M&A and Due Diligence in Indonesia
Overview
Streamline your company’s business consolidation with Business Hub Asia’s expert Mergers & Acquisitions advisory. We provide comprehensive assistance throughout every phase of the M&A process, including strategy development, thorough due diligence, legal & tax compliance, and secure transaction completion, ensuring efficiency and adherence to Indonesian government regulations.
Get Expert HelpKey Features
Strategic M&A Consultacy
Develop a merger or acquisition strategy that is aligned with long-term business objectives.
Comprehensive Due Diligence
A comprehensive review of legal, financial, tax, and operational aspects to minimize transaction risk.
Legal & Regulatory Compliance
Processing of all legal documents and licenses following OJK, BKPM, and the Ministry of Law & Human Rights (Kemenkumham) regulations.
Valuation & Negotiation Support
Assistance in company valuation and negotiation to get the best results.
Post-Merger Integration
Support in the post-merger/acquisition integration process to ensure effective transition and minimal business disruption.
Minimum Requirements
Company Profile
Full profile of the companies involved (legality, financial statements)
Letter of Intent
Letter of Intent (LOI) or Memorandum of Understanding (MoU)
Financial Information
Data on company assets and liabilities
Structure & Shareholding
Organizational structure and shareholding
Shareholder Consent
Shareholder approval (if required)
Process and Timeline
1
Initial Consultation & Feasibility Study
Initial discussion to understand M&A objectives (expansion, consolidation, efficiency), including scope identification, business potential, and industry research, to legal and financial feasibility analysis. Estimated time: 3-5 working days
2
Non-Disclosure Agreement (NDA) & Letter of Intent (LOI)
Signing of NDA to maintain data confidentiality, and LOI to confirm initial interest and basic principles of M&A. Estimated time: 1-2 working days
3
Legal & Financial Due Diligence
A thorough examination of the legal, compliance, tax, HR, assets, encumbrances and liabilities of the target company. Estimated time: 10-20 working days (depending on the scale and complexity of the company)
4
Valuation & Negotiation
Assessment of the fair value of the target company using valuation methods, followed by discussions and adjustment of the strike price. Estimated time: 5-10 working days
5
Drafting & Signing Final Agreement
Drafting of the definitive agreement (Share Purchase Agreement, Merger Agreement, and other related documents), including transition agreements. Estimated time: 5-10 working days
6
Regulatory Approvals & Compliance
Processing of approvals from the Ministry of Law and Human Rights, KPPU (for large mergers), and other relevant regulators. Estimated time: 10-20 working days (depending on the regulator and industry sector)
7
Transaction Closing & Fund Transfer
The process of finalizing the transaction, payment, and handover of shares or assets according to the terms. Estimated time: 1-3 working days
8
Post-Closing Integration & Reporting
Combine operational, HR, financial, and regulatory reporting aspects. For foreign investment cases, ensure BKPM reporting is included. Estimated time: 5-10 working days (optional, depending on client needs)
*The M&A process in Indonesia generally takes 2-4 months overall, depending on the complexity of the target business, the number of entities involved, and regulatory approvals and document readiness
Important Consideration
- The M&A process must comply with local regulations, such as, e.g., OJK regulations for the financial sector and the IDX for public companies.
- Anti-monopoly due diligence must be conducted to avoid violating the Antitrust Law (UU No. 5/1999).
- Public companies require a general meeting of shareholders’ approval in the M&A process.
- Tax consultation is highly recommended to maximize the tax efficiency of the transaction.
Frequently Asked Questions
Does the business acquisition in Indonesia require government approval?
Yes, depending on the business sector and transaction value. Certain sectors require approval from regulators such as OJK, BKPM, or KPPU.
Can foreign companies fully acquire Indonesian companies?
Yes, but subject to the Negative Investment List (DNI) or the latest regulation on foreign investment, which limits foreign ownership in certain sectors.
Should the M&A process involve a consultant or a lawyer?
It is highly recommended to involve a professional consultant so that the entire process runs smoothly, legally, and safely, from legal risks.
How is the company value calculated in the M&A process?
Company value is usually calculated through valuation approaches such as Discounted Cash Flow (DCF), Comparable Company Analysis (CCA), or Asset-Based Valuation.
Are there tax risks in the M&A process?
Yes, M&A transactions can have significant tax implications for the seller and the buyer. Therefore, tax planning should be completed beforehand as a part of mergers & acquisitions strategy.
Can Business Hub Asia find a suitable target company in Indonesia?
Yes, we can assist in identifying acquisition targets that align with your specific criteria or suggest companies deemed appropriate for your acquisition strategy.
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