Transaction Advisory With The Farsightedness Of A Telescope

Target Screening & M&A

A buy-and-build strategy is essential for the sustainable growth of a private equity fund. Investment decisions should not only be made on the basis of price or time, but rather according to the fit of the target company to the current portfolio.

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.

Pre-DD Assessment

We support our clients in the pre-deal phase in the evaluation of initial questions regarding the target company by collecting market insights through primary and secondary data. The aim is to formulate hypotheses to be validated in the Commercial Due Diligence phase.

Task

  • Provide clarity & status-quo analysis of market drivers and development as well as customer insights on the target company
  • Development of hypotheses to validate in the CDD phase

Topic List

  • Collection of questions with regards to market, competition and customers with the fund’s deal team

Pre-DD Assessment

  • Market sounding from stakeholder interviews along the entire value chain
  • Product & service review
  • Additional secondary research to generate a comprehensive picture of the status quo

Conclusion On Key Questions

  • How is the market developing?
  • What is the current status quo of the target in the market environment?
  • What are the market stakeholders thinking about it?
  • Are the market mechanics changing?

Input For Initial Bid And Management Presentation

  • Key hypotheses for a successful deal
  • Input for CDD scope
  • Assumptions & initial feedback on target’s SWOT and position (winner-/loser position)

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.

ESG Due Diligence

The importance of sustainability is constantly rising and can help businesses to expand their corporate social responsibility. It is designed to be in keeping with environmental, economic and social outcomes. Environmental, Social and Governmental Due Diligence involves the identification and evaluation of environmental and social risks associated with a proposed investment.

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

Pre-Evaluation Report

Pre-evaluation: Analysis of the following sectors based on shared client data

  • Biodiversity & natural resource management
  • Pollution prevention and resource use efficiency
  • E&S Management
  • Labour and working conditions
  • Community health, safety, and security
  • Land acquisition and economic displacement
  • Indigenous people and cultural heritage

Information enhancement through conducted interviews

  • Interviews with management and HR responsible
  • Assessment based on client data input
  • Recommendations for further due diligence process regarding environmental and social issues
  • Development of pre-evaluation report
Full ESG Report

Pre-evaluation

  • Analysis of client data input
  • Evaluation of conducted interviews

Deep-dive evaluation: Environmental aspects

  • Biodiversity & natural resource management
  • Pollution prevention and resource use efficiency

Deep-dive evaluation: Social aspects

  • E&S Management
  • Labour and working conditions
  • Community health, safety, and security
  • Land acquisition and economic displacement
  • Indigenous people and cultural heritage

Industry evaluation

  • Comparison to E&S activities in the industry
  • Comparison to main competitors‘ E&S status quo

Recommendations for improving E&S activities and measures

  • Comparison of E&S guidelines and standards with current company’s status quo

Want To Know More? Contact Us.

You have in-depth questions regarding our areas of expertise? Let us help.

Simon Fischer

Phone: +49 172 8994627

Email: simon.fischer@telescope-advisory.com