Don’t leave your company’s growth to chance.

Commercial Due Diligence

Commercial Due Diligence with SuP –
Preventing investment failure before it’s too late

Academic analyses clearly show that the Pareto rule does not stop at M&A transactions. Approximately 20% of all M&As actually contribute to a company’s sustainable value. The other 80% have proven to either be value neutral or to even have had a negative effect on the buyer. A main reason for investment failures is an excessive price due to incorrect appraisals regarding, e.g. market growth or the competitive position of the acquisition candidate.

Schlegel und Partner provides you with support for the following tasks in the due diligence process:
  • Identification and assessment of individual “red flags” in advance to the actual due diligence process
  • Evaluation of company strategy and statements from the information memorandum
  • Determination of company positioning and qualitative assessment of competitiveness
  • Derivation of a realistic scenario for top line and raw material development for the upcoming years
  • Final evaluation and identification of a purchasing price using common methods (such as DCF) based on the calculated top line developments as well as information from the financial DD

Thereby, we also analyze and answer core questions pertaining to Commercial Due Diligence –
  • What is a justifiable purchasing price for the acquisition?
  • Are there any looming “red flags” that could be detected in advance to Due Diligence that would speak against an acquisition?
  • How would new technologies or products influence the company’s competitive position?
  • How sustainable is their USP?
  • How well is the acquisition candidate positioned in the market?
  • Would an investment pay off in the end?

Selection of project examples:

Calculation of a company’s value and synergy potentials for a precious metal processing company in Asia
  • A European company in the precious metal processing industry was interested in strengthening its presence in Asia through an acquisition.
  • The main task was to determine an objective purchasing price in consideration of the market development in Asia and the alleged synergies.
  • Schlegel and Partners analyzed the competitive situation and created a prognosis for the market’s development. This information was integrated into a business model in order to identify revenue and profit developments as well as synergy potentials.
  • An objective value and synergy potentials were then calculated in consideration of the scenario and sensitivity analysis.
Determination of the sales development for a European company in the nonwovens industry
  • In light of an acquisition process, a private equity fund commissioned Schlegel and Partners to conduct a commercial due diligence for the takeover of a nonwovens manufacturer.
  • The main task was the determination of the USP as well as a validation of possibilities to maintain the USP. This also included the question of how the company could partake in market growth and gain further market shares.
  • Schlegel and Partners conducted interviews with market participants in order to answer these questions.
  • Ultimately, a very positive development of the acquisition target could be delivered that even crushed previously forecasted top line developments.

Your contact person
Silke Brand-Kirsch
Executive Partner

Your contact person
Dierk Plümer
Executive Partner