Insights into valuation and due diligence in M&A transactions

The valuation of a target company in the context of M&A transactions is a complex matter that goes far beyond facts and figures.
Klaus Eberle, Director M&A at Emporion, provides insights into the process of determining the offer price and the challenges of due diligence.

Proposal preparation and the importance of due diligence

If the client decides to submit an offer for a target company, the first step is an indicative valuation.
This valuation is then successively refined as part of the subsequent due diligence process.
Klaus Eberle explains how Emporion proceeds in practice in order to arrive at an appropriate offer price.

Evaluation and strategic considerations

Emporion organizes meaningful information from the target company and develops a business concept with target figures together with the seller.
Strategic considerations are translated into a concrete business model.
The analysis of market data, valuation parameters from peer groups and comparable transactions plays a decisive role.

“It really has nothing to do with magic – we create various scenarios and provide them with budget figures and a cash flow statement – always taking into account necessary investments and liquidity requirements.” Klaus Eberle, Director M&A at Emporion

Scenario development and communication

The creation of scenarios is not a magical prediction, but is based on the systematic viewing and evaluation of documents.
Intensive communication with those responsible at the target company and the customer plays a central role.
Klaus Eberle emphasizes the importance of “playing through” various scenarios, right through to making the budget figures understandable for the decision-making bodies and owners.

Emporion’s role in due diligence

Emporion supports the target company in setting up the data room and relies on virtual data room solutions for due diligence.
As a neutral intermediary, Emporion coordinates all participants and auditors in the data room and is the main point of contact for the target company.

“We offer the added value of anticipating deal breakers early on and usually finding a solution at an early stage thanks to a good relationship with the seller.” Klaus Eberle, Director M&A at Emporion

The biggest challenge and potential deal breaker

The biggest challenge in due diligence is often that the process takes longer than desired, as entrepreneurs underestimate the amount of preparation required.
Klaus Eberle warns of the individual emotions, perspectives and egos that can arise on both the buyer and seller sides.
Unpredictable findings or details in the procedure can trigger discussions that need to be managed professionally.

Conclusion

Valuation and due diligence are critical phases in the M&A process.
Emporion proves its expertise with its systematic approach, pragmatic solution finding and early anticipation of deal breakers.
Transparent communication and a close relationship with the seller are key aspects in order to be successful in this complex phase.