Any project involving the purchase of a company requires extensive and detailed preparation for the M&A process. We advise clients planning to buy a company throughout the M&A process, from identifying and approaching potential sellers to drafting a letter of intent and negotiating the contract. When you’re preparing for an M&A process, it’s important that buyers agree on their internal decision-making processes, that they have decision-making templates in place and that they’ve agreed who will be responsible for what. The role of KP Tech in helping buyers is not only to provide detailed advice during the preparation phases of an M&A transaction, but also to ensure we’re available to act as a facilitator or someone to contact for the seller.
Providing professional M&A advice during the preparation phase accelerates the M&A process overall. There’s also a higher probability that the project will result in closing. Another important aspect for buyers when preparing to purchase a company is M&A insurance to cover the risk associated with acquiring a company.
Horizontal or vertical extension of the business model in order to gain competitive advantage, or acquire/secure a unique selling proposition
Consolidation of competition, or gaining or building market leadership
Entry or access to new markets (e.g. internationalisation)
Acquisition of products, patents, licences, know-how or a customer base following a make-or-buy decision
Once an acquisition strategy has been defined in detail, the next step is to determine the criteria for target companies
KP Tech provides advice on defining acquisition targets and the acquisition strategy
A crucial aspect of any company acquisition is determining the right purchase price and safeguarding the value of an investment. According to the theory, there are number of ways to calculate the value of a company. The methods of business valuation mentioned in scientific theory include looking at net asset value, earnings value, discounted cash flows or transaction multiples, plus a slew of other approaches. These days, M&A experts tend to use discounted cash flow methods and transaction multiples to value a company. In addition to calculating the value of an enterprise, it’s important to understand any influencing factors that could account for the often significant differences between the value of a company and the actual price paid.
As well as advising buyers on the process of valuing a company, in keeping with standard procedures KP Tech also provides advice on financial modelling. German: Unternehmensbewertung
As far as someone selling a company is concerned, it’s important that prospective buyers are aware of the following aspects, especially if they don’t want to end up closing on the transaction as the only buyer willing to pay the highest price
KP Tech advises buyers on the entire M&A process. >20 years of M&A consulting in Germany, Austria and Switzerland.
A considerable amount of capital is required to finance a company acquisition. This usually comes from a mixture of company equity and borrowed capital. In addition to going through normal banks, these days consideration is often given to private equity companies or providers specialised in debt financing.
As a rule, you should ask your regular banking partner whether there are financing options, subsidies or grants available through development banks (or the KfW in Germany).
In the case of corporate succession, sellers can also grant buyers a so-called vendor loan to cover part of the purchase price, or sell a certain proportion of company shares successively over an extended period of time.
Acquiring company shares over a longer period of time balances risk between the buyer and the seller of shares. If the party purchasing shares is a start-up or has low levels of equity capital, this approach may offer a way to make a company acquisition possible in the first place.
KP Tech advises buyers on debt and private equity financing.
Contractual arrangements for sales and purchase agreements (SPAs) come in many forms. German contracts tend to be kept more simple and shorter than the sales contracts used in English-speaking countries. As a result, it’s crucial when buying a business that the buyer knows what type of purchase agreement they want to enter into. The more complex the SPA, the higher the risk for the buyer.
The essential elements of a company acquisition agreement are:
KP Tech offers corporate finance advice on the negotiation of the company acquisition agreements (not legal advice/tax advice), particularly on M&A deal structuring and any aspects pertinent to the purchase price of a company acquisition. German: Unternehmenskauf
As an owner-managed and independent management consultancy, we specialise in corporate finance consulting. The focal points of our M&A consulting are the topics: Company sale, company acquisition, company valuation, company succession as well as advice on private equity transactions.
Contact us in strict confidence at
KP Tech Beratungsgesellschaft mbH
Maximilianstr. 2
80539 Munich / Germany
Further offices in Berlin, Frankfurt/Main, Duesseldorf
Munich • London • San Francisco
KP Tech has been providing consulting services for more than 20 years with a focus on company acquisitions, company sales, company succession, equity capital and company valuation. Our clients include small and medium-sized companies as well as international groups and private equity companies. Most of our clients come from the technology, services and consumer (including e-commerce) & healthcare sectors.
KP Tech is a member of the Association of German M&A Consultants (VMA)
KP Tech is part of the renowned Cornerstone International Alliance.
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