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Mergers & Acquisitions
How to buy a company –
step by step(incl. MIZ services)
19.04.23 2
Motives
• From the seller‘s POV:– Focusing upon core competences
– Outsourcing of divisions
– Synergic effects
– Covering capital requirements
– A desired re-orientation
– No succession plan
– Advanced age
– Impaired health
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Motives
• From the buyer’s POV:– Synergic effects
– Development of new markets
– Acquisition of know-how
– Acquisition of human capital
– A wider range of products/services
– Capital investment
– MBO
– Taking over competitors
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Variants
• Share deal– Acquisition of shares
• Asset deal– Assignment of assets
• Properties and buildings• Regular customers, machines, stocks of
merchandise etc.
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Stages (seller‘s)
(1) Partner‘s/owner‘s decision to sell
(2) Authorisation of consultants
(3) Consultants run a performance analysis; what asking price?
(4) Looking for a suitable buyer via brokers, networks, media, successor exchanges (e.g. www.nexxt.org)
(5) Buyer and seller enter into a non-disclosure agreement
(6) Exploratory talks
(7) Letter of intent
(8) Due diligence
(9) Contract negotiations
(10) Closing of the contract of sale
(11) Handover to buyer
(12) Perhaps closing of a consultancy contract
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Stages (buyer‘s)
(1) Commissioning a transaction consultant- Asking price appropriate?
- Offer sincere?
- A brief analysis of the company
- Checking financing options:Equity vs. outside financing
- Consulting banks re financing
- Time expenditure: 2 days
- Costs: ca. €2,000**Costs depend upon consultant‘s qualification. Our hourly rates:
• CPA / tax consultant: 275 €/h• Lawyer / tax consultant: 220 €/h• Tax consultant / partner: 200 €/h• Tax consultant: 140 €/h• Qualified staff: 100 €/h
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Stages (buyer's)
(2) Starting negotiations- Drafting a letter of intent
- A “soft” LOI:- Non-committal
- General phrasing
- Time expenditure: 1 day at max:
- Costs: ca. €1,800
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Stages (buyer's)
(2) Starting negotiations- A “hard” LOI:
- Specific agreements
- Legally binding declarations
- Reference to integral parts of the contract
- Non-disclosure obligation
- Time expenditure: 2 days
- Costs: ca. €3,500
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Stages (buyer's)
(3) Due diligence- Legal, business and technical analysis of the
company prior to the closing of the contract of sale
- The buyer‘s detailed consideration
- Data room
- Time expenditure: dependent upon the company’s size and structure, 5 – 10 days
- Costs: ca. €10,000 – 20,000
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Stages (buyer's)
(4) Form of contract- Drafting the contract of sale
- Buyer/seller coordination
- Cooperation with an experienced lawyer: a specialist in commercial and company law
- Time expenditure and costs: dependent upon the company‘s size and structure and the resultant complexity of the contract of sale (ca. €10,000 - 30,000)
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Stages (buyer's)
(5) Signing- Suggesting a notary for the notary act
- Accompanying the closing of the contract
(6) Closing- Monitoring the implementation of the purchase
- Payment- Appointment of the new management- Dismissal of the former management- Delegation of authorities
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Stages (buyer's)
• Financing– Asking for offers
– Negotiation of the terms
– What leverage?
Financing negotiations with banks are concurrent with the other steps
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Why can buying a company fail?
• No clear acquisition target
• Companies are too disparate (in terms of their culture)
• Too high a price
• Synergic effects overestimated
• Costs underestimated
• Acquired company‘s potential misjudged
• Market pattern misjudged
• Wrong implementation
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Why consultants?
• Buying or selling a company is not part of one’s day-to-day business
• Speed
• Expertise
• Experience gained in many a project
• A discreet outreach possible
• Coordination of involved specialists
• A realistic purchase price
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Why MIZ?
• An extensive network– Banks
– Lawyers
– Notaries
• Experience in processing M&As
• Consultancy/support out of one hand– Buying the company
– Accounting consultancy
– Tax consultancy
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Other MIZ services
• Ongoing tax consultancy
• Accounting consultancy
• Auditing
• Work in advisory councils
• Assumption of directorships
• Representation of partners vis-a-vis other partners
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Contact
MIZ GmbH Steuerberatungsgesellschaft
WIR TEUHAND GmbH Wirtschaftsprüfungsgesellschaft
Im Teelbruch 5545219 EssenTel.: 02054 / 928 – 01Fax: 02054 / 928 – [email protected]
Grunerstraße 13340239 DüsseldorfTel.: 0211 / 5381 93 - 0Fax: 0211 / 5381 93 - [email protected]
Röntgenring 3-540878 RatingenTel.: 02102 / 9929 – 0Fax: 02102 / 9929 – [email protected]
Kirchhellener Straße 26946145 OberhausenTel.: 0208 / 64844 – 0Fax: 0208 / 64844 – [email protected]
www.miz.de