COMMERCIAL DUE DILIGENCE IN TECHNOLOGY MARKETS

The term “Commercial Due Diligence” (CDD) refers to the structured evaluation of a company’s market and competitive environment, usually against the background of an upcoming M&A situation, for example a company purchase or sale.

While companies operating in consumer goods markets often have access to extensive market data, commercial due diligence in the industrial sector (e.g. mechanical engineering, automotive suppliers, medical technology, energy technology ) usually requires an adapted approach.

both the buy and sell  sides for over 10 years . We focus on analyzing technology and niche markets in the business-to-business (B2B) sector.

CURRENT COMMERCIAL DUE DILIGENCE – PROJECT EXAMPLES

We conduct customized due diligence analyses for our clients. Click on the project examples to learn more about some of MEYER INDUSTRY RESEARCH's projects.

As part of a planned acquisition of a medium-sized manufacturer of industrial furnaces in the automotive sector, we supported the seller with systematic sell-side due diligence. We developed a robust analysis of the company's market size, growth prospects, competitive situation, and unique selling propositions. Based on our due diligence, the transaction was successfully completed.

For two investment companies interested in acquiring and continuing a struggling medium-sized machine tool manufacturer, we conducted a comprehensive buy-side due diligence review, examining the global market situation, international sales markets such as China and Italy, the competitive structure, and key customer requirements. Interviews with more than 20 industry experts provided a precise and reliable picture of the acquisition candidate's market position. Based on our analysis, the investors decided to proceed with the transaction and continue the business.

As part of a buy-side due diligence, we analyzed not only the market for specialty locks and electronic locking technology in Germany and Europe, but also a selected company (a locking technology manufacturer) for our client. Based on our due diligence analysis, our client decided to acquire the company and is currently systematically expanding the target company's market position with targeted investments and a new strategic direction.

Industrial image processing is currently experiencing dynamic growth, and Germany is one of the leading nations in the development and use of image processing technologies in industry. Whether in mechanical and plant engineering, medical technology, security technology, or even traffic and transportation – industrial image processing systems make processes more efficient and reliable.

As part of a planned corporate transaction involving a leading European integrator, we analyzed the European market for industrial image processing systems for a family office. Based on our commercial due diligence, the family office prevailed in the bidding process and was awarded the contract to acquire the attractive medium-sized target company.

As part of a client-specific commercial due diligence, we identified the leading technology providers (hardware and software) in the field of sensor fusion. The merging of sensor data (sensor fusion) is a crucial factor in the further development of autonomous vehicle concepts. Data from radar, LIDAR, ultrasonic, and other sensors must be analyzed in real time, compared, and translated into a vehicle response adapted to the situation. The market is considered one of the fastest-growing segments in the field of autonomous driving and is therefore currently highly attractive to investors.

EXTENSIVE MARKET DUE DILIGENCE EXPERIENCE

Our clear focus on commercial due diligence (CDD) projects in industry and B2B offers our clients advantages: We have access to key information sources, understand the possibilities for efficient information gathering in your industry, have access to key market experts, and have developed a proven checklist for analyzing companies in their market environment. We provide buyers and sellers with customized, up-to-date market and industry information at short notice and analyze potential target companies in detail.

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QUESTIONS AND ANSWERS ON COMMERCIAL DUE DILIGENCE (CDD)

Here we answer some frequently asked questions from our clients about conducting market due diligence in the industrial sector:

A commercial due diligence (used analogously to: market or strategic due diligence) is a special form of strategic market analysis in which the strengths, weaknesses, opportunities and risks or future prospects of a company in the market are assessed in a structured manner (SWOT analysis).

In addition to financial due diligence, legal due diligence, HR due diligence and tax due diligence, market due diligence is another fundamental component in the evaluation of the target company prior to corporate transactions/M&A projects .

To obtain reliable information during commercial due diligence, both secondary sources (e.g. statistics, publications from companies in the market, competitive analysis, specialist articles) and primary market research methods (e.g. interviews with existing customers, potential customers or market experts) are used.

Depending on whether the due diligence is carried out prior to a company acquisition or a company sale, it is referred to as a sell-side or buy-side due diligence .

Sellers require market due diligence to present a neutral assessment of the market environment . This provides solid arguments for an attractive valuation of the company and a correspondingly high sales price. The analysis emphasizes strengths and opportunities for future business planning and typically highlights the company's positive attributes (stability through loyal customers, profitability, sustainability, etc.) prior to the transaction, without neglecting a critical examination of less positive aspects (e.g., stagnating sales, intense competition).

A buy-side due diligence critically examines the market attractiveness and positioning of the target company and uncovers potential hidden risks of a company acquisition. It enables the buyer, who otherwise usually has limited information about the market and the target company, to conduct an appropriate evaluation based on unbiased information. The analysis of the target company and its business model is reviewed for existing weaknesses and risks without neglecting potential.

In both cases, in addition to key performance indicators (e.g., historical sales and expected development as part of a financial due diligence), other factors such as locations, products, or the business model must be examined and included in the evaluation. A competitive analysis of the company can also provide important insights and enable an analysis of strengths, weaknesses, opportunities, and threats prior to the transaction.

fewer directly available market figures and statistics are available for industrial and B2B markets than for consumer markets. Therefore, reliably estimating market size and growth is a particular challenge for CDD projects in industrial and niche markets.

We leverage our extensive access to all relevant industrial data sources and complement these with our extensive modeling expertise to evaluate complex markets. The assessments of industry experts , with whom we maintain extensive contacts, also play an important role.

Identifying competitors already active in the market and analyzing market development strategies is a key task of commercial due diligence. Which competitors operate in the target market, what positioning do they adopt, what technologies do they use, what corporate strategy do they pursue, how successful are competitors, and what best practices can be identified?

The collection, review, and aggregation of key competitive metrics is a fundamental component of the analysis. This is complemented by the analysis of competitors' strategies and other "soft factors" such as customer structure, business model, sustainability, or the company's products. From this, the assessment of the target company's competitive position derived.

Interviews with market participants and industry experts are an important source of information for evaluating companies and markets and represent the ultimate data collection method. Our proven interview process guarantees maximum survey success:

(1) We will develop a suitable discussion guide with the key questions in close consultation with you.

(2) We research our network and other suitable environments for relevant interview partners . We interview, for example, decision-makers at customers, non-customers, dealers and sales partners, associations, research institutes, or other participants in the value chain. You will receive a list of suggested interview partners for approval.

(3) We conduct the interviews in accordance with professional principles .

(4) We compile the assessments of the interviewees and derive implications for the company and market valuation.

Company sales are often time-critical, and deadlines are tight. Therefore, we support our clients with commercial due diligence in a short-term and unbureaucratic manner Initial results are often available within just . The overall processing time is usually no longer than a few weeks.

Do you have any further questions about conducting a market due diligence? We would be happy to assist you.

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OUR COMMERCIAL DUE DILIGENCE SERVICES

Robotics Market Research Germany

Commercial due diligence projects for industrial companies and in the business-to-business (B2B) sector require a special methodology:

Especially in technologically driven niche markets with a manageable number of market participants, conventional, publicly accessible sources generally contain little or at least little reliable information on the market environment, existing opportunities and risks, potential customers, customer behavior or the competitive environment.

Usable and reliable information can often be found in special databases and industry-specific sources that require specific knowledge and research expertise.

Robotics Market Research Germany

An essential source of information for a reliable, neutral assessment of a company during market due diligence are experts, customers, business partners and other market participants who, based on their practical experience, can make valuable statements about the market and competitive situation and the position of the relevant company in the market.

COMMERCIAL DUE DILIGENCE OF UNCOMPROMISING QUALITY – EXTENSIVE REFERENCES

Managing directors, sales managers, and strategy and business development managers at more than 100 client companies rely on our meticulous market analyses for one key reason: the uncompromising quality and reliability of the results from our market and competitive analysis .  Our discerning clients also value the personal and open collaboration with our team, as demonstrated by their numerous testimonials – please see for yourself.

Further references

INDIVIDUAL CONSULTING FOR YOUR COMPANY ANALYSIS

Trustful personal cooperation and the high quality and reliability of our analyses are top priorities at MEYER INDUSTRY RESEARCH.

We would be happy to provide you with an in-depth, non-binding consultation prior to a potential collaboration , including a personal on-site consultation upon request. We look forward to receiving your inquiry and will be happy to prepare a customized quote for you!

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