Due diligence: better investment decisions for mergers and acquisitions
Zühlke helps its clients gain a better understanding of business models, profitability prospects, and risks during mergers and acquisitions involving technology-driven and software-driven companies. These assessments provide a solid foundation and form a crucial contribution to the legal and financial due diligence.
This means that you, as an investor, are better placed to make your investment decision based on your criteria and your strategy, realistically evaluate success factors that are difficult to grasp, and strengthen your position during negotiations and throughout the project, thereby optimising your risk/reward ratio.
Through focused commercial and technical due diligence, we ensure that the goal of the M&A is assessed based on a sound understanding of the business, the value creation strategy, and the risks involved.
The combination of in-depth business analysis and the specific technical expertise and industry knowledge exhibited by Zühlke’s consultants creates total transparency over the attractiveness, quality, and competitive position of your investment or takeover target. We analyse how well-suited the structures, processes, systems, and capabilities are to achieving the investment targets, and we help you improve your investment case.
- Are the use and development of techniques, technology, and software secured and adequately protected?
- What role do these play in the business model and what risks are they associated with?
- How efficiently and effectively does the company innovate and operate compared to the industry average?
Zühlke has specialists, experience, and knowledge to answer these questions quickly and competently.
Financial projections are substantiated using operational scenarios which are then evaluated and assessed. The result is that the plan of action for increasing the company’s value is more realistic and implemented more quickly once the transaction is complete. You obtain a clearer picture of the investment’s potential, which puts you in the best position to exploit it.
Due Diligence Checklist
12 key questions you should ask yourself during a commercial/technical due diligence:
Is management capable and sufficiently sized to implement the growth strategy?
Are there specific and credible plans supporting the projected growth in sales?
What are the key value and risk drivers inherent to the business of the target?
Are opportunities and risks in the product or service pipeline reflected in the financial projections?
Does product, plant, and software architecture scale with the growth plans, and what risks are buried therein?
What are the key competencies making the USP of the company, which persons in the company hold them, and is their future contribution to the success of the company secured?
Has the company's intellectual property been safeguarded?
What level of excellence do sales, operations, and product/service development exhibit?
Are the projected improvements in cost and productivity supported by specific and credible plans?
Is the level of regulatory, environmental, health, safety, etc. risk in operations and product/service lifecycle acceptable?
Are there hidden risks in the support services and infrastructure (IT, facility management, HR, finance, etc.)?
Are tangible and non-tangible assets valued sensibly?
Are there some points you cannot check? Contact us for more information.
Rolf P. Maisch
Due diligence: understanding the critical M&A success factors
Acquiring a firm or start-up whose business is driven by technology or software requires specific knowledge and insights into the drivers and risks of such companies. Technical and commercial appraisals as part of a due diligence process can be significantly improved using specialist consulting and thereby lead to better investment decisions.