Case Study

Credentials: Project K, a successful acquisition by the Chinese B(…) Co., Ltd.

Background of the transaction:

• Client B is a Chinese manufacturer of industrial machines for producing electronic parts.
• In order to transfer know how and to accelerate the future growth of their Company, the management of B decided to acquire a German competitor in the area of machine engineering.
• A German M&A advisorwasauthorized to take over this case.

Criteria of potential target companies:

• Established company in the area of machine engineering
• products supplementing B’s assortment
• Minimum turnover of € 15-25 million (possibly lower in case of a positive growth trend)
• EBIT margin at least 7,0%
• Headquarter in Germany and successful in the German market
• No restructuring case

Milestones:

1. First screening of 184 potential target companies
2. Deeper ‘insight’ research on 130 target companies
3. 102 potential target companies presented to client (= Long List)
4. Determination of 20 target companies to be approached by Greens (= Short List)
5. Approach of these 20 target companies within 24 hours via eMail and phone
6. 12companies responded in the following days, whereas 8 did not respond at all
7. 8 initial meetings (M&A advisor only)
8. Follow-up meetings on ‘principle level’ with 5target companies
9. Further meetings and discussions with 4 target companies
10. Valuation of & negotiations with 3 target companies
11. Organize the Meeting between the Clint B and the final companies
12. Assign the lawyer to make suggestions to the M&A plan and future company structure
13. Signing of LOI with 1 target company (Company K)
14. Make the Due Diligence Plan
15. Assign lawyer and accountant to join the Due Diligence Team. (We strongly suggest to choose the lawyer and accountant, who have extra insurance, which can cover the lost, if they did any mistake by the duty)
16. Help Clint B to analyze and win the synergies of the transaction
17. Organize the Final Meeting between the Clint B and the final companies K
18. Sign contract
19. Transaction/Closing

1. What will happen, if no adequate company can be found in the end? Will my company get back the service fee?

The service and consulting fees are the remuneration for the amount of work for recherché, analysis, correspondence etc. It is payed independently from a possible transaction. This guarantees that the M&A consultant remains neutral, and in case the transaction would be detrimental to the client, the consultant can advise against the transaction.

1. When will arise costs frommandating the lawyer, tax accountant or auditor?

By assigning the lawyer to make suggestions to the M&A plan and future company structure and by assigning the lawyer and accountant to join the Due Diligence Team.

1. Which services do lawyer, accountant and auditor provide and which costs willl typically arise?

The costs of all these services will amount to about 10% of the complete transaction.