job is performing valuations on portfolios for fund managers or securities firms. For example, when valuing a typical Series B preferred share invested by a private equity fund, we start with the fundraising history and conduct empirical research on mass data, applying industry-based market approach techniques. At the same time, equity allocation using option pricing models is necessary to address the fact that different classes of shares, having different priorities and rights, should have different values, even though their values will be the same upon a successful IPO. The challenge increases when we encounter special cases like a target company teetering on the edge of default.
What are the opportunities of your work?
It is common for us to value companies in industries that are in the spotlight, for example, electric vehicles and related businesses, artificial intelligence (AI) applications, biotechnology, and digital asset service providers. As these industries attract capital and draw market attention, valuation demand arises. With the growth of Hong Kong’s asset management industry, we see increased demand from fund managers, family offices, and investment arms of established corporations for regular support.
What key trends or threats are having a major impact on your work?
The biggest threat is not AI itself, but how seriously people take valuation. An example of not being serious is giving AI an instruction like, “Based on the information provided about my business, generate a valuation report and justify its worth of US$50 million.” When people are not interested in critically assessing the reasonableness of the valuation process or disclosures supporting the valuation result, the value of our work will diminish.
What are your current priorities as a valuation professional?
My next target is acquiring the valuation license in Mainland China by passing the two remaining exams. I am inspired by studying the differences between the valuation systems and practices in Mainland China and International Valuation Standards. This pursuit comes from my desire to become an all-around valuation expert. Secondly, I am eager to explore ways to expand Valtech’s business operations to other financial hubs.
What key advice do you have for CPAs?
CPAs have an obvious advantage in practising valuation due to their understanding of how a financial statement is compiled and how consolidation is done. They have a better sense of drilling down items and notes. Basic quantitative skills are essential in valuation, and an interest and skills in spreadsheet modeling will be necessary to enter the field.
How did the QP or training as a CPA prepare you for this role?
To prepare a good valuation with necessary disclosures, a valuer must gain a thorough understanding of the business model, the market and industry, and the development of the target company. A solid understanding of financial standards, such as those introduced in module A of the QP is helpful. The knowledge covered in module B provides essential concepts in corporate finance for CPAs to understand risk, capital budgeting, and cost of capital, which are heavily used in valuation.
The master communicator
Today, more than ever before, investors or stakeholders are having in-depth discussions with investor relations (IR) professionals on a broad range of topics. Those in IR roles must stay up to date on changing market dynamics, and understand the long-term strategies of a company, with a focus on enhancing liquidity.
Q&A with Mark Lam
Mark Lam, Head of Investor Relations & Corporate Sustainability at Hongkong Land Limited
What does a typical day look like for you?
I would start with a breakfast meeting with sustainability consultants, then have a coffee catch-up with the team. I would draft board papers and report back to the C-suite on the latest investor interactions, and collaborate with colleagues, giving input on key initiatives from an investor relations or sustainability perspective. I could have a lunch meeting with prospective investors, then work with colleagues to execute regular portfolio tours for prospective investors.
What are the challenges of your role?
Most public companies are inherently complex. In order to ensure that I, and the IR function overall, can speak to specific queries or issues, building and maintaining strong relationships with colleagues as well as ensuring my market knowledge is up-to-date is critical. Another challenge is that investors are wanting to spend more time with the C-suite and/or IR to discuss industry trends, as well as company-specific strategies on business, capital allocation and sustainability. The topics discussed are very diverse. One minute we are discussing the Hong Kong luxury retail market and the next we are talking about the potential avenues Hongkong Land has to achieving its 2030 science-based targets.
What are the opportunities of your work?
Explaining first-hand to investors or stakeholders the fine work done by colleagues across the organization, allows us to cut through the “noise” of the press. Also, taking the time to build genuine relationships with investors and stakeholders allows us to better understand the thinking, priorities of our investors to facilitate proper planning, which allows us to respond to their needs.
What key trends or threats are having a major impact on your work?
There are two major trends. Not only do investors expect more frequent interactions than in the past, but they are also looking for more in-depth and frank discussions. Another trend is that the range of topics discussed have become broader, moving beyond the financials. These days, investors or stakeholders tend to scrutinize not only the business results but how we do business.
How did your training as a CPA prepare you for this role?
Financial literacy is critical to IR work. As professionals in this space, we are expected to be able to discuss everything from macro issues and trends impacting the business to the origins of a specific financial or ESG-related disclosure. In addition, as companies look to further integrate ESG considerations into their operations, and consider ESG- related risks and opportunities in a more holistic manner, my training as a CPA helps me to bridge different perspectives when communicating with key stakeholders.
What key advice do you have for CPAs?
Those thinking about a career in IR should devote time to develop their skills and feel comfortable speaking about topics outside of finance such as business strategy, industry trends, sustainability trends and performance. There is a growing global trend of placing CPAs with prior experience in senior or external facing roles in IR positions.
The risk expert
The role of a due diligence analyst is a dynamic one, requiring professionals to stay up-to-date on market developments and maintain a keen eye for details and red flags. They often focus on conducting thorough research and analysis to support the onboarding of new investment products and match products to the client’s risk appetite.
Q&A with Crystal Wong
Crystal Wong, AVP, Product Due Diligence Analyst at DBS Bank (HK) Limited
What does a typical day look like for you?
It involves performing product due diligence on various investment products such as bonds, equities, bancassurance, funds, and structured products. A key part of my day is reviewing new onboarding product requests, among which bond and equity are often time- sensitive. This includes reviewing product documentation to assess the risk factors, redemption terms and coupon structure of the products. My goal is to provide appropriate risk ratings, taking into account the key products features and risk factors, to the product managers in a timely manner.
What are the challenges of your role?
I find balancing the interests of a wide range of stakeholders to be a challenge. For example, a new product approval (NPA) process usually involves different teams including risk management, technology and operational or compliance. Each has their own perspectives and risk considerations in the NPA process. Therefore, I have to invest time to explain the process, consolidate their advice, understand their specific areas of focus and risk considerations. Reconciling the varying priorities and risk appetites of all stakeholders can be a delicate balancing act. My goal is to align everyone on the appropriate risk profile, so that I can proceed to the final stage with the collective sign-off within a reasonable timeframe.
What are the opportunities of your work?
Through my work, I’ve gained a broad understanding of market trends, particularly how different investment products perform in varying interest rate environments. This allows me to stay alert to the evolving preference and appetites of our retail and private banking clients. Additionally, navigating the NPA process has given me unique opportunities for cross-functional collaboration. Navigating interpersonal and interdepartmental complexities has been invaluable for my professional growth.
What key trends or threats are having a major impact on your work?
The prevailing market conditions have undoubtedly had a major impact on my work. Investors are seeking more green products that do not only generate positive financial returns, but also align with their values and sustainability goals. This has broadened the portfolio with more green investment product offerings, requiring robust due diligence to validate their impact and authenticity.
What are your current priorities as a due diligence professional?
My primary focus is to conduct a detailed assessment of the investment products’ risks factors, return, and key features from our client’s perspective. It is important to assess and match the investment product with a suitable target market. This can be done through careful consideration of the clients’ investment objectives, time horizon, and risk appetite to match their profiles with a wide range of products on shelf.
What key advice do you have for CPAs?
Develop a holistic, risk-focused mindset. This role requires a broad understanding of the business, industry and regulatory environment. With a keen risk management mindset, you’ll be able to identify and address risk from the bank’s and client’s point of view.
How did the QP or training as a CPA prepare you for this role?
The QP emphasizes the importance of ethical decision making and professional judgment. The training has taught me to uphold a high standard of integrity and to maintain professional skepticism when performing due diligence work. It has enabled and enhanced my risk assessment capabilities and ability to fulfil my role as a well-rounded due diligence professional.
The local guide
When it comes to inbound and outbound investments, tax professionals will know best practices for managing cross-border tax issues, and can help companies identify tax-efficient structures and strategies to minimize tax liabilities and ensure compliance. CPAs in this area are equipped with up-to-date knowledge, helping them navigate the dynamic global tax landscape.
Q&A with Cecilia Hung
Cecilia Hung, Tax Director at Moore Tax Services Limited
What does a typical day look like for you?
In addition to routine Hong Kong tax compliance work, I also deal with ad hoc tax enquiries on proposed restructuring, inbound and outbound investments, cross-border due diligence projects etc., which may require extensive liaison and collaboration with member firms in other jurisdictions with different time zones. Checking emails is typically the first thing I would do, and that gives me an idea of what I would need to handle on that day.
What are the challenges of your role?
Planned work alongside ad hoc calls and meetings means our work can be full of challenges. We normally work on several projects at the same time, in addition to the compliance work. The ever-changing global tax environment, particularly the implementation of the two-pillars under Base Erosion and Profit Shifting (BEPS) 2.0 keeps us busy. There have been quite a number of important changes to Hong Kong tax laws in recent years. We need to consider the implications on our clients and take necessary actions.
What are the opportunities of your work?
Tax is a cost of investment. Investors should know what their options and the related tax costs are before making decisions. To a certain extent, through a tax-efficient holding structure, investors could lower the tax cost on dividend repatriation and the profit derived at the time of exit in a legitimate way, and hence get a higher investment return. This is how tax professionals add value to investment strategies. Because of the dynamic global tax environment and recent changes to Hong Kong tax laws, there is increasing demand from multinational enterprise groups and local entrepreneurs for advice on the potential tax implications and restructuring. Taxpayers are paying more attention to tax issues nowadays as Hong Kong tax is not that simple as it used to be.
What key trends or threats are having a major impact on your work?
There are now more tax issues in Hong Kong, as well as other jurisdictions, in relation to cross-border investments, that need to be considered in view of the newly implemented foreign-sourced income exemption (FSIE) regime, tax certainty enhancement scheme for onshore disposal gain on equity interest, concessions for family office, the expanding treaty network, BEPS 2.0, etc.
What are your current priorities as a tax professional?
The FSIE in Hong Kong and tax rules concerning BEPS 2.0 are our main focuses. These would affect the holding structure of a new investment as well as an existing investment since Hong Kong has been a traditional investment holding platform for multinational enterprises for many years. With tax in general, it costs you less if you put things in the right position in the first place.
How did your training as a CPA prepare you for this role?
My training has given me the skills to easily communicate with colleagues and clients with different professional backgrounds. I have also benefited from the annual tax conferences and seminars organized by the Institute covering hot tax topics.
