COMPANY ACQUISITION
Find out here what you should know and consider as a strategic investor when buying a company or a stake in a company (buy-side).
Our expertise
Company acquisition as a growth driver
Company acquisitions are a central component of the growth strategy of many large companies. Larger medium-sized family businesses have also already firmly incorporated the possibility of inorganic growth through acquisitions into their corporate strategy, as confirmed by the SME M&A study. These company acquisitions – often summarised under the term Mergers Acquisitions (MA) – involve the purchase of a company or company shares. We support companies in the acquisition process with our 10 years of expertise in buy-side M&A projects.
MA: buy-side vs. sell-side
MA transactions can be divided into two basic categories: the buy-side and the sell-side. While the sell-side often aims to sell one’s own company in order to find a succession plan, for example, the focus of the buy-side is on the targeted acquisition of companies or shares in order to achieve strategic or financial goals. Compare Infographic.
• Sell-Side: Divesture of a company or of parts of a company, or company shares. Reasons may include the desire for a succession plan, a carve-out of non-core business areas or the procurement of capital. The main objective of the sell-side is often to achieve the highest possible selling price with a high level of transaction security.
• Buy-Side: Purchase of companies or shares in companies. This can be done by both financial investors and strategic investors. The buy-side is aimed at identifying potential takeover targets and carrying out acquisitions that meet the long-term objectives of the buyer.
Financial investors vs. strategic investors
A distinction is made between financial investors and strategic investors both when buying and selling a company:
• Financial investors such as private equity firms, family offices or hedge funds specifically invest their capital in companies in order to achieve a financial return. Their focus is on the purchase, development and subsequent profitable sale of companies or company shares. They are usually invested for a limited period of time and plan an exit following an increase in value. In this context, financial investors also act as sellers on the sell-side.
• Strategic investors, on the other hand, take a different approach. These companies often come from the same sector as the target company. They are interested in a takeover in order to achieve strategic goals, such as expanding the product portfolio, entering new markets, increasing production capacity or eliminating competitors. Their interest often lies in acquiring control, either through a majority shareholding or through special voting rights in the case of a minority shareholding.
The need for specialised MA advice for strategic investors
Although the MA advisory market comprises numerous providers who serve both financial and strategic investors, there are only a few advisors who focus exclusively on the buy-side on behalf of strategic investors. This is where our unique specialisation lies. Many MA advisors deliberately focus on the sell-side because these projects are associated with faster achievable profits, steady deal flow (a key KPI in the MA industry) and straightforward execution. When consultants talk about buy-side projects, this usually refers to the support of financial investors by service providers in the capital market (investment banks). We are the only MA consultancy in Germany with over 10 years of experience specializing in supporting strategic investors, typically large medium-sized companies and international family groups, in executing their MA acquisitions. This focus enables us to offer our clients customized, high-quality advisory services tailored to their specific needs and industries.
The strategic MA buy-side process for company acquisitions
The structured process plays a crucial role in the successful execution of a buy-side transaction for strategic investors. Below you will find the five main phases of the buy-side process that we consistently implement in our specialised MA advisory services:
1. transaction strategy:
the first step in the buy-side process is to develop a clear transaction strategy that is orientated towards the long-term goals of the investor. We analyse the overarching corporate objectives, identify the key success factors and develop a tailor-made strategy that enables both short-term and long-term value growth.
2. target screening:
Based on the developed strategy, we carry out a comprehensive target screening. This phase includes the identification of potential takeover targets that fit the buyer’s objectives both strategically and operationally. We pay particular attention to strategic fit, synergy potential and long-term integration into the buyer’s existing business. The enormous importance of these first two process phases for the ultimate success of the transaction distinguishes strategic buy-side transactions significantly from sell-side and financially driven buy-side transactions.
3. due diligence:
As soon as a target has been preselected and the intent to invest has been clarified, the due diligence phase begins. In close cooperation with external partners (lawyers, auditors), we examine all relevant financial, legal, operational, and strategic aspects of the target company. The aim is to identify risks at an early stage, validate the valuation, and ensure that the target offers the desired synergies and strategic advantages.
4. deal closing:
Following successful due diligence and negotiations, we manage the deal closing process. This includes the final negotiations, contract drafting and ensuring that all regulatory requirements are met. Our aim is to finalise the purchase process smoothly and efficiently so that the buyer can take full advantage of the transaction.
5. post-merger integration after the company acquisition has been completed:
Once the transaction has been finalised, the post-merger integration phase begins. This phase is crucial for the long-term success of the acquisition, as it is here that the strategic objectives are actually realised. We support our clients in integrating the acquired company into the existing structure, help to realise synergies and ensure that the acquisition delivers the planned value contribution.
Company Acquisition FAQs
Frequent Questions with regard to company acquisitions.
1 What are the first steps in a company acquisition?
The first steps in a company acquisition include defining the acquisition targets, identifying potential target companies, carrying out due diligence, valuing the company and contacting the sellers. It is advisable to consult legal, financial and ma-advisors at an early stage in order to optimise the process.
2 What are the risks involved in buying a company?
Risks when acquiring a company include financial risks (e.g. over-indebtedness of the target company), operational risks (e.g. integration of business processes), legal risks (e.g. hidden obligations or legal disputes) and cultural risks (e.g. incompatibilities between corporate cultures). Thorough due diligence can help to minimise these risks.
3. How long does the process of buying a company take?
The timeframe for a company acquisition can vary greatly, but the entire process usually takes between 6 and 12 months. The duration depends on various factors, including the size of the company, the complexity of the negotiations, the duration of the due diligence and any regulatory approvals.
4. What financing options are available for the purchase of a company?
There are several financing options based on equity and debt capital for the purchase of a company. Depending on the individual requirements of the buyer and the terms of the deal, these can be combined.
5. What does MA advice cost when buying a company?
The cost of MA advice can vary greatly and depends on factors such as the complexity of the transaction, the size of the company and the scope of services required. MA-advisors usually charge a combination of a monthly retainer and a success fee, which is often a percentage of the transaction value. However, the exact cost structure should be contractually agreed individually in advance.
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