Transaction Advisory With The Farsightedness Of A Telescope

Target Screening & M&A

Our screening approach follows a proven methodology that allows us to quickly identify and rank suitable acquisition targets.

Target screening for Add-on Acquisition

In a first kick-off workshop Telescope defines together with our clients the relevant investment criteria, which kind of investments are of interest and which companies fit best to the current portfolio.

Future targets are identified via secondary sources e.g. press, specialized magazines, databases, publications, studies from industry associations, and company information collected by web research, fairs, databases, syndicates, and buyer’s guides. The initial longlist is going to be filtered by predefined criteria in order to remove inappropriate companies and create a shortlist of potential targets.

Telescope subjects the remaining companies to a detailed secondary and primary analysis. Based on the data collected, the companies are converted into a scoring model in order to quantify them according to the defined criteria and to identify the potential targets with the best fit.

Based on this analysis Telescope develops company profiles with detailed information on company hard facts, financial data, management overview, service / product overview, the latest news, market presence data, the competitive environment, and company insights.

Optionally, Telescope will make initial contact with the targets in order to assess their willingness for a possible transaction and prepare the contact for takeover talks.

Commercial Due Diligence

Our data-infused approach enables us to provide a full commercial background check to identify possible red flags and to provide the future buyer with all information about the available business that is needed for a purchase decision.

Company at a glance

In the first step we provide a company overview, which includes the examination of the business and earnings model with elements like revenue streams, characteristics, product profitability, etc.

Another key topic is to dig into the sales process and the organization including the cooperation with partners, gaining insights on the customer landscape and behavior including churn rate, growth potential, etc.

Also, we analyse the organisational structures with focus on key talents, resources, and risks as well as the degree of innovation and key financials.

Product & Performance

A basic product and service overview provides information about functionalities and features of the given product as well as the offered services. Moreover, we check if the product meets the market reality by readiness for innovation.

The requirements are checked by the embedding solutions into other product environments. Also, the product value propositions and differentiation criteria are topics that we cast a light on.

The performance check includes an adherent products and technology stack analysis as well as a background check of the performance on key purchase criteria including benchmark.

Market assessment

To identify the market position of a business, our key topics are about identifying the market size (lead market, target market, addressable market) for the target’s solutions and products along with providing a market share assessment.

Furthermore, we offer a customer segmentation by industry and profile (“stereotypes”) but also identifying market drivers and trends as well as opportunities and threats in the market due to strategic shifts.

Competitive landscape

Identification of key competitors and strategic groups falls within the scope along with the benchmarking of products and companies against core competitors.

In addition, we locate market entry barriers and competitive forces (lock-in effects, etc.), future “winner and loser” positions plus competitive threats of the business.

Strategic fit

The strategic fit consists of two main topics. The first one is to implement the strategic fit to the overall strategy of the buy&build platform (ideal fit to the platform, synergies in sales, product developments, marketing, etc.)

The second topic is the validation of the business plan (under development) and key success drivers after the transaction.

Tech Due Diligence

As additional workstream in our due diligence offering for financial and strategic investors, we have extended our offering in technology due diligence.

In technology due diligence (“Tech-DD”) projects, we assess the product development processes and application landscape, the digital product architecture, the product’s performance as well as the IT/product-organization.

The tech due diligence is being applied in buy-side M&A transactions of software companies, digital tech start-ups and tech-enabled product companies.

Our approach is based on a three-step concept of review, challenge and develop.

During the first step of the due diligence, we review the existing setup of the target and crucial components of the IT. We combine our knowledge acquired in the commercial assessment of the target with the reality we find in the IT or product departments. The influence of the tech-DD review on the performance of often digitally-enabled companies of software firms is strong. Hence, a solid understanding of the setup is key to understand the true corporate performance. We collect data through VDRs and by means of management interviews.

In the second step, we benchmark the processes and tech performance indicators against best practices we have identified in the market and industry.

The final step in the due diligence includes the development of a bankable report incl. an assessment of the feasibility of the business plan with regard to the IT-related CAPEX and OPEX planning. As a last component, we will highlight key areas of focus for the new investor and essential topics to monitor as part of value creation programs.

Within our scope and the assessment of the development processes and operations, we analyze:

• Key development processes and principles (lead, agile, etc.)
• Ticketing processes
• Tools and applications used in product development
• Partnership with third parties and service providers

Within the assessment of the product and its architecture, we analyze:

• Product architecture and core structures (monolithic vs. micro-services)
• Maintenance efforts and scalability
• Computational capabilities
• Code language
• UX/UI review
• Hosting architecture and associated costs
• API landscape
• Data management and storage principles
• GDPR compliance
• Cyber security
• Embedded third party components and licenses

Within the assessment of the product’s performance, we analyze:

• Key KPIs of the product (speed, scalability, performance) vs. key industry benchmarks
• Analysis of sales and user KPIs
• Analysis of cost/OPEX
• Analysis of front-end / e-commerce performance KPIs

Within the assessment of the product organization, we analyze:

• Product organization
• Skill and role profiles
• Hiring and recruiting processes
• Gap analysis and required team additions
• Salary benchmark

Our team has collected extensive experience in transactions involving targets in areas of artificial intelligence and machine learning, virtual reality solutions and enterprise IT-systems such as ERP, CRM, WMS and MES systems.  We also assess shop systems, E-commerce applications in b2b environment as well as different types of tech-enabled services.

ESG Due Diligence

Main environmental and social issues

General Environmental, Social & Governmental Management

Management of environmental and social issues means to set up a policy but also to identify risks and opportunities for the upcoming Due Diligence. With the help of management programmes, internal capacity and accountability mechanisms are developed as well as emergency preparedness and response.

A stakeholder engagement programme (SEP) and grievance mechanism are further steps for a successful monitoring and review.

Labour and working conditions

In a great investment, also the labour and working conditions have to be without any red flags. The investigation of human resource (HR) and internal labour is as much important as the investigation of the organization (ILA) core labour standards. Moreover, the freedom of association, collective bargaining, the occupational health and safety (OHS), the worker productivity and skills development are factors we examine in detail.

Any changes in the past due to retrenchment-reducing and restructuring exercise has to be reconstructed and also contractors, third parties, supply chains and temporary workers have to be included in labour and working condition issue.

Pollution prevention and resource use efficiency

A main part of Environmental Due Diligence is the pollution prevention and resource use efficiency. An investment is checked by their effort of waste reduction and pollution prevention as well as the efficiency of energy and water. Regarding climate change, the greenhouse gas (GHG) emission are under investigation. Depending on the business, pesticides and other agrochemicals as well as contaminated land or land with liabilities is part of the issue.

Community health, safety and security

The health, safety and security of the community is an important part for every business since it covers the social aspect and ensures a sustainable balance. This part’s fulfillment is proven by a deeper look into the stakeholder engagement and consultation as well as the security personnel.

Land acquisition and economic displacement

The investigation of the acquisition of land which has or will result in the involuntary resettlement or economic displacement of people.

Biodiversity conservation and natural resources management

The value of biodiversity and the risk to biodiversity is going to be ensured in this part of the Due Diligence as well as the management of ecosystem services.

Indigenous people

The protection of the rights of indigenous people needs to be ensured, especially if the investment is making business in foreign countries. The issue describes whether company’s operations or indirectly affect indigenous people and determines the number of indigenous people that could be affected.

Cultural heritage

The last issue of an Environmental and Social Due Diligence is checking if the investment affects cultural heritage directly or indirectly and if there is an approval for its operations.

Our Services In ESG