Tag Archives: Advisory

Confidentiality and the Virtual Data Room

Confidentiality during an M&A process is vital for the success of an operation. One of the Corporate Finance Industry success metric is the levels of transparency between buyers and sellers, making confidentiality a crucial in any operation. A good M&A advisor also supports the transparency and confidentiality of the process.

Confidentiality and transparency have their protagonism during many phases of the process; in this article, we will refer specifically to the Virtual Data Room.

Managing confidentiality during an M&A Operation:

Managing confidentiality during this process is a crucial aspect within an operation. Usually the sellers seeks for higher levels of confidentiality but this metric may vary depending on many factors.

For example, if the seller wants a high level of confidentiality he must reduce the amount of potential buyers he reaches, but this will slow down the selling process. Vise versa, if the seller seeks faster results he must amplify his selection of possible buyers, making it more difficult to control the confidentiality factor.

This may seem like a conflicting paradox for any seller because many business owners do not posses knowledge of the different techniques that can be applied to increase confidentiality during the M&A process.

What are some techniques we can refer to regarding confidentiality during an operation?

Creating a blind teaser: This document is designed to protect the identity of the company being sold when presented to potential investors. The teaser uncovers the situation of the company but not its name. If buyers show interest a confidentiality agreement is signed to protect such identity.

Signing an NDA: Confidentiality is crucial since day one. There will be a lot of agents involved in the process everyone that is exposed to this information must sign an NDA so the idea and intention is protected and safe.

Confidentiality Agreement: This document serves two purposes. The first one is to protect the selling company’s intentions regarding potential investors once they showed interest. The second one is that the signing of this document represent a clear intention of the buyer to proceed with a possible deal.

Data Room: If the deal has gone up to the point that there is the need to create a Data Room it means that we are near to the closing of an operation. In other words we are in a sensible point in which confidentiality is vital. That’s why Data Rooms are designed to protect information since they create a virtual space in which the seller will deliver all the documentation necessary to the potential buyer to proceed with the operation.

Defining the Virtual Data Room

A virtual data room (VDR) is a virtual space where the seller uploads all the necessary documentation of the company so the buyer can have access to it and advance in the process. This transaction of information is extremely delicate and must be made only when there is a trust-worthy and robust relationship between both parties, meaning that there is already the will to invest and close a deal.

The transaction of this information is made through unique online software design to prevent any disclosure of the documentation and keep-safe all the uploaded data. The software must be a high-quality product that provides confidence, security, and safety to both parties involved in the operation.

Imagine how hard it can be for a business owner to expose the essence of their company to someone. Leaving aside the emotional factors that make this operation hard, this part of the process must have all the requirements to ensure safety within the parties.

In every scenario, work-ethic and professionalism must be applied, but when referring to VDR’s we can assure that one of the best options in the market is EthosData. We invite you to take a look at their high-end Service that guarantees safety when taking care of your documentation.

In ONEtoONE we are characterized by the level of transparency, confidentiality, and professionalism with which we handle our clients’ operations. One of our best allies is the trust we generate through our work. Therefore, we encourage you to contact us if you are looking for advisory on buying or selling your company.

Whether Buying or Selling a Company: Pick the Right Advisor

Pick the Right M&A advisor By PAUL HAGER, Partner of ONEtoONE Corporate Finance

Have you bought, or sold, a business lately? If you did, how do you know if you received optimal value on the deal? Did you ask an M&A advisor? It can take years before the value gained can be objectively measured, or even whether the result was a business success. Recent McKinsey and Harvard research shows that nearly 90% of all M&A deals fail to deliver the value expected, or achieve their M&A goals. How can this be?

Well-known, high-profile deals like Daimler-Benz-Chrysler; Time Warner-AOL; Quaker Oats-Snapple; Sears-Kmart; Google-Motorola; Sprint-Nextel, are extreme examples of deals not meeting expectations. A number of factors lead to poor M&A results. These include: simply paying too much; fundamental cultural mismatch; massive infrastructure incompatibilities; significant redundancies; or no product synergy, whatsoever (i.e., the marriage simply wasn’t ever going to generate products customers would consider more valuable).

As someone who has bought companies as a Fortune 500 investment committee member, and as a valuation and investment advisor for M&A clients, I’ve found the team you select to be your investment advisor plays a significant role in the amount of value created in the deal. I hope my thoughts might help you pick the right investment advisor, and significantly increase the likelihood of you achieving your M&A goals. I’ve listed characteristics I think exist in all exceptional advisors. An exceptional investment advisor:

1) Asks “Why?”.

You’ve likely heard of Simon Sinek’s Golden Circle paradigm or Paul Ambruso’s use of the “5 Whys” to discern the root cause of success and failure. The “5 Why” approach was derived from Taiichi Ohno’s 1960s Toyota Production System methodology. Its purpose is to identify inefficiencies, waste, inconsistencies in manufacturing. Most importantly, the technique can help people discover and objectively assess assumptions, biases, facts, priorities of any endeavor – personal or professional. In our case, buying or selling a business. The “5 Why” method states that clear insight leads to the best decision, and that insight is likely to come only after you’ve assessed answers to five iterations of “Why?”. For example, your investment advisor might ask, “Why do you want to buy a business?, Why do you think buying another company will lead to greater innovation?, Why do you think this type of research capability will lead to needed innovation? And, so on. Asking “Why” throughout the M&A process leads to clearer understanding of why a certain type of company or investors would be the best match. An exceptional advisor asks “Why” to constantly validate assumptions, eliminate wasted effort, explore new deal options, and sustain deal focus.

2) Understands your business

As an M&A advisor, there is no adequate substitute for deep understanding of a client’s operations and industry sector. Having empirical insight into current and future industry trends, enabling technologies, and inter-dependent industries dramatically heightens the value ceiling. An exceptional investment advisor will use this insight, and that of her other industry experts, to develop a set of optimal investment candidates for each client.

3) Spearfishes

Last year, a friend of mine told me of her exciting trip to Bora Bora (How nice is that?) She said the restaurant would take their dinner order the day before, so that snorkelers could search for the exact type and number of fish needed for their guests’ dinners. No waste in effort, time, or resources (fish not on the menu appreciated that). The diver knew the depth and location to find the type and size of desired fish. An exceptional investment advisor will find those investors and companies that most value a specific client’s offering. Through use of the “5 Whys” and other analytic methods (e.g., Porter’s 5 Forces) to build a well-defined target profile, the advisor will quickly identify superior matches for each client.

4) Leverages global reach and local insight

In searching for their client’s best investment candidates, it is sometimes more efficient and expeditious for advisors to contact corporate, institutional, and private investors with whom they regularly do business – “the usual suspects.” Because of established trust and understanding regarding these investors’ preferences and capabilities, advisors will work within their established networks. That’s understandable. But, the best strategic partner, the one that may most value the client’s offering is often not within any investor’s direct set of contacts. The best advisor is one who will leverage an expansive global investor network that connects multiple industries. Investors who most value your offering may be in Singapore, Prague, Estonia, or Shanghai. An exceptional investment advisor will leverage access to trusted M&A colleagues with deep understanding of financial markets, industries, and companies in each region of the world – allowing them to open discussions with new investors and corporate networks that promise to hold greatest interest in the deal.

5) Takes business, personally

If the human body is 60% water, I surmise at least 60% of a company’s value is its people. Or maybe, applying the Pareto Principal, 80% of a corporation’s value is its people. A good investment advisor is constantly mindful that M&A success depends on people to embrace and support implementation – before and after the deal. Having been an entrepreneur, and having worked to grow small businesses for nearly twenty years, finding a phenomenal, successful M&A match helps to improve the lives of people in each company. Or, it should. Cultural rifts and redundancy layoffs can destroy the deal, its value, and peoples’ lives. Applying the previous four facets helps create and expand deal value. An exceptional investment advisor knows that business is personal, and that the company’s greatest value asset must be supported, nurtured, and challenged. A successful M&A deal will do that.

There are many exemplary investment banks and advisory groups around the world. Whether it be a top-tier large firm, or one with a boutique focus, these firms have phenomenal analytic research, and deal-making talent. I know this from my own experience.

My only suggestion is that you chose an investment advisor who also possesses the five qualities mentioned above. If you do, I am confident you’ll capture exceptional value in your deal.

If you are looking to optimize the value of your investment within an operation, I encourage you to evaluate ONEtoONE Corporate Finance: a firm dedicated to provided the highest value services to their clients through transparency and professionalism. For more information click the button below.

Paul Hager: “At ONEtoONE my focus has changed to helping companies reach business success”

“At ONEtoONE my focus has changed to helping companies reach business success”

In ONEtoONE we deeply care about the opinion of our partners and their level of satisfaction with us. That is why we have interviewed some of them to have a better picture of their personal opinion.

On this occasion we have asked a few questions to our partner Paul Hager, who is an expert in M&A transactions with over 30 years of professional experience helping mid-market companies grow.

Can you tell us a little bit more about your professional career?

My career path has certainly reflected my interests in technology, entrepreneurship, and people. I began my career in advanced digital technologies – as a systems manager at General Electric, and as a cyber expert for the US intelligence community.

After serving as US Representative to NATO, for data policy, I moved to the private sector to focus on corporate strategy and finance. I founded two technology companies, and advised other companies on corporate transformation, business innovation, and corporate investment. Before joining ONEtoONE, I was the Director for Strategic Consulting at Science Applications International and held interim CEO roles as a turn-around specialist. I now enjoy helping companies accelerate growth, specifically within the Digital-Tech, ClimateTech, FinTech, and HealthTech sectors.

My early academic training was in Mathematics and Psychology. I subsequently earned an MBA in Finance from the Wharton School of Business and an MPA in International Policy from Harvard University.

What is the one thing you enjoy more about your profession?

I most enjoy the fact that real “value creation” requires an investment banker to be both highly analytic and creative. Most investment advisors are skilled at interpreting a company’s financial sheets and operational processes. But, I think value creation is similar to painting a house. It’s all about preparation. Understanding each client’s financials, processes, and competitive assets is only the first step. Distilling those diverse data points for insight on optimal partnerships requires creativity. I enjoy the data analytics and creativity mix that is so important to building strategic partnerships that produce significant long-term value.

What has changed in your professional life after you joined ONEtoONE?

The key change, for me, has been focus. Before joining ONEtoONE, I helped C-level leaders build successful business strategies and operations – with focus on accelerating organic growth. At ONEtoONE, my focus is helping companies achieve business success through acquisition, divestiture, or capital infusion. I understand the constant need for organic growth. But, I now work to ensure my clients benefit from the positive dynamics when they accelerate growth by selling or buying capabilities. Ironically, I sometimes advise CEOs for whom I had earlier helped organically grow their business.

Can you tell us which has been your most successful operation?

I strive to bring the greatest value to each client transaction. So, my sincere goal is for each of my client projects to be the most successful.

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Federico Forchielli: “ONEtoONE has brought to my professional life tremendous changes”

In ONEtoONE we deeply care about the opinion of our partners and their level of satisfaction with us. That is why we have interviewed some of them to have a better picture of their personal opinion and professional life.

On this occasion we have asked a few questions to our partner Federico Forchielli, member of ONEtoONE Italy and with a very extensive and international professional career behind him.

Can you tell us a little bit more about your professional career?

After my degree in Business and Economics from Alma Mater Studiorum Universita’ di Bologna, I started my professional career in management consulting because I thought it was the best way to have a clear understanding of the real business world (and of course, I had the chance to be hired by an international management consulting firm).

From the beginning, my personal goals were to build not only a solid technical background but to develop some soft skills:

Open-mindedness towards cultural and geographical variety – I lived in UK, Spain, USA. I worked for international companies and I run temporary management projects for Italian SMEs.
Networking – I got an MBA at IESE Barcelona because it was ranked amongst the top business schools in Europe and the well-spread network in Europe I guessed would be a great added-value for an Italian. I developed an innovative approach to provide consulting services to a community of SMEs that had in common a geographic area and industry (Industrial Cluster) with the intention of enabling them to benefit from strategic thinking that was difficult to achieve individually.
Country doctor attitude – I do consider myself a corporate finance guy but I am supposed to always understand the needs of my clients (even when they are not aware of them) and be able to deliver a solution they can deal with. In 1998, I founded my own consulting firm with the intention of staying close to the multitude of Italian entrepreneurs regardless of whether they wantrd to remain local or become international players.

What is the one thing you enjoy more about your profession?

After almost 30 years of professional activity I am tempted to think that nothing would surprise me anymore, but punctually, when I first approach a new client, there is always something that strikes me. I’ve met people with extraordinary stories, entrepreneurs able to find creative solutions to almost impossible problems with almost no education, leaders capable of keeping the equilibrium amongst family members involved in the business, 80+ year-old owners with interest for new investments for the pure desire to see their company grow, etc.

My profession will never be boring, I do not know which one would be the solution, there is no an “out-of-the-shelf” recipe, but I am sure there is one and I am supposed to find it.

What has changed in your professional life after you joined ONEtoONE?

A wrong answer would be “nothing”! ONEtoONE does what I do, every member delivers global solutions for local problems, good network and rigorous methodology.

The real answer is “tremendous changes”. Now I can count on “100 Federicos” each one working in his/her environment, industry experts that help me to reach a deep understanding of opportunities and threats, valuable back-office services, better visibility and, unmistakably, more time to be spent with my loved entrepreneurs and design their future winning strategies.

Can you tell us which has been your most successful operation?

Last year we faced a sell-side mandate, the owner’s first statement was “I want to sell a minority stake to a Private Equity Fund that brings money to develop internationally and I want to keep control of my company”. I knew that it was not the right solution but I also knew we could have walked a different path and reach the result, which is difficult (if not impossible) to explain to the founder from the beginning. We accepted the challenge and we won. He signed with a strategic partner with international presence that bought a majority stake, kept the owner as CEO with ample power, defined a business plan for the development of the company, etc.

Honored to have made the entrepreneur happy!

Get to know about the professional life and opinions of our other partner as well!

Business Acquisition: Catella acquires fifth property for its special AIF Catella Parken Europa

Catella Real Estate AG, a leading specialist in property investments and fund management, has acquired the multi-storey car park Park 25, the Milan-based car park for its open real estate special-AIF “Catella Parken Europa”. The acquisition process was facilitated by ONEtoONE Corporate Finance. The fund is a cooperation product of the Munich investment manager Catella and Orange Investment Managers from Amsterdam. The fund invests exclusively in central parking areas with stable cash flows in major European cities.

“After acquisitions in Denmark, Ireland, Great Britain and the Netherlands, the property in Milan is now the fifth multi-storey car park to be included in the fund. With a balanced risk/return profile, our investors benefit from attractive dividend yields of up to 5%.”
– Henrik Fillibeck, CEO of Catella Real Estate AG

About the companies

Park 25 is a multi-storey car park with six underground levels is located at Piazza 25 Aprile in the historic center of the northern Italian metropolis of Milan. The car park has a total rental area of around 10,000 m² with 333 parking spaces. The anchor tenant of the fully let property is APCOA Parking Italia S.p.A.

Catella is a leading specialist in property investments and fund management based in Munich, with operations in 15 countries. Its main functions are to provide for real estate solutions in the field of open-end special funds, open-end public funds, closed-end-real estate funds, and single accounts.

The leading partner

For this transaction, Catella has been advised by Federico Forchielli, Partner of ONEtoONE Corporate Finance in Italy. Federico holds a degree in Economics and Business Administration from the University of Bologna and an MBA in Business Administration from the IESE. He began his career in London at Gemini Consulting, an international management consulting company, now part of Ernst and Young. Federico is particularly active in project finance, corporate finance and family business and he is very familiar with the “Made in Italy”, Hotel and Tourism, Mechanics and Mobility Industry.

Read about more business acquisition advised by ONEtoONE!

Contact the advisor

IT Consulting Industry Outlook 2019

Background of IT Consulting industry

BERNAR DE LA HERA | Author and Partner ICT Specialist, ONEtoONE Corporate Finance

Traditionally, information technology or IT has represented a significant part of global transactions in the consulting sector. The IT consulting industry requires low capital investment, together with the high level of innovation and the impact that new digital technologies offer in all sectors of the global economy, are the key factors explaining an upward trend in this sector. The advantages of this industry are driving the interest and continuous need of companies to acquire new capabilities that allow them to enter these new and innovative markets. Since 2013, the rapidly expanding technological trends towards cloud computing and Big Data analytics caused larger competitors to enter the market through acquisitions of the smaller industry counterparts with developed technology and supporting infrastructure.

What is the IT Consulting Service?

IT Consulting is understood as the field of activity that focuses on advising organizations on the best way to use information technology (IT) in order to achieve their business objectives. IT Consulting industry is comprised of companies that offer business design and implement information technology systems and infrastructure. These IT consulting services provide expertise, experience, and industry intelligence to enterprises, helping to obtain better design, architecture, optimization, and implementation of security software, people, and processes. Industry giants like Accenture PLC and International Business Machines Corp. (IBM) have allocated millions in acquisition sprees in the past years, purchasing leading digital consulting firms like OCTO Technology and even institution-based projects like the MIT-run laboratory focused on the development of computer systems. The IT Consulting industry is known for the low capital requirements, thus it is also attractive for small to medium-sized businesses.

The IT Consulting industry is known for the low capital requirements and is therefore attractive for small to medium-sized businesses.

According to IDC, the global IT industry surpassed $4.5 trillion mark in 2017. A large amount that is more widespread and established in mature technology markets such as the U.S., Europe and the Asia Pacific, where the robust infrastructure and a large installed base of users equipped with hardware provide the demand.

Trends in the market

Artificial intelligence & Automation, Cybersecurity and Cloud-based solutions are the most popular sub-sectors of the IT consulting industry. Here are some highlights of these three advanced technologies:

Artificial Intelligence and Automation add an additional layer of intelligence to the existing technical solutions that companies are building, and provide a more extensive IT architecture to tackle a broader range of problems. The main advantages of automation are cost reductions, improving customer services and allowing for more precise oversight of trends impacting the clients’ business. Consulting service providers are also actively implementing automated back-office functions in order to optimize the invested time and effort of employees accomplishing laborious back-office tasks.

Cloud-based solutions refer to the array of resources, on-demand services, networks, applications that can be accessed through a shared cloud infrastructure. The cloud’s value proposition solution facilitates faster and easier experimentation and innovation in the business context.

Cybersecurity is the technology designed to protect systems, networks and data from cyber attacks and data protection infractions. The latest disruptive impacts of new cloud-based solutions on the company’s business and operating models make cybersecurity a critical investment priority. The consequences of suffering a cyber attack range from loss of reputation and business assets to the costs of solving damages.

You may be interested in: High-Tech Industry Outlook 2019. M&A in disruptive environment

M&A in the IT Consulting Industry

During 2018 the average value deal in M&A Activity in the IT consulting sector accounted for 46% in North America and 38% in Europe, which represented eight out of ten transactions while Asia represented a smaller chunk with 11%. Furthermore, the average price deal of the United States is practically 3 times higher than in Europe, which shows a significant difference in the IT services companies in these geographies.

According to the data collected for the present report, Artificial Intelligence is being aggressively adopted by forward-looking businesses, particularly in the banking, retail and automotive sectors and rising buyer demand for AI players. The demand for business with Cloud-based services remains robust but in line with previous years. Finally, Cybersecurity continues the growth as a consequence of the high demand for cloud solutions and connected device.

Overall, if the expected growth materializes in the years ahead, the spending will overlap the $5 trillion mark by the end of 2019 compared to the results from previous years. Disruptive IT services will be the catalyst for a large part of M&A transactions worldwide, increasing the interest of the consulting industry in transactions within this area.

If the expected growth materializes in the years ahead, the spending will overlap the $5 trillion mark by the end of 2019.

The full report “IT CONSULTING INDUSTRY OUTLOOK 2019” offers more information about services provided by IT consulting firms, geographical segmentation, and a detailed overview of the M&A transactions carried out by the leading companies in the IT consulting sector. Download it here in order to have a deeper understanding of today´s M&A landscape within the sector.

Mergers & Acquisitions, Compraventa de empresas

70% of the value of a company lies in finding the suitable buyer

Many business owners will sell to the first buyer without taking into account other potential buyers. When selling your business it is important to ask questions specific questions. Is this the best buyer? Is he the one that can pay the most for the business?
Business owners often rely on a lawyer or an auditor to look for potential buyers and investors without considering 70% of the deal value lies in finding the suitable buyer. Hence, it is essential to find a buyer which is the best strategic fit and will pay the most.
To maximize the value of your company, you or the advisors must engage in a rigorous search process to find buyers or investors who can deliver the highest synergies for your business and those with the strongest financial profile.
The best buyer is not always the most obvious buyer or the closest one. The best counterparty for your company could be for example from a different sector located on the other side of the world.
Once, in ONEtoONE Corporate Finance we advised during the sale of a company that generated ten million euros each year, the company had two million euros in operating income (EBITDA) and six million in financial debt. We found a buyer in the same country (Spain) who´s company earned double of what this other company earned, but had accumulated a lot of debt. He was interested in buying the company, offering to buy it for six times the operative income, which meant that discounting the company´s debt; the potential buyer was willing to pay six million euros for the selling company. As the potential buyer did not have enough capital up front to pay for the company, he offered to pay two million at the time of the sale and the rest of the four million over the upcoming years.

We found a German buyer with a turnover of double the selling´s company, but contrary to the Spanish buyer, he did have financial capability. Given that it was an international operation and the German company did not have a presence in Spain, he offered to pay a higher price for the company. He offered to pay seven times the operating income, (that after subtracting debt, it valued the company at eight million euros) and also planned to pay for the company in deferred payments, paying six million at the start and the rest of the two million one each year.

We attracted a third buyer, a Canadian company with a turnover of more than a billion euros, from which he earned a total of hundred million and with no debt. He saw many synergies with our client and he did not have any presence in Europe. He had a lot of interest in the company and offered to pay ten times the operating income of the company that after subtracting the debt, it left the buying price set at fourteen million.

If we were to have sold it to the Spanish firm, the firm could have come up with excuses not to repay the remaining four million euros and could have paid for the company two million. The Canadian company paid seven times more.

For your company, you should look for a buyer that gives you synergies and has a lot of cash at hand, without minding so much about its location. If the buyer can perceive the true added value for the company, they will be willing to pay more for your business.

Written by Enrique Quemada, president of ONEtoONE Corporate Finance.