Maurits Hesseling, Board Member of Translink International and Managing Partner of Translink Benelux, discusses four important considerations that companies need to prioritise in this current M&A environment.
From an M&A perspective, companies need to be more cognisant than ever when it comes to mitigating their risks amid the current turmoil being experienced globally. Geopolitical uncertainty, falling equity valuations, rising inflation, surging interest rates and the effect of the pandemic are all factors influencing the tough economic headwinds being experienced across the board.
Maurits Hesseling, Board Member of Translink International and Managing Partner of Translink Benelux, says that there are four very important considerations that companies need to prioritise in this current M&A environment.
Due Diligence
The first is the importance of expanding your due diligence. Traditionally, a comprehensive appraisal would investigate the standard areas of finance, legal and human resources. Given the current climate, Hesseling says that due diligence needs to go even deeper when verifying and assessing a potential purchase, to enhance the type and quality of the information and to enable the buyer to make the most informed of decisions.
Projections and Forecasts
In a more stable economy, a buyer would look at projections and analyse how a company was expected to grow. What is currently happening is that a significant part of a company’s growth can be attributed to inflation, which also affects turnover.
“What we would like to emphasise is to be more critical on projections and focus more on the worst-case and stress scenarios, instead of the best-case scenarios, which might have been the case in the past,” Hesseling says. The key here is to be much more critical when analysing potential risk.
From the seller’s perspective, Hesseling reiterates the importance of making sure that your company projections are realistic, based on the situation the company is in currently, and including details of any challenges and headwinds the company may be facing.
Similarly, banks involved in financing these deals are even more cautious today and need reassurance that their investment is in a company that shows resilience despite current challenges.
The Workforce
The strength and capabilities of the workforce are also an important M&A consideration.
“The number one risk right now is the workforce. What companies should do is to clarify how strong the workforce is, what the competence of the workforce is and what might be lacking,” Hesseling says. Buying a company only for the key people to leave, based on the acquisition, is a very real risk that needs to be assessed.
Tools to Reduce M&A Risk
Given the financial and commodity volatility experienced today in the M&A sector, M&A insurance is becoming an increasingly important tool to reduce any risk for both the buyer and the seller.
The Material Adverse Change (MAC)-clause is being used more often and is playing an increasingly significant role in M&A, especially since the COVID-19 pandemic, says Hesseling.
This clause comes into effect after signing a sale and purchase agreement (SPA) but before the deal is completed, a period of time that can exceed a year.
The (MAC)-clause provides the buyer with the option to abandon the acquisition before it closes, should the situation change to such an extent that it is no longer suitable or advantageous to proceed with the transaction.
“While most strategic buyers are well prepared and know what they are looking for, they cannot take anything for granted during this new and challenging business climate,” says Hesseling.
“A significant part of the valuation of a company is based on projections, but projections are not as straightforward as they used to be, which is why we urge companies to expand their due diligence and go beyond the traditional assessment areas to find out more about the company,” he says.
Despite a volatile operating environment, valuable opportunities still exist globally within the M&A space. While the depth and complexity of due diligence might seem daunting, having a trusted, corporate finance partner can help guide and ease the process.
Translink Corporate Finance, a world leader in specialised mid-market corporate advisory services, has deep local market expertise in more than 35 countries around the world, with in-depth industry expertise and transactions concluded across numerous sectors.
50 Years Of M&A Excellence
We specialize in small and medium-sized cross-border M&A, typically with a transaction value in the range of EUR 10-300 million. Get in touch with us today and let us help you get the deal done.
Translink Corporate Finance advised PlanetHome Group GmbH, a leading real estate service provider in Germany and Austria in the brokerage and financing of real estate, on the acquisition of Hammers & Heinz Immobilien GmbH. Translink Corporate Finance acted as exclusive M&A advisor to PlanetHome in this transaction.
Translink supported swisspeers AG as financial advisor in this transaction.
BLKB invested as a strategic investor in swisspeers AG, which operates a digital peer-to-peer lending platform for financing SMEs in Switzerland. With this investment, BLKB, as a forward-looking bank, underlines its commitment to supporting SMEs and strengthening Switzerland as a business location. Through this participation, the bank is solidifying its commitment to small and medium-sized enterprises, which together account for more than two-thirds of jobs in Switzerland.
Translink Corporate Finance announces the sale of Onyx Promavi to Assystem. Onyx Promavi is a French company which generates €5 million in annual revenue, specializes in major French and international infrastructure projects and has a high-quality portfolio of clients in the energy, environment, transport and defense sectors. Translink acted as the exclusive financial adviser to Onyx Promavi shareholders. Through this acquisition, Assystem’ s Energy & Infrastructure division has enhanced the business processes and client portfolio of its Project Management Consultancy (PMC) business, which is dedicated to supporting complex projects subject to significant regulatory constraints. Onyx Promavi Sold to Assystem: A Strategic Acquisition in the Engineering and Innovation Sector Translink Corporate Finance is pleased to announce the successful sale of Onyx Promavi, a leading French engineering services provider, to Assystem, one of the world’s foremost engineering and innovation consultancies. This acquisition strengthens Assystem’s position in the aerospace, energy, and industrial sectors, allowing them to broaden their expertise and capabilities in engineering design and project management services. About Onyx Promavi Onyx Promavi, based in France, is an established player in the field of engineering services. The company has built a strong reputation for its expertise in aerospace engineering, providing high-quality design, analysis, and project management solutions for some of the most demanding projects in the industry. Their work spans aeronautics, energy, and industrial systems, where they deliver tailor-made engineering solutions to clients in both domestic and international markets. Onyx Promavi’s specialized expertise in aircraft structures and component design has earned it a solid client base among leading global aerospace manufacturers, making it a highly attractive target for acquisition. About Assystem Assystem is a global leader in engineering innovation, with a focus on complex infrastructure projects in sectors like aerospace, energy, automotive, and healthcare. Assystem provides engineering consultancy services to clients worldwide, offering deep expertise in technology solutions, project management, and engineering design. The acquisition of Onyx Promavi enables Assystem to enhance its offerings in aerospace engineering and expand its footprint in the French and international markets. Strategic Benefits of the Acquisition The acquisition of Onyx Promavi by Assystem is a strategic move aimed at increasing Assystem’s market share in the aerospace and energy sectors. Onyx Promavi’s capabilities in structural engineering and aerodynamics complement Assystem’s broader portfolio of services, allowing for greater operational synergies. By integrating Onyx Promavi’s technical know-how and talented engineering team, Assystem will be better positioned to provide end-to-end engineering solutions, from design and development to implementation. This acquisition will also strengthen Assystem’s presence in the highly competitive European engineering services market, particularly in the aerospace sector. Translink’s Role in the Transaction Translink Corporate Finance acted as the exclusive M&A advisor to Onyx Promavi throughout the sale process. Leveraging our extensive knowledge of the engineering sector and experience in cross-border transactions, we facilitated a smooth and efficient deal that delivered value for all parties involved. Our deep understanding of both Onyx Promavi’s capabilities and Assystem’s strategic growth objectives enabled us to successfully structure and negotiate the transaction to ensure a seamless acquisition. Future Outlook The acquisition positions Assystem to further capitalize on the growing demand for aerospace engineering services and complex infrastructure projects. Onyx Promavi’s specialized expertise will not only support Assystem’s growth but also provide enhanced services to their collective client base. The combined strength of these two engineering powerhouses will offer a comprehensive range of solutions across multiple industries, from aerospace to energy and industrial manufacturing.
Contact our Team Members advising in this transaction:
Based in Amsterdam and Brussels, we act as exclusive partners of Translink in the Benelux. We are one of the leading M&A boutiques in the Benelux mid-market segment due to the extensive international reach of Translink. We offer companies, private owners and PE funds a wide range of corporate finance services, including advising on domestic and cross-border M&A transactions, equity and debt raisings, and valuations.
Lina
Ismail
Partner
lismail@translinkcf.com
Translink Corporate Finance announces the completion of the management buy in / buy out of IGF Invoice Finance (IGF) from Greater London Enterprise. Translink were lead advisers to management on the transaction, acting for an experienced lending team led by John Onslow.
Translink Strempel & Co. announces the signing of an agreement between Askoll and Taco, in which Taco Comfort Solutions purchased 100% of Askoll Sei Srl from Askoll Holding Srl. Askoll Sei is a world-class manufacturer of high efficiency circulation pumps, based in northern Italy.
Translink International AG
