As soon as she left EDHEC in 1994, Anne Hiebler laid the foundations for a career in corporate finance, particularly in mergers & acquisitions (M&A). Last year she took over as head of this department at Crédit Agricole CIB. But is this a technical profession or one of subtle human negotiations? Here she tells us about the precepts in the world of M&As, at a time of market uncertainty and environmental and societal imperatives. 

How would you summarise your current position and responsibilities?

I’m in charge of M&As at Crédit Agricole CIB. Our team advises the bank’s clients on rules that generate changes in their shareholder base, whether in the parent company or its subsidiaries, and are the reflection of strategic choices such as shareholder restructuring, acquisitions, international development or subsidiary sell-offs. In my role, I play a direct part in client operations alongside other members of my team, but I also manage the team to ensure everyone develops in the right way, and I interact with my colleagues in other departments at Crédit Agricole CIB to offer a more comprehensive service, whenever necessary, which could of course be advice on M&As, but also on financing or hedging. 

Does the consultancy phase only take place upstream of operations, or also during the operational phase? 

In financial consultancy, we identify upstream the structural moves that might be appealing to our clients, we discuss them with them, and once the decision has been made to move forward, we help them see through the operation effectively. For a company that wishes to restructure its shareholding, this means properly understanding its business, strategy and development objectives, and then looking for the right partners willing to invest. Similarly, for a company that wishes to separate from a subsidiary, after the same efforts to develop an understanding, one must identify the best buyers and then oversee a process to sell off the subsidiary in optimal conditions. We begin the process of reflection and discussion sometimes well in advance of changes that may be rolled out 1 or 2 years later (or even more), but our consultancy work ends on the day the deal is signed off. The earlier we take up a position, the easier it is to anticipate the different scenarios, and the greater the chances of completing the operation.

So there is at once a methodology and a human-oriented approach depending on the personalities of the top managers. How do you lead on these two aspects?

Our profession has a reputation for being quite technical. And that’s true, especially in the early stages of your career, when analysts and associates engage in a lot of modelling, valuation exercises and business plan development. This is an important component, but successful operations are ultimately those in which the people involved share the same convictions and the same analysis of the right narrative to write in collaboration with the company. A lack of fit or agreement between them can be the downfall of certain moves which on paper make a lot of sense. For a merger between two firms who together want to write a narrative of value creation, who want to create synergies and have shareholders and lenders to finance the move, if both CEOs want to oversee the new entity, it will never work! The specifications can include details to reconcile such differences, for example with a rotating presidency, but if no suitable governance solution can be found, the project can’t get off the ground. 

Is this storytelling, finding the “right narrative”, a decisive criterion for mergers & acquisitions? 

Yes, absolutely. In the jargon, we call this the equity story. When listed firms make a major acquisition, their stock price moves on the day of the announcement. The perception of the acquisition hangs on the equity story, the strategic rationale, the synergies, the way the new entity will be stronger than the company was with its previous, more limited scope. Such a move can lead to significant disappointment if the market doesn’t believe in it. In the case of a listed firm, it is absolutely essential for the market to understand the appeal and value creation of the move. In the case of investment funds, it’s more or less the same mechanism, but in a private context: the equity story and its translation in financial terms are key in convincing the investment committee and those who ultimately approve the transaction. Demonstrations backed up with figures are indispensable, but so too is everything that surrounds the figures, and the conviction driven by more qualitative aspects. And it is those strategic and qualitative aspects that lend credence to the figures. 

Is storytelling a weapon against market uncertainty and one that can boost the transaction?

It plays a role, but it’s not long before reality catches up on you. Investors believe in your narrative if you have a good track record, in other words if you have demonstrated in the past that you have successfully delivered what you promised and that you are realistic and credible in your forecasts. Once the story has been told, understood and “bought”, very quickly, quarter after quarter or month after month, you will be asked for figures that prove what you said initially. It is therefore important to tell that story well, but also ensure it is accurate. There’s no point in selling pipedreams. 

Are artificial intelligence and data driving changes in the sector?

This is a question we regularly ask ourselves, as staff spend a lot of time processing figures and compiling information, some of which is public. A certain number of things could be done by artificial intelligence, but that runs the risk of problems with confidentiality. As things stand, in the world of M&As, we continue to have a preference for data, especially confidential data, to be processed in closed circuits that can be controlled through traditional channels that provide a legal framework for information exchanges. Practices in the profession have not really changed that much in recent years, although certain tools (databases in particular) have been modernised, but we have to get ready for things to change, all the while preserving confidentiality.

In 2023, the number of mergers & acquisitions reached the lowest level in 10 years. Is that indicative of a trend?

I don’t think so because the market for mergers & acquisitions is cyclical. Wherever there is a lack of visibility, it’s harder to estimate how the earnings of a company you want to buy or sell are likely to evolve. It’s harder to put a price on it, and therefore harder to reach an agreement. This low point in the market in 2023 came at the end of quite a long upward cycle that lasted around 10 years (outside of Covid), and so it may have been perceived as more destabilising, but that’s not necessarily the case. At the beginning of my career, in the late 1990s, cycles were perhaps more regular, and we always knew things would pick up again after 18 or 24 challenging months. The prospects for 2024 are quite encouraging, although one must always remain cautious. 

In contrast, mergers & acquisitions in the world of start-ups reached a new high in 2023 …

Many innovative start-ups are being founded in tech and the digital sector, areas of great interest to investors. This makes it easier for them to raise money, but overall the fundraising market has suffered as much as the M&A market in recent months. Sellers continue to operate with price logics that potentially take into account low rates, while buyers apply market rates. Once rates have fallen and stabilised, which seems to be underway, there should be greater convergence.

What changes are you seeing in mergers & acquisitions in the sectors covered by Crédit Agricole CIB (energy transition, transport, agrifood, etc.)?

We cover all business sectors at Crédit Agricole CIB, but it’s true that some of them are of strategic importance for the firm; for example, the energy transition and our clients’ decarbonisation objectives generate colossal needs in terms of financing and equity. The market has been more resilient in this sector than in others. Digitalisation, mobility and healthcare are also important societal issues underpinning mergers & acquisitions. Everything that is linked to infrastructure (energy, digital or transport) also continues to impact the M&A market and our deal flow at CACIB.

Can mergers & acquisitions be positioned in the slipstream of sustainable finance?

The first financial products to be labelled green or ESG (Environmental, Social & Governance) were mainly from the world of financing, like green bonds. Investors developed investment theses highly centred on these criteria, and that quite naturally spread to the world of M&As. In line with Crédit Agricole’s ESG strategy and the shift in our client portfolio in this direction, ESG is also becoming an essential component of M&A operations. ESG strategy, or the ESG story, has become as important as the famous equity story, strictly speaking, and is now an integral part of it. We are all coming round to this and learning about it. CACIB has a team of M&A GreenTech experts who specialise in high-impact ESG transactions, as well as a Sustainable Banking team, mainly focused on financing issues and also very much up to speed when it comes to understanding and defining ESG frameworks. We capitalise on their expertise to better understand the ESG challenges, costs and benefits for all our clients’ M&A transactions.