Inside Asian Gaming

October 2015 inside asian gaming 41 CHALLENGES TO ADDRESS M&A opportunities may also bring challenges. These challenges can be better understood and mitigated through due diligence and integra tion planning. Awareness of common challenges within the casino gaming sector is key to successful due diligence and planning efforts. Back office scalability: Back office platforms are often dated and lack scalability. Back office due diligence can be conducted to evaluate the target’s systems and scalability, to ensure that such capabilities will align with the acquirer’s growth plans. Talent retention and cultural considerations: Acquisitions focused on casino game content and developer resources require culture assessments for cross-border transactions, as well as talent- retention strategies to ensure continuity post transaction. Brand transition: Deals involving multiple brand purchases can cause confusion to the market if not positioned correctly. Market analysis and stakeholder buy-in is a critical first step to ensuring “NewCo” has the right brand strategy. Following brand decisions, careful planning and execution of customer, employee and vendor communications helps ensure the right positioning in the market. The regulation factor: M&A in the real money gaming sub- sector will have regulatory implications, with complexity varying by jurisdictional scope. Regulatory compliance requires expertise (external or in-house) and may result in detrimental impacts on deal value if not planned for properly. Contract assessment: Mergers of companies with the same service providers may result in conflicting commercial agreements in place that can result in high breach penalties. Proper due diligence on potential contract risk should be fully understood and factored into the purchase price. Capital investment: Level of effort and the required capital investment to port casino game content to new and existing operator distribution channels must be quantified. Exhaustive inventories of games that a company acquires may require significant time and effort to transfer to existing distribution channels (mobile, social network, etc.), as well as large one-time investments in new capital infrastructure. As the casino gaming sector continues to evolve with the changing technology and regulatory landscape, companies may increase the odds of successful future M&A transactions by employing the strategy of rapid, thorough due diligence, and by executing on detailed integration planning with strong executive sponsorship. Following these strategies should allow companies to enhance their social gaming positions and move fast to capture real money online market share, as the sector continues on this exciting path of evolution. Paul Kennedy is principal M&A advisory/delivering deal value and Bart Spiegel is partner, entertainment, media and communications deals for PwC Deals practice, which advises entertainment, media & communications (EMC) companies and EMC-focused private equity firms on key M&A decisions. This article was printed with permission from PwC from its recently released study, “Eye on the prize: U.S. entertainment, media and communications deal insights.” PwC’s Deals group can be reached at http://www.pwc.com/us/en/industry/entertainment-media/ publications/emc-deal-insights.jhtml Online Gaming As the casino gaming sector continues to evolve with the changing technology and regulatory landscape, companies may increase the odds of successful future M&A transactions by employing the strategy of rapid, thorough due diligence.