Consulting - Mergers & Acquisitions
Transaction Process

Navigating you through the entire transaction process

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Planning

At first, we will work with you to define a purchasing, sales or succession strategy tailored to your or your company’s needs. In a second step, we work out the preferred type of transaction, the in-house and consulting teams, the communication channels and, last but not least, the most important price parameters. At an early stage we will check whether a transfer of individual assets and liabilities (asset deal) or a transfer of shares (share deal) is possible and sensible in order to achieve transaction targets.

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Data compilation, price range & sales documents

The foundation of any business sale is a comprehensive fact finding about the company or part of the company that is intended for sale. Financial information is necessary here, but those alone are not sufficient. Data on the market and competition, the organisational and operational structures and much more are also included. It is necessary to obtain a comprehensive and truthful picture of the object of sale, also in order to be able to make corrections.

To determine an appropriate price range on the basis of this data compilation is usually no small matter. In the context of a company succession for instance, the expected remuneration for an entrepreneurial life’s work and the price customary in the market from the point of view of third parties, often have to be reconciled first.

Moreover, price derivation must be carried out carefully and expressed comprehensibly to all parties involved. We use standard methods of company valuation, such as the determination of future success value (income value method or the discounted cash flow method) and the practice-oriented multiplier method to support the pricing process.

The creation of an anonymous teaser and a company profile follows after the data collection and analysis, as well as the determination of the price range and initial constraints have been completed. The teaser is a highly compressed and, in the company profile, still a short compilation of the most important company data and a general outline of the offer.

The company profile includes, for example, the type of enterprise, its business activities, the key points of the company’s structure, important milestones in its history, selected financial data and the transaction concept. It is important to us that your company will only become identifiable, when it becomes useful for the intended transaction process. Until then, owner and company remain anonymous.

Parallel to the development of the first sales documents, potential target companies or transaction partners are identified based on market and company-related information. Those potentials are combined to a “long list”. In doing so, we make use of our long-standing network and specific databases.

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Contacting

Based on the criteria you, as the owner, have defined, the “long list” is reduced to a “short list” of potential transaction partners of particular interest. We will contact these interested parties personally or by telephone. In case of a positive feedback to the initial contact, the teaser is sent out to the interested parties.

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Non-disclosure agreement (NDA) and comprehensive information of potential transaction partners

If the potential transaction partners show continued interest in the company or part of the company offered for sale after receiving the initial information, we sign a non-disclosure agreement with them.

This is a contract which stipulates the confidentiality (agree not to disclose) of company-confidential information, negotiations or negotiation results. The obligor thereby agrees to keep secret any information made available to him. Subsequently, the interested party receives a company profile from us with non-anonymised company information.

In the next step, we determine in interviews how high the level of interest of the potential transaction partners really is. Based on these findings, you as the client decide which interested parties are invited to a management meeting.

We prepared the management meeting together with you in advance in order to present the company or business unit as comprehensively as possible. This enables potential transaction partners to get an exact picture of the target and, if possible, make a preliminary decision. In addition, the potential investor is encouraged to present his strategies for the development of the company or business unit. This way, you have the chance to get a better idea of who they are and what they plan to do with your business.

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Indicative offer

After the management meetings we will assist you to decide with how many and specifically which prospective buyers you would like to continue. We can draw on a wealth of experience from successful transactions to support your decision-making.

The selected potential buyers are then requested to provide an indicative offer, which besides an asking price already contains first considerations of the transaction execution and concrete plans for the company or business unit on sale. An indicative offer is not a contract and hence, it is not binding. However, experience shows, that the submission of an indicative offer in almost all cases shows an actual interest in the transaction.

In a next step, we analyse with you the various indicative offers with regard to their financial, tax and legal substance. Together we weigh up their advantages and disadvantages. At the end of this phase, you decide again which prospective buyers you want to continue the process with. It is not always the price alone that brings about a decision. Often it is the expected transaction security or the continuation concept which are of great importance, too.

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Letter of Intent (LoI)

The remaining prospective buyers in this part of the process are requested to submit a Letter of Intent (LoI). The LoI is a preliminary contract of the subsequent purchase agreement, which defines the economic and strategic aspects of the transaction as comprehensively as possible and also defines legal and tax aspects.

The letters of intent are compared and details renegotiated. The more detailed a LoI is, the more friction can be avoided and time saved in subsequent negotiations.

At this stage, we must again evaluate which of the potential investors have submitted the most interesting offers and with whom the process is to be continued.

If a LoI is concluded with only one interested party, exclusivity for this investor is usually agreed (for a limited period of time).

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Due Diligence - The careful examination of risks and opportunities

The LoI is followed by a detailed due diligence of the company. There is a relatively standardised procedure for this. All relevant documents, such as annual financial statements, legal disputes, contracts of all kinds, etc. are made available to interested parties in a data room (online).

The due diligence of medium-sized transactions usually includes financial, legal, tax and commercial due diligence. As a rule, a specialized service provider is commissioned for each of these audit areas, i.e. the process has a complexity that should not be underestimated. We can provide you with comprehensive handling support, as we carry out due diligence services for prospective buyers in other contexts.

Based on this information and findings, the potential buyer is asked to make a final purchase decision. At this point it is not uncommon to once again negotiate select economic issues due to the findings.

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Negotiating the Sale and Purchase Agreement (SPA)

Once the prospective buyer has made a positive purchase decision, he makes an adjusted binding offer or negotiations on the sale of the company or business unit begin directly.

Binding offers or draft contracts of sale are reviewed critically, often several times, and discussed regarding their essence (value and security of consideration, ancillary services, assumption of rights and obligations from existing contractual relationships, etc.) and alternatives from the seller’s perspective. The negotiation process is moderated and accompanied until the purchase contract is completed. Your legal concerns are also taken care of by specialised lawyers with transaction experience, whom we can recommend to you if necessary.

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Conclusion of the Sale and Purchase Agreement

If both parties are in agreement, the company purchase agreement is usually signed with notarial certification.

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Closing

The corporate transaction is successfully completed when the precedent conditions have been met and the agreed purchase price has been credited to the seller’s account. Until then, we support the fulfillment of the implementation requirements.

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Post-Merger Integration (PMI)

During the phase of post-merger integration, accounting and reporting must be adapted as quickly as possible and harmonized with the requirements of the new shareholders, among many other things. These requirements often include quick monthly, quarterly and annual financial statements as well as new financial ratios and more detailed long-term planning. Here, too, we can quickly support you based on our extensive experience and specifically adapted IT instruments.

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Contact us

Merten Kroehan

Director
Mergers & Acquisitions

T: +49 (30) 28 49 87-210
E: Merten.Kroehan@aios.de

Matthias Giese

Chartered Accountant
Tax Advisor
Managing Director

T: +49 (30) 28 49 87-202
E: Matthias.Giese@aios.de