Due Diligence for Mergers and Acquisition (M&A)
The reasons for selling or merge a company are various. Major reasons are:
- Young companies reach a level
that they become of interest for bigger companies which want to buy them
- Older owners decide to retire
and are looking for a successor
- Established companies need
investments and are ready to sell stakes
Whatever is the reason, most cases become urgent quickly. Sometimes only few weeks left available for finding a solution which is acceptable for both - the seller and the buyer.
In the last years Tech-ibc successfully arranged several takeovers of companies. Especially when it comes to the automotive market, Tech-ibc is the first address to get qualified guidance and support in such critical phases. We are specialized on finding investors or a potential buyer.
Our M&A team consists of engineers, economists and marketing experts, all graduated from universities. For tax and financial issues we cooperate with experienced partners, but can also adapt if our client has experts already.
Especially in the automotive world our expertise and market knowledge allows us to quickly find the right partner. We have recourse to an extensive network comprising manufacturer, developer and investment companies in Europe and Asia.
Starting our activities, we first learn about the products, services and core competence of our client. This is essential for the efficiency of all following steps.
- Together with our client we define the profile of a potential buyer
and the boundary conditions. By the sharpness of the determinating factors we
can pinpoint the circle of potential buyers and significantly shorten the time
schedule. Usually, at this stage we also start collecting key data and basic
information of our client‘s company to compile a first catalogue as a brief
company profile.
- Afterwards we can start establishing the first contacts, which usually is the toughest part of the job. Since merger or acquisition projects are not only a financial issue but also a strategic decision, they are directly connected to the owner or board members of the buyer company. Often the deciders cannot be contacted directly or short-term. Here our network comes into play, which opens doors either because we are known already, or we receive support from partners for setting up the contact. At this point, the most important action has started.
- Nevertheless, while waiting for the first feedback from potential buyers, lot of paper work is to do. Together with our client, an internal corporate audit is performed comprising properties, order log, financial status, HR, market, forecasts, patents, etc.. All collected information are logically structured, evaluated for a short overview and compiled to a document which is the basis for the next loop as soon as a company shows seriously interested. Usually we provide to such companies only the absolute necessary information after they sign a non-disclosure agreement (NDA). If intended, investors can be approached at this stage.
- Once a buyer is found a due diligence,
usually in cooperation with the buyer, is performed. While most parts of a due
diligence are related to the history (tax) or current status of a company, the
market due diligence plays a deciding role, when it comes to the future of the
company. Our engineers, some concerned with the many different automotive areas twenty years and more, understand the true value of the products and services.
In cooperation with our marketing experts not only the current market chances
are evaluated, but suggestions for additional or a new market orientation are
made, contributing to a higher value for investors and buyers.
Knowing the value of client’s company well, we advice and accompany during the final negotiations. After a positive decision we prepare the handover and, if wanted by the buyer, take over the corporate management and / or company reorganization to guarantee a smooth post-merger integration (PMI).
We are also familiar with cases where companies are threaten by liquidity problems or insolvency. Urged by the debts, most companies open an insolvency process, but miss one important step - this is the engagement of specialists before, which are familiar with the legal steps, but work out concepts and action lists that the worst case, the insolvency, can be avoided.