Enterprise Financing Scheme – Mergers & Acquisitions
The Enterprise Financing Scheme (EFS) – Mergers & Acquisitions (M&A) is a Singapore government initiative that helps local businesses obtain financing for mergers and acquisitions.
Previously, the scheme only supported outward expansion through M&A, but it was enhanced in April 2022 to include domestic M&A activities as well. This means that the EFS can now be used to finance mergers and acquisitions between companies based in Singapore.
The EFS-M&A is part of the broader Enterprise Financing Scheme, which is a comprehensive suite of programs designed to make financing more accessible for Singaporean businesses at all stages of growth.
By sharing the loan default risk with participating financial institutions, the EFS-M&A makes it easier for businesses to secure financing for mergers and acquisitions. This can be helpful for businesses that are looking to grow through acquisitions or mergers, or for businesses that are looking to consolidate their market position.
The EFS-M&A is available to companies that meet the following eligibility criteria:
The acquiring company must be a Singapore-registered company.
The target company may be a Singapore-registered company or a company registered in a foreign country.
More Information about the Scheme
Here's some additional information about the Enterprise Financing Scheme (EFS) – Mergers & Acquisitions (M&A) in Singapore:
Loan Quantum and Repayment:
Maximum loan amount: S$50 million per borrower or borrower group.
Repayment period: Up to 5 years for M&A transactions.
Full Eligibility Criteria
The Enterprise Financing Scheme – Mergers & Acquisitions (EFS-M&A) in Singapore offers financing to companies looking to grow through acquisitions. Here's a breakdown of the eligibility criteria:
Company Registration:
Must be a business entity registered and operating in Singapore
This includes ACRA-registered Sole Proprietorships, Partnerships, Limited Liability Partnerships and Companies
Local Shareholding:
The company must have at least 30% local equity ownership. This can be directly or indirectly held by Singaporean citizens or Permanent Residents (PRs)
Company Size:
The company's Group Annual Sales Turnover must not exceed S$500 million
Borrower Group Limit:
There's an overall limit of S$50 million for EFS-M&A across the entire borrower group, including subsidiaries
Focus of the Scheme:
While domestic M&A is now allowed, the EFS-M&A is still particularly interested in supporting internationalisation. This means using M&A to expand your business overseas or acquire a company that helps you enter new markets.
The target company should be in a business that complements your existing operations or allows you to enter an emerging sector.
The target company cannot be in a "challenged market" (countries with a low S&P credit rating or non-rated countries). There may be exceptions for certain circumstances.
Benefits beyond Financing:
The EFS-M&A can potentially help with matchmaking, connecting acquiring companies with suitable targets.
Since the government shares some of the loan risk, it may make negotiations with lenders easier.
How to Apply
You'll need to go through one of the Participating Financial Institutions (PFIs) authorized to offer the scheme. Here's the process:
Identify Participating Financial Institutions (PFIs): Enterprise Singapore provides a specific list. Most major banks in Singapore offer the EFS-M&A program. You can contact your existing bank or research options like DBS, HSBC, IFS Capital, Maybank, OCBC, RHB, UOB, to confirm their participation.
Contact Your Chosen PFI: Reach out to the PFI's business banking department and inquire about the EFS-M&A loan. They can guide you through the specific application process and requirements.
Prepare Application Documents: The PFI will likely request various documents to assess your eligibility and the M&A deal. This might include your company's financial statements, business plans, details of the target company, and the proposed acquisition structure.
PFI Review and Approval: The PFI will assess your application based on their credit criteria and the EFS-M&A eligibility requirements set by Enterprise Singapore. They'll make the final decision on loan approval.
Enterprise Singapore offers a direct application portal on their website: https://esgincentives.enterprisesg.gov.sg/
Remember, approval for the EFS-M&A loan ultimately depends on the PFI's assessment and your company's financial health and the viability of the M&A deal.
Finding More Information:
For more details and the latest information, it's recommended to refer to the official sources from Enterprise Singapore:
How Bestar can Help
Bestar's accounting expertise can be very useful during the M&A process.
Here are some reasons why Bestar might be helpful:
Due Diligence: We can help review the financial records of the target company to identify any potential risks or opportunities.
Transaction Structuring: We can advise on the best financial structure for the deal, considering tax implications and other factors.
Valuation: We can help value the target company to ensure you are paying a fair price.
Mergers & Acquisitions Accounting: We can handle the complex accounting tasks associated with M&A transactions, such as purchase price allocation and goodwill accounting.
By providing these services, Bestar can help you make informed decisions about your M&A transaction and increase your chances of success.
Our accounting services can be a valuable asset during the M&A process itself.
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