Transactions
Transactions
Chancen und Risiken erkennen. Die richtigen Entscheidungen treffen.Transactions
Recognizing opportunities and risks.Taking the right choice.
If you are targeting a transaction, we will guide you with ingenuity along with advice and action.
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Transaction Services
Bei Unternehmenskäufen bzw. -verkäufen durchleuchten wir in Ihrem Interesse die damit verbundenen Chancen und Risiken.02
Mergers & Acquisitions
Unter Mergers & Acquisitions verstehen wir den ganzheitlichen Ansatz im Bereich Transactions. Wir begleiten Sie in einzelnen Phasen oder während des gesamten M&A-Prozesses.03
Valuation
Bei einer Transaktion stellt sich die Frage nach dem fairen Wert bzw. dem maximal zu zahlenden oder mindestens zu erzielendem Kaufpreis auf. Wir übernehmen für Sie die Bewertung.A transaction is a complex process in which one wheel has to mesh with the other. It is important to identify, calculate and weigh economic risks and opportunities, determine a company value and organize an integrated process. All of this requires technical and procedural expertise, practical experience and, last but not least, targeted communication with all those involved.
A transaction is a complex process in which one wheel has to mesh with the other. It is important to identify, calculate and weigh economic risks and opportunities, determine an enterprise value and organize an integrated process. All of this requires technical and procedural expertise, practical experience and, last but not least, targeted communication with all those involved.
We offer our customers tailor-made solutions for their individual transaction projects - whether with due diligence services from our Transaction Services division and company valuations from our Valuation division or during the entire M&A process. You benefit from our many years of experience, the close interaction of all parties involved in the transaction process and our pragmatic but always conscientious approach. We support our customers in every step as a reliable partner. We understand your needs, represent your interests and provide you with targeted support in order to make the transaction process safe, fast and successful.
When company acquisitions or sales take place, the focus is on the opportunities and risks that come with the transaction. We help our clients to gain an overall impression. Our product-related advisory approach to transaction services enables our clients to gain a quick and complete overview of the situation so that they can make the appropriate decisions with a clear conscience.
The term Financial Due Diligence refers to a comprehensive and systematic analysis of a target company’s financial data from which a detailed overview can be made.
It identifies and assesses opportunities and risks in the following areas:
- Accounting, including historical business transactions
- Budgeting
- Financing
- Control systems
Financial Due Diligence also offers the following advantages:
- A systematic review of the target company for opportunities and risks
- Providing a reliable basis for determining a company’s value, drawing up a purchase agreement and determining the purchase price
- Mitigating identified risks through guarantees and indemnities
- A basis for a potential post-merger integration
Depending on whether a company is to be bought or sold, we distinguish between:
The scope of financial due diligence (scope of the work) depends on the complex nature and speed of a transaction. With this in mind, we suggest different approaches to our clients, the scope of which is tailored to specific information requirements, namely "Red Flag Financial Due Diligence" and/or "Full Scope Financial Due Diligence".
Red Flag Financial Due Diligence
Red Flag Due Diligence allows a potential buyer to make an initial assessment of the target company based on the information provided. It is often performed prior to submitting a Letter of Intent (LoI) or indicative offer. It also forms the basis for decisions on how to proceed with the transaction process.
The advantages of Red Flag Due Diligence are:
- Early detection of potential deal-breakers
- Identifying key themes in consultation with the clients/focus on key issues
- Limited scope of work at manageable costs (efficiency benefits, particularly when transactions have been completed earlier than expected)
Full-scope Financial Due Diligence
Full Scope Due Diligence is commissioned by the potential buyer during which all decision-relevant information about the target company is included in a due diligence report to be forwarded to the purchaser. This type of due diligence covers the following areas, depending on the scope of the work:
A Full Scope Due Diligence report has the following features:
- Inclusion and analysis of all relevant specific themes that fall within the scope of the work, as well as a detailed analysis and commentary
- Dividing the report into a management summary, with supporting analysis and appendices
Depending on your individual wishes and needs, we supplement and/or extend financial due diligence to the following:
- Indicative valuation of the target company as a basis for determining the purchase price
- Business modeling including an outline of a possible company acquisition (ex-ante, ex-post) and goodwill as well as disclosure of other hidden reserves (indicative purchase price allocation)
- Appraisal and review of closing accounts, compliance with guarantees and analysis of net debt and working capital
Vendor due diligence is a due diligence process commissioned by the seller in which all decision-relevant information about the transaction object are included in an objective analysis to be forwarded to potential buyers.
Vendor due diligence basically covers all sub-areas of financial due diligence. In contrast to a due diligence provider commissioned by the purchaser, Auricon acts as an independent expert in vendor due diligence, analyzing the transaction object from a potential buyer’s perspective.
The advantages of Vendor Due Diligence are:
- A more efficient selling process and better process control for the seller
- Potential transaction issues are identified at an early stage to avoid any surprises emerging during the negotiations
- A potentially larger pool of interested parties due to lower transaction costs
When it comes to vendor assistance, we advise our clients on a selective basis on the implementation of sales processes with the aim of maximizing both the effectiveness of the transaction procedure and proceeds from the sale. In doing so, the client or the responsible department remains in the lead for the M&A process.
The security of the process must be ensured at all times to protect the sale object from an unwanted loss of information. As the scope of meaningful vendor assistance largely depends on the complexity of the company and the transaction being considered, our priority will be to provide specific solutions, which are discussed on a basis of mutual trust with our clients.
At AURICON, we offer the following vendor assistance services:
- Financial Data Book
- Financial Fact Book
- Carve-out assistance
- Data Room management
- Support for Q&A sessions
Financial Data Book
A Financial Data Book comprises condensed and concise financial data relating to a sale.
The Financial Data Book is available in electronic form or as a hardcopy and offers the following advantages:
- Identification of key information
- Plausibility and transparency of the financial data
- Fast availability of data
- Provides the basis for the Financial Fact Book or vendor due diligence
Financial Fact Book
The Financial Fact Book should be seen within the context of financial vendor due diligence based on the simple presentation and commentary on facts and figures without analyses or evaluation statements, e.g. on the target company’s financial position.
This approach is a common alternative to vendor due diligence, particularly in the SME sector, as a way of saving time and costs
As well as its advantages, the Financial Fact Book offers the following additional benefits:
- Increased transparency through plausibility checks and comments on financial data
- Time and cost savings compared to vendor due diligence
Carve-out assistance
A carve-out involves the sale of part of a company that is not legally independent. The process is particularly challenging since the part of the company to be carved out is usually not an independent functional unit which means that no stand-alone financial information is available.
We help our clients to overcome the challenges of a carve-out and advise them on the precise allocation of financial data, assets and personnel, the derivation of a separate set of figures from company reports and the resolution of group interdependencies.
Data Room management
Potential buyers require access to the data of the transaction object in the sales process.
As a first step, we advise our clients on the compilation, preparation, and critical appraisal of the relevant information. Secondly, we assist in organizing, setting up and managing the data room (physical or virtual) to provide prospective buyers and their advisors with controlled and secure access to sensitive company data. We check the data room information for confidentiality, accuracy, and consistency with other company data (including information memoranda, due diligence reports and management presentations).
Support in Q&A sessions
During a transaction process, questions are usually posed by potential investors to the seller’s management team after access to the data room or following management meetings.
The coordination of Q&A sessions, either on-site or by telephone, can take a lot of time, particularly if several investors are involved in the transaction process. We advise our clients on how to manage these events effectively.
When it comes to contract assistance, we support our clients in structuring the purchase agreement, including protecting the company from the risks identified during due diligence.
The purchase agreement is the result of negotiations on purchase price terms and warranty provisions. In today's transactions, the negotiation and implementation of the purchase contract offer buyers and sellers great opportunities which they can exploit to their advantage.
Working with our network partners, we support our clients in structuring the purchase agreement in their best economic interest by:
- Definition of price determination and adjustment clauses
- Compiling a comprehensive list of representations and warranties (“Reps and Warranties”) that focuses on specific risks involved
- Definition of conduct obligations between signing and closure
Tax due diligence involves the identification and assessment of the target company’s tax risks or object of sale. This enables the buyer to utilize tax risks as a means of reducing the purchase price. The vendor, on the other hand, fulfils his/her obligations to disclose tax risks and so avoids tactical errors during purchase price negotiations. In this context, tax guarantees and exemption rules can be included in the contract so that the buyer does not have to bear any losses from old tax burdens in the future.
Typical contents of tax due diligence are:
- Identifying or revealing existing back-payment risks from the past and checking whether adequate provisions have been made
- Identification of tax benefits (e.g. loss carry-forwards) and checking whether these will be affected by an acquisition
- Formulation of tax guarantees and exemption requirements
- Assessment of tax risks to reduce the purchase price
Nothing can be achieved without financing, regardless of whether a company is in the start-up, growth or maturity phase. Sensible financing solutions are required to cover capital requirements in the long term.
We support companies as a bank-independent advisor, as well as assessing their options and advise them on a range of suitable debt and equity instruments. New forms of financing such as private equity and debt, securitization or mezzanine capital have increased the number of alternatives to traditional bank loans. We advise our clients on setting up appropriate reporting structures, calculating covenant scenarios and preparing bank statements.
Mergers and Acquisitions (M&A) is a process-oriented approach to business transactions. We provide professional support for our clients, either in individual phases or in managing the entire M&A process.
Financial and strategic investors have their own particular investment strategies in mind. A well-prepared and focused acquisition strategy is the starting point for a successful transaction, regardless of whether the service and product portfolio is to be specifically augmented or new market areas developed.
Typical contents of acquisition strategies are:
- Scanning of markets/industries/segments
- Profiling for candidate selection
- Recognizing individual company goals as well as their financial situation
- Overview of opportunities and risks
From a seller’s perspective too, having a defined strategy is also a vital part of the whole process. If our clients want to sell specific business units for strategic reasons, or if a market consolidation is taking place, or if there is no successor for family-owned companies, we will provide confidential assistance in developing an individual sales strategy to optimize proceeds from sales.
Typical contents of sales strategies are:
- Definition of the transaction object and analysis of its current situation
- Preparation of a time and action plan for the sales process
- Identification of the company's value drivers and potential deal issues
- Preparation of a search profile for selecting potential buyers
We help our clients in their professional search for suitable target companies (from a buyer’s perspective) or potential investors (in terms of the seller).
As a first step, we identify suitable target companies or interested parties (long list). As medium-sized companies in particular not only have a small group of "logical" buyers but also a large number of potential target companies and interested parties with varying motivations, the definition of a specific search profile is of major importance. We draw on reliable databases and a broad network to create the long list.
We categorize and prioritize target companies or interested parties in discussion with the client based on the long list. We summarize the results in a shortlist and create detailed company profiles. In addition, we devise a contact strategy for each target company to increase the chances of success.
We will fully support you in the preparation and implementation of a sales process, from the development of strategic objectives to data compilation and signing/closing.
Auricon will provide detailed advice on the sale of medium-sized companies throughout the transaction process. In doing so, we plan and structure the transaction, identify potential investors and advise on contract negotiations both for cross-border transactions and sales within Germany. Our professional support throughout the transaction process will help achieve the best possible outcome for our clients.
We assist companies in their search for a reliable partner and provide targeted and effective support in selected phases of the M&A process.
We offer our clients to take over individual tasks in the transaction process or work with them without pushing ourselves into the foreground. Our many years of M&A expertise and clear insight into the overall process enables us to relieve the burden on companies in a targeted and effective manner.
Typical elements involved in transaction support are:
- Data Room management
- Preparation of the teaser and/or information memorandum
- Preparation of the Fact Book
- Integrated business planning, including an indicative value for determining the purchase price
- Support for Q&A sessions
- Preparation of a fairness opinion
- Carve-out assistance
When a transaction is being planned, the question of a fair value or the maximum or minimum purchase price to be paid always arises. We prepare company valuations and provide our clients with professional and reliable support in all valuation-related matters.
Valuations of companies and their shares, together with a statement that meets the German Institute of Auditors’ Standard (IDW S1), are carried out as part of the valuation report.
A company’s value is generally calculated as future profitability value. In practice, capitalized income value and discounted cash flow models have become the norm. Simplified pricing methodology (e.g. multiplier methods) can be used in individual cases as a plausibility check of the valuation results. Simplified pricing methods are applied in practice, particularly in relation to small and medium-sized enterprises.
In determining a company’s value, we perform various roles such as:
- Consultant
- Independent expert
- Arbitrator/mediator
An indicative valuation differs from that of a professional appraisal in that it dispenses with the requirement for a detailed expert opinion. The focus is on financial planning.
The aim of the indicative valuation is to offer the client a cost-effective way to quickly and reliably determine a company´s value using established valuation methods and/or also applying multiplier models.
An indicative valuation is particularly interesting for:
- Companies with imminent purchase and sale decisions
- Assessing the addition of new (capital) partners
- The validation of comprehensive investment measures
- Assessment of capital structure optimization measures
Within the scope of their discretion, board members and managing directors are obliged to scrutinize business decisions and their economic consequences in advance and to record them for their supervisory board and shareholders.
These obligations are becoming increasingly important in agreeing transaction prices in the context of major deals as well as in restructuring. Furthermore, a lack of information often makes it difficult for supervisory boards and shareholders to assess the financial viability of a transaction price.
The Fairness Opinion offers the following advantages:
- Business certainty for corporate bodies in decision-making through an assessment by an independent and expert third party
- An important contribution to the preparation of the proper documentation to comply with due diligence obligations
- Reduction of an imbalance in information among oversight bodies and shareholders
Company acquisitions and their inclusion on consolidated balance sheets place high demands on the reporting company due to complicated valuation and accounting factors.
When an acquisition takes place, the purchase price is allocated to the assets, liabilities and contingent liabilities acquired (Purchase Price Allocation). Recognition at fair value generally leads to the disclosure of hidden reserves. In addition, previously unrecognized intangible assets are recognized for the first time to the extent that they can be capitalized.
Such a purchase price allocation usually involves a lot of complex valuation and accounting factors. We advise our clients particularly on the time-consuming identification and valuation of previously unrecognized assets such as trademarks, etc.
Your advantages:
- Plausibility check of the results using databases and publicly available information
- Easing the burden on your own resources
- A reliable outcome that limits the risk of impairment losses
Goodwill acquired through a transaction and intangible assets with indefinite life cycles are generally subject to an annual impairment test.
Performing such a test is challenging particularly in difficult economic times as companies are forced to rethink their planning strategy and, if necessary, respond to changes in key parameters. This, in turn, can trigger impairment losses. In this context, it is important to identify and quantify potential impairment risks at an early stage in order to manage any potential effects in a timely manner. We advise our clients on the structuring and implementation of a typical impairment test process.
This is based on four elements:
- Automated data generation of input parameters, including monitoring of impairment indicators
- IFRS or US GAAP or HGB-compliant impairment model
- Reconciliation of key model assumptions with market parameters
- Assessing the consequences from the result