College students dared to take the M&A challenge

Happy participants of last year’s M&A Challenge. The second run has begun.

Structuring a merger and acquisition (M&A) transaction is both a science and an art, which no student of business, accountancy or management engineering will learn by heart without getting hands-on experience.

This is why the Philippine unit of multinational professional services network PwC hatched a nationwide competition that will give college students the opportunity to go through the entire M&A deal cycle from target identification, financial modelling and valuations, through deal presentation.

Isla Lipana & Co., the Philippine member firm of the PwC global network, recently launched Mergers & Acquisition (M&A) Challenge 2017, which is now on its second year.

“The M&A Challenge offers students from universities and colleges nationwide an experience, a realistic simulation—the next best thing to an actual M&A engagement,” said Alexander Cabrera, chair and senior partner at PwC Philippines. “We want to help in the transformation of the academe by integrating more real-life concepts into the curricula of local universities and colleges. In turn, we help prepare the students from the academic life into the actual world of business.”

Citing PwC’s experience in running last year’s competition, Cabrera said top schools do not necessarily have a monopoly on good teaching and good students.

“They are not shoo-in for the finals,” he said, adding that it was possible for less-known schools to compete well.

For Cabrera, business acumen, critical thinking and tenacity are the key values that PwC would like participants to take away from this competition.

“There’s a business purpose for decisions and we want them not to have just a feel of that but have an actual go of that thinking process,” Cabrera said in a roundtable briefing last week.

Critical thinking is seen just as important.

“Attentiveness to details is also very critical in M&A transactions. Every transaction is about the jungle and the beast. If you ignore one part of that, you don’t make the right decision,” he said.

Finally, tenacity is seen as a must in the world of M&As. “There could be a lot of distractions and issues that could really wear you down. But in real M&As, they are time-bound, and you need to keep at it until you deliver the report to the decision-makers and until the decision is made,” Cabrera said.

As for the mechanics, each participant must be enrolled in a university or college in the Philippines and has reached at least the second year.

The participants will form teams, with each member coming from the same university.

Jade Divinagracia, deals and corporate finance managing partner of PwC Philippines and lead partner for the event, explained that given a simulated M&A scenario, students will be tasked to help a prospective client address their strategic needs by assessing the growth prospects of different industries.

From there, they will identify which is the most suitable business for divestment.

This year, the plan is for the participants to scrutinize eight Philippine conglomerates that are listed on the Philippine Stock Exchange.

Judges will pose questions that will test the students’ understanding of various business concepts in accounting, tax, due diligence, and corporate finance as well as their proficiency in soft skills like delivering presentations, public speaking and critical thinking.

Teams must compete in three rounds to win.

Each round will require them to apply different technical and soft skills to solving problems that may occur when engaging a client during a corporate finance engagement.

A screening committee, composed of judges from PwC and the business community, will select the teams through elimination rounds.

During the final presentations day, finalists will take their cumulative knowledge from previous rounds and present their acquisition proposal to the judges.

Students and faculty members will also be invited to a series of webinars called “The Dealmaker Seminar Series”, which will focus on valuation techniques, due diligence, public speaking and presentation skills, and accounting and tax considerations in business combinations.

These are intended to help them on concepts that they will have to apply during the course of the competition.

This year’s M&A Challenge will run from August until late November.

Deadline for nomination and application is on Aug. 25, 2017.

The grand champion will earn P100,000 in cash prize plus P50,000 to the university.

They will also receive a trophy and internship opportunity with PwC Philippines’ deals and corporate finance department in 2018.

The second-placer will have a cash prize of P50,000 and a trophy while the third placer will have P25,000 and a trophy.

But all participants will come out of the competition with priceless knowledge that they can apply as soon as they graduate. —DORIS DUMLAO-ABADILLA