You can’t buy or sell a company without knowing its market inside out.

“The market – the place where supply and demand come together and value becomes price.”

Ever-changing background conditions such as the trend towards market internationalisation, ever-increasing pressure on growth, ever-changing standards and practices in both corporate financing and taxation and, importantly, also the forthcoming transition of generations affecting the top-management positions in most companies are inevitably defining new challenges, such as:

  • Tapping new national and international customer potentials
  • Purposeful completion of product ranges
  • Setting foot into new horizontal and vertical markets
  • Opening up new purchasing and selling channels
  • Conception of new, forward-looking output optimisation strategies
  • Maintaining and increasing enterprise value
  • Preparation of viable and efficient corporate succession concepts

There are always two options companies may seize to realise future corporate growth: Either they develop new products, new markets and new profit sources organically – i.e. independently and based on own resources –, or they reach out for this dynamic combination by acquiring or merging with an enterprise completing their operations.

However, enterprise value and purchase price may diverge, particularly if the market is already overvalued due to company transactions that have already been completed within the relevant market sector. In such case, an extensive analysis of prior transactions should be carried out in order to ensure that the acquiring or controlling company will not pay an excessively high price. In this context, the sector-specific knowledge that is present within the company is just as important as the systematically assimilated external in-depth analytical and financial know-how of new, potential acquisition candidates.

We do believe that successfully operating companies may benefit from the sober way of thinking and practices of financial investors when acquiring or divesting an enterprise. After all, whatever occupies centre stage for an investor when acquiring a business should also be in the spotlight of any producing company: reaching return on equity as quickly, efficiently and effectively as possible.

The question to follow is: What is the objective of the projected acquisition and how should the core business be positioned in its relevant markets in order to increase the value of the company subsequent to the addition?

Here too, Allert & Co. will be pleased to be at your service.

© 2009 Allert & Co.   [ Impressum ]