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 in the context 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 a tailored approach.

both buyers and sellers  (buy/sell side) for over 10 years . Our focus is 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 about some exemplary projects from MEYER INDUSTRY RESEARCH.

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 landscape, and unique selling propositions (USPs). Based on our due diligence review, the transaction was successfully completed.

For two private equity firms interested in acquiring and continuing the operations of a struggling, medium-sized manufacturer of machine tools, we conducted a comprehensive buy-side due diligence analysis. This included examining the global market situation, international sales markets such as China and Italy, the competitive landscape, and key customer requirements. Interviews with more than 20 industry experts allowed us to develop a precise and reliable picture of the target company'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 for our client, but also a selected company (a locking technology manufacturer). Based on our due diligence analysis, our client decided to acquire the company and is currently systematically expanding the target company's market position through targeted investments and a new strategic direction.

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

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 against each other, and translated into a situation-adapted vehicle response. 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 several advantages: We have access to key information sources, understand the efficient methods of information gathering in your sector, have access to leading market experts, and have developed a proven checklist for analyzing companies within the market environment. We provide buyers and sellers with tailored, up-to-date market and industry information quickly and analyze potential target companies precisely.

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QUESTIONS AND ANSWERS ON COMMERCIAL DUE DILIGENCE (CDD)

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

Commercial due diligence (analogous 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).

Market due diligence, alongside financial due diligence, legal due diligence, HR due diligence, and tax due diligence, is another essential component in the evaluation of the target company in the run-up to corporate transactions/M&A projects .

To obtain reliable information for commercial due diligence, both secondary sources (e.g. statistics, company publications 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 in advance of a company acquisition or a company sale, it is referred to as a sell-side or buy-side due diligence .

Sellers need 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 selling price. The analysis emphasizes strengths and opportunities for future business planning and typically highlights the company's positive attributes prior to the transaction (stability through loyal customers, profitability, sustainability, etc.), without neglecting a critical examination of less positive aspects (e.g., stagnant sales, intense competition).

Buy-side due diligence critically examines the market attractiveness and positioning of the target company and uncovers potential hidden risks of an acquisition. It enables the buyer, who otherwise typically has limited information about the market and the target company, to make an appropriate valuation based on neutral information. The analysis of the target company and its business model is reviewed for existing weaknesses and risks, while also considering its potential.

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

For industrial and B2B markets, there is often less readily available market data and statistics 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 this with our strong modeling expertise to evaluate complex markets. The assessments of industry experts , with whom we maintain extensive contacts, also play a crucial role.

Identifying competitors already active in the market and analyzing market strategies is a key task of commercial due diligence. Which competitors operate in the target market, what positioning do they occupy, what technologies do they use, what corporate strategy do they pursue, how successful are they, 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 an analysis of competitors' strategies and other "soft factors" such as customer structure, business model, sustainability, and the company's products. From this, the assessment of the target company's competitive position derived.

Interviews with market participants and industry experts are a crucial source of information for evaluating companies and markets and represent the gold standard among data collection methods. Our proven interview process guarantees maximum success in conducting these surveys

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

suitable interview partners within our network and in other appropriate circles . For example, decision-makers at customer companies, non-customers, dealers and distributors, associations, research institutes, or other participants in the value chain will be interviewed. You will receive a list of proposed interview partners for approval.

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

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

Company sales are often time-sensitive, with tight deadlines. Therefore, we support our clients with commercial due diligence quickly and efficiently Initial findings are often available within just . The overall process typically takes no more than a few weeks.

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

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OUR COMMERCIAL DUE DILIGENCE SERVICES & BENEFITS

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 usually provide little or no reliable information about the market environment, existing opportunities and risks, potential customers, customer behavior, or the competitive environment.

Usable and reliable information is often found in specialized databases and industry-specific sources, which require specific knowledge and research know-how.

Robotics Market Research Germany

Experts, customers, business partners and other market participants are also an indispensable source of information for a reliable, neutral assessment of a company during market due diligence, as they can make valuable statements about the market and competitive situation and the position of the relevant company in the market based on their practical experience.

COMMERCIAL DUE DILIGENCE OF UNCOMPROMISING QUALITY – EXTENSIVE REFERENCES

Managing directors, sales managers, and strategy and business development managers at over 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 evidenced by numerous testimonials – please see for yourself.

Further references

Individual consultation for your company analysis

At MEYER INDUSTRY RESEARCH, a trusting personal partnership and the high quality and reliability of our analyses are our top priorities.
We would be happy to advise you in detail and without obligation before any potential collaboration on a market study , including, if desired, a personal meeting at your location. We look forward to your inquiry and will gladly prepare a customized offer for you!

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