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Mergers & Acquisitions

Mergers & Acquisitions. How to buy a company – step by step (incl. MIZ services). 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

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Mergers & Acquisitions

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  1. Mergers & Acquisitions How to buy a company – step by step (incl. MIZ services)

  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

  3. 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

  4. Variants • Share deal • Acquisition of shares • Asset deal • Assignment of assets • Properties and buildings • Regular customers, machines, stocks of merchandise etc.

  5. Stages (seller‘s) • Partner‘s/owner‘s decision to sell • Authorisation of consultants • Consultants run a performance analysis; what asking price? • Looking for a suitable buyer via brokers, networks, media, successor exchanges (e.g. www.nexxt.org) • Buyer and seller enter into a non-disclosure agreement • Exploratory talks • Letter of intent • Due diligence • Contract negotiations • Closing of the contract of sale • Handover to buyer • Perhaps closing of a consultancy contract

  6. Stages (buyer‘s) • 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

  7. Stages (buyer's) • Starting negotiations • Drafting a letter of intent • A “soft” LOI: • Non-committal • General phrasing • Time expenditure: 1 day at max: • Costs: ca. €1,800

  8. Stages (buyer's) • 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

  9. Stages (buyer's) • 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

  10. Stages (buyer's) • 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)

  11. Stages (buyer's) • Signing • Suggesting a notary for the notary act • Accompanying the closing of the contract • Closing • Monitoring the implementation of the purchase • Payment • Appointment of the new management • Dismissal of the former management • Delegation of authorities

  12. Stages (buyer's) • Financing • Asking for offers • Negotiation of the terms • What leverage? Financing negotiations with banks are concurrent with the other steps

  13. 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

  14. 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

  15. 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

  16. Other MIZ services • Ongoing tax consultancy • Accounting consultancy • Auditing • Work in advisory councils • Assumption of directorships • Representation of partners vis-a-vis other partners

  17. Contact MIZ GmbH Steuerberatungsgesellschaft WIR TEUHAND GmbH Wirtschaftsprüfungsgesellschaft Im Teelbruch 55 45219 Essen Tel.: 02054 / 928 – 01 Fax: 02054 / 928 – 100 essen@miz.de Grunerstraße 133 40239 Düsseldorf Tel.: 0211 / 5381 93 - 0 Fax: 0211 / 5381 93 - 99 duesseldorf@miz.de Röntgenring 3-5 40878 Ratingen Tel.: 02102 / 9929 – 0 Fax: 02102 / 9929 – 31 ratingen@miz.de Kirchhellener Straße 269 46145 Oberhausen Tel.: 0208 / 64844 – 0 Fax: 0208 / 64844 – 48 oberhausen@miz.de www.miz.de

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