Buying a company on a secure basis

Whether you would like to take over a competitor or extend your portfolio, or you are considering a management buy-out, buying a company is a highly complex matter that requires a lot of know-how and often involves considerable financing requirement.

We support you in the search for a suitable company, the structuring, carrying out audits, negotiating terms and financing.

What makes a well-structured M&A process?

Optimal structuring

The purchase process is planned and structured well right from the beginning. Together with you, we determine the goals you want to achieve and we search for suitable companies. If you do not wish to act directly as a purchaser, we will make initial inquiries and find out whether the companies you are interested in are for sale.

Balanced financing

We help you put together an ideal financing mix for your purchase. If necessary, we will negotiate with financial institutions and identify the right partner or investor for you.

Assessing and negotiating

The company is thoroughly assesses by us, so that you know what risks and liabilities you are likely to encounter. We scan all major factors, filter out those that are dangerous and ensure that your interests are put forward during the negotiations, so that there are no unpleasant surprises for you later on.

Careful drafting of contracts and healthy financing mix

In the M&A sector in particular, excellent results can be achieved through wise, prudent contract drafting, and individually tailored, healthy financing mix. However, it is advisable to consult with experts, who have the necessary experience and professionalism in both areas. If necessary, they also negotiate with banks and credit institutions on your behalf, and can also find a suitable partner/investor.

Two prominent examples: perpetuity and earn-out

In order to avoid a one-time payout, a perpetuity, for example, can be agreed upon. The buyer is paying the seller an annuity instead of the full purchase price at once. Earn-out clauses, on the other hand, are offered when the expected future profitability of the company is a hotly debated topic. In this case, the purchase price of the company shares will be paid upon the closing of the contract, while the disbursement of remaining parts is done based on performance at later stages.

How does an ideal acquisition process look like?

Ideally, an acquisition process lasts up to three months, however, may also extend over years, depending on the complexity of the transaction. It is usually divided into the following four phases:

Start

  • Formulation of strategic objectives, selection of a target company
  • Eventual assistance of an external partner (investment bank or M&A advisory)
  • Collection of relevant market and company information
  • Contacting the target company, initial interviews and confidentiality agreements

Analysis and screening

  • Review of the annual financial statements and planning
  • Market and country analysis
  • Development of a takeover strategy
  • Preparation of offers, preliminary negotiations
  • Execution of a term-sheet as a basis for subsequent contracts

Due Diligence

  • Economic, fiscal and legal examination of the target company

Execution

  • Contract drafting
  • Contract negotiations
  • Signing und Closing
  • Payment of the purchase price and transfer of ownership

What risks must be accounted for?

In company acquisitions, the target company must be assessed and evaluated in its whole complexity. This protects against erroneous decisions. Managers tend to “adorn the bride” and “whitewash” corporate figures, and not only in times of crisis. Here lies the difficulty of assessing the company properly. Open compensation claims, long-term continuous obligations and pending court proceedings are often just the tip of the iceberg.

Reduce to the minimum

Professional analysis, audits and negotiations help ensure that upon the conclusion of the contract, all liability issues have been resolved, dangerous risk factors have been eliminated and no hidden defects remain. Should this not be possible with own available resources and staff, it is recommended that external specialists, such as investment banks, auditors, taxation law experts and/or lawyers be consulted.

Ultimately, what determines the success of the transaction is whether the purchase price is proportionate to the risks and rewards.

Why even experienced businessmen engage with a professional team?

Even companies which have their own M&A department at disposal, often engage an investment bank or an M&A advisory to rely on their experience and expertise.

How we will support you

Assess and negotiate

The company is thoroughly checked and assessed by us, so that you know what risks and liabilities you may have to cope with. We scan all key factors, filter out the dangerous ones, and put your interests across in the negotiations, so that you don’t encounter any surprises afterwards.

Balanced financing

We can help you create an ideal financing mix for a company acquisition. If necessary, we will negotiate with banks and credit institutions and provide you with the right partner/investor.

Advantages

  • Faster and better results can be achieved than on one’s own.
  • External advisors ensure a well-planned and structured M&A process for the right closing, actively support their clients in negotiations and in setting of the maximal purchase price.
  • Due to the expertise of consultants, the complexity of company acquisitions is manageable Risks and liabilities are minimized.
  • Risks and liabilities are minimized.
  • The ideal financing mix will be developed, funding issues will be resolved immediately.
  • Coordination tasks can be outsourced.
  • Contracts, presentations and sales materials are professionally prepared and checked.

Contact

PALLAS CAPITAL Advisory AG
Schottenring 16,
1010 Vienna, Austria

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