COMMERCIAL DUE DILIGENCE IN TECHNOLOGY MARKETS

class="img-responsive

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 acquisition or sale.

While extensive market data is often available for companies operating in consumer goods markets, commercial due diligence in the industrial sector (e.g. mechanical engineering, automotive suppliers, medical technology, energy technology) usually requires a customized approach.

MEYER INDUSTRY RESEARCH has been carrying out individual commercial due diligence projects on the buy and sell side for more than 10 years. We focus on the analysis of technology and niche markets in the business-to-business (B2B) sector.

CURRENT COMMERCIAL DUE DILIGENCE - PROJECT EXAMPLES

We carry out customized due diligence analyses for our clients. Click on the project examples to get to know some exemplary projects of MEYER INDUSTRY RESEARCH.

As part of a planned takeover of a medium-sized manufacturer of industrial ovens in the automotive sector, we supported the seller with a systematic sell-side due diligence. We prepared a reliable analysis of the company's market size, growth prospects, competitive situation and USPs. Based on our due diligence review, the company transaction was successfully realized.

For two investment companies interested in the takeover and continuation of an ailing medium-sized manufacturer of toolmaking machines, we carried out a detailed buy-side due diligence to examine the global market situation, international sales markets such as China and Italy, the competitive structure and key customer requirements. Through interviews with more than 20 industry experts, we were able to draw a precise and reliable picture of the market position of the takeover candidate. Based on our analysis, the investors decided in favor of the transaction and the continuation of the business.

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

Industrial image processing is currently experiencing dynamic growth and Germany is one of the leading nations when it comes to the development and use of image processing technologies in industry. Whether in mechanical and plant engineering, in medical technology, in the field of safety technology or in traffic and transportation - industrial image processing systems make processes more efficient and safer.

As part of a planned corporate transaction of a leading integrator in Europe, 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 race and was awarded the contract for the purchase of the attractive medium-sized target company.

As part of a customer-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 decisive factor in the further development of autonomous vehicle concepts. Data from radar, LIDAR, ultrasound and other sensors must be analyzed in real time, compared with each other and converted into a vehicle response adapted to the situation. The market is considered to be one of the fastest-growing segments in the field of autonomous driving and is therefore currently highly attractive for 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 important sources of information, know the possibilities of efficient information procurement in your industry, have access to important market experts and have developed a tried and tested checklist to analyze companies in the market environment. We provide buyers and sellers with tailor-made, up-to-date market and industry information at short notice and analyze potential target companies to the point.

market_due_diligence_factsheet

QUESTIONS AND ANSWERS ON COMMERCIAL DUE DILIGENCE (CDD)

Here we answer some common questions asked by our clients about 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 evaluated 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 elementary component in the evaluation of the target company in the run-up to corporate transactions/M&A projects.

Both secondary sources (e.g. statistics, publications by 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 to obtain reliable information for commercial due diligence.

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

Sellers require market due diligence in order to be able to present a neutral assessment of the market environment during the sales process. It provides reliable arguments for an attractive valuation of the company and an associated high selling price. The analysis emphasizes strengths and opportunities for future business planning and generally highlights the positive attributes of the company (stability due to loyal customers, profitability, sustainability, etc.) in the run-up to the transaction without, however, neglecting to critically examine less positive aspects (e.g. stagnating sales, intense competition).

Buy-side due diligence critically scrutinizes the market attractiveness and market positioning of the target company and uncovers possible hidden risks of a company acquisition. It enables the buyer, who otherwise usually has limited information on the market and target company, to make an appropriate valuation based on neutral information. The analysis of the target company and its business model is reviewed with regard to existing weaknesses and risks without ignoring the potential.

In both cases, in addition to the key figures (e.g. historical turnover 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 valuation. The presentation of the company from a competitive perspective can also provide important information and enables an analysis of the strengths, weaknesses, opportunities and risks in the run-up to the transaction.

In many cases, there are fewer directly available market figures and statistics for industrial and B2B markets than for consumer markets. Therefore, the reliable estimation of market size and market growth is a particular challenge for CDD projects in industrial and niche markets.

We use our extensive access to all relevant industrial data sources and supplement this 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 the market development strategies of these players is a central task of commercial due diligence. Which competitors are active in the target market, what is their positioning, what technologies do they use, what corporate strategy do they pursue, how successful are they and what best practices can be identified?

Die Erhebung, Prüfung und Aggregation wichtiger Kennzahlen des Wettbewerbs ist ein elementarer Baustein der Analyse. Sie wird komplettiert durch die Analyse der Strategien der Wettbewerber und weiterer “weicher Faktoren” wie z.B. Struktur der Kunden, Geschäftsmodell, Nachhaltigkeit oder Produkte des Unternehmens. Daraus wird die Bewertung der Wettbewerbsposition des Zielunternehmens abgeleitet.

Interviews with market participants and industry experts are an important source of information in the evaluation of companies and markets and represent the supreme discipline among the methods of data collection. Our tried and tested interview process guarantees the maximum success of the surveys:

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

(2) We search our network and other suitable environments for meaningful interview partners. For example, we interview 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 summarize the assessments of the interview partners and derive implications for the company and market valuation .

Company sales are often time-critical and deadlines are tight. This is why we support our clients with commercial due diligence quickly and unbureaucratically. The first partial results are often available within just a few days. The overall processing time is usually no longer than a few weeks.

Do you have further questions about conducting a market due diligence? We are happy to be your contact partner.

GET ADVICE NOW!

OUR COMMERCIAL DUE DILIGENCE SERVICES & BENEFITS

Robotic Market Research Germany

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

Particularly in niche markets characterized by technology 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 behaviour or the competitive environment.

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

Robotic Market Research Germany

An indispensable source of information for a reliable, neutral assessment of a company during market due diligence are also experts, customers, business partners and other market participants who, based on their practical experience, can make valuable statements on 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, strategy and business development managers at more than 100 client companies rely on our meticulous market analyses for one central reason: the uncompromising quality and reliability of the results from our market and competition analysis. Our discerning clients also appreciate the personal and open cooperation with our team and express this in numerous references - please see for yourself.

More references

INDIVIDUAL CONSULTING FOR YOUR COMPANY ANALYSIS

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

 Gerne beraten wir Sie im Vorfeld einer möglichen Zusammenarbeit bei einer Marktstudie intensiv und unverbindlich, auf Wunsch auch bei einem persönlichen Termin bei Ihnen vor Ort. Wir freuen uns auf Ihre Anfrage und erstellen Ihnen gerne Ihr individuelles Angebot!

GET ADVICE NOW!