M&A: selling and acquiring companies

Triggers and process formats

Succession without a family solution, shareholder disputes, growth capital through a partner, carve-out of a non-core business, strategic acquisition. Each trigger calls for a different cut.

In succession, preserving the business often matters more than the last million. In a carve-out, clean separation of IT, contracts and staff determines feasibility. In a strategic acquisition, funding the purchase price sits at the centre from day one.

• Bilateral: one buyer, maximum discretion, less price tension
• Limited auction: five to fifteen preselected addresses – our standard route
• Broad process: highest competition, highest visibility, longest runtime

Valuation: three routes, one corridor

Earnings value or DCF, multiples from comparable transactions and – as a floor – net asset value. Those three produce a corridor, not a point. Anything else is false precision.

What matters is the adjustment of earnings. Owner salaries above or below market, private cost elements, one-off effects, non-operating assets. A cleanly derived adjusted EBITDA is worth more in negotiation than any valuation opinion.

• Adjust EBITDA and document every adjustment
• Normalise working capital – this is where later price adjustments come from
• Name customer concentration openly, it co-determines the multiple
• Assess owner dependency realistically and cushion it with a transition arrangement

Approaching buyers

Strategics pay for synergies, financial investors for cash flow and a growth path, MBI candidates for the opportunity. The list is walked through with the shareholder before the first approach – competitors are deliberately released or excluded.

Contact happens at decision-maker level, by us personally, not through mass mailings. Once a process lands with an analyst it loses pace and commitment.

LOI and due diligence

The letter of intent is the real turning point. Price range, structure, exclusivity, timetable and which conditions the buyer may still examine. Stay vague here and you renegotiate everything in due diligence – from a weaker position.

In the review itself: a well structured data room with a complete index and managed Q&A shortens the phase considerably. Weekly late submissions create the impression that there may be more to come.

• Grant exclusivity only against a firm timetable
• Require the buyer's financing confirmation before exclusivity
• Financial, tax, legal, commercial – for manufacturing add technical and environmental
• Log the Q&A, route all answers through one point

The SPA points that count

The sale agreement decides how much of the negotiated price actually arrives. Locked box or closing accounts, scope of the warranty catalogue, liability caps, indemnities for known risks, non-compete and the seller's transition arrangement.

W&I insurance pays off more often than people think – it gives the seller a clean exit and the buyer protection nonetheless. From roughly EUR 20 million upwards we review it as standard.

• Locked box with a clear effective date or closing accounts with a defined procedure
• Set liability caps, de minimis thresholds and limitation periods early
• Earn-out only on a verifiable metric the buyer cannot dilute
• Limit the seller's transition period contractually and in time

Earn-out: what it actually costs

An earn-out bridges different price expectations – and in practice it is often paid only partly or not at all. Not out of bad faith, but because the buyer reshapes the business after closing and the measurement base changes.

If an earn-out, then on a metric the seller can follow and the buyer cannot dilute through allocations. Revenue is more verifiable than EBITDA. And the period should not exceed two years.

After closing

Integration decides whether the price was justified. Communication to employees and customers on the same day, clear responsibilities for the first hundred days, no open questions about the seller's role.

For acquisitions with acquisition finance there is one more thing: the first covenant tests often fall in the next quarter. The integration plan therefore has to fit the financing plan.