Economy, Digital Boom, and Legal Framework of Navigating Indonesia's M&A Landscape

Economy, Digital Boom, and Legal Framework of Navigating Indonesia's M&A Landscape Presented by: Mr. Dhiratara Date: 13 February 2025 The Tech Boom and Subsequent Tech Winter - Investment & Growth in the Tech Industry/Digital Economy Over the Past 5 Years • Global IT Spending Trends: According to Statista, global IT spending has seen consistent growth, with projections reaching $5.1 trillion by 2025. • Al Investment Surge: McKinsey's annual research indicates that Al investments have more than doubled since 2017, with 50% to 60% of companies investing in recent years. • Technology Industry Growth Statistics (Data: Technology Industry Growth Statistics)  The tech industry is expected to grow from $8,508.63 billion in 2023 to $9,039 billion in 2024, reflecting a compound annual growth rate of 6.2%.  Artificial intelligence is anticipated to contribute a remarkable $15.7 trillion to the global economy by 2030.  Hardware, software, and services collectively account for 56% of the technology industry.  The "Big Four" companies, namely Amazon, Apple, Google, and Facebook, jointly hold a staggering value of $4 trillion. • ...while Tech Winter Haunts, Mergers & Acquisitions in Tech Industry Rise  Market Corrections Leading to Consolidations: Periods of slowed growth or market corrections, often referred to as "tech winters," have historically led to increased mergers and acquisitions (M&A) as companies seek to consolidate resources and technologies. Global M&A Overview - Global M&A Volume and Values in past 2010-2024 • North America Deal value increased 9% year-over-year to $1.7 trillion, driven by a 27% increase in technology deal value and a 39% increase in sponsor-led buyout value. Utility and energy M&A surged, up 80% in value to $137 billion. • Asia-Pacific Deal value increased 3% year-over-year to $790 billion. Eight out of the 10 largest transactions in the region were announced in the second half of the year, hinting at the potential for a larger resurgence in 2025. • Europe, the Middle East, and Africa Deal value increased 10% year-over-year to $840 billion. Deals involving financial sponsors rose 36% in value, with takeprivate transactions in Europe surging to a record 95 deals. M&A Trends in Tech Industry - Consolidation • Many tech company have pursued mergers or acquisitions to survive intense competition and challenging market conditions. Example: Tik Tok acquires Tokopedia. - Strategic Expansion by Large Companies • Several major companies have aggressively acquired businesses to expand services and enhance competitiveness. Example: IBM acquires HashiCorp for $6.4 billion. The company aims to expand its cloud-based software offerings in response to the growing demand for Al-powered solutions. • Japan Industrial Partners Inc., Suzuki Motor Corp., and ROHM Co. Ltd. have acquired Toshiba Corporation. This acquisition will provide benefits to Toshiba by keeping the company and its resources alive and Japan Industrial Partners will benefit as it will compete directly with other Japanese conglomerates. Indonesia's National Strategy for Digital Economy Development 2030 As published by the Coordinating Ministry for Economic Affairs of the Republic of Indonesia - Pillar 1 • Infrastructure  Develop reliable digital infrastructure, expand internet access, and enhance connectivity nationwide - Pillar 2 • Human Resources  Strengthen digital skills and literacy to create a competitive and techsavvy workforce. - Pillar 3 • Business Climate & Cybersecurity  Improve ease of doing business, enhance cybersecurity, and ensure a secure digital environment. - Pillar 4 • Research, Innovation & Business Development  Promote R&D, support startups, and encourage technological innovation. - Pillar 5 • Funding & Investment  Facilitate access to funding, attract investments, and develop a strong digital finance ecosystem - Pillar 6 • Policy & Regulation  Establish adaptive regulations to support digital transformation and ensure fair competition Legal Services Required to Ensure M&A in Tech Companies - - Due Diligence • Verifying corporate structure, financial statements & obligations • Ensuring ownership, validity, and protection of Intellectual Property (IP) • Reviewing compliance with industry regulations (GDPR, CCPA, antitrust, etc) • Identifying pending or potential legal disputes Transaction Structuring & Negotiation • Deal structure on asset purchase vs. stock purchase vs. merger structure • Structuring payments (stock swaps, cash, or contingent payouts) • - Optimizing tax efficiency and compliance with tax laws Contract Drafting & Review • Outlining key terms and conditions for Letter of Intent • Formalizing the transaction details in a definitive agreement • Managing key personnel retention and restrictions on competition • Technology transfer & licensing to address software licenses, SaaS & compliance • - - Reviewing customer & supplier contracts for change-of-control provisions Regulatory & Compliance Approvals • Filing necessary notifications to ensure antitrust & competition law compliance • Addressing data security laws such as GDPR, HIPAA, CCPA, etc • Adhering to laws on foreign investment & national security compliance Closing & Post-Closing Obligations • Legal support integration, IP governance changes for workforce migration & • Ensuring post-merger compliance (ongoing regulatory compliance. shareholder obligations, etc.) Everyone Must Know the Law - Challenges • 320,000+ # total regulations¹ • 4,000+/year # new regulations¹ • 50+ # regulation hierarchies