4 Minutes Read By Dr. Stefan Sambol

Insights from the Mergermarket M&A Forum Germany 2023

#Transaction Advisory#Commercial Due Diligence#Digital Due Diligence#Digital Readiness Assessment#Technical Due Diligence

Corporate due diligence is an essential part of mergers and acquisitions (M&A) processes, as it helps dealmakers identify and protect against potential risks and liabilities associated with an investment. However, traditional due diligence procedures are no longer enough in today's fast-changing digital landscape – dealmakers need to understand the full scope of tech, data, and digital due diligence to ensure that they are making informed investment decisions.

The Mergermarket M&A Forum in Germany, held on April 18th, 2023, explored the importance of digital due diligence and exit readiness in today's economic climate. Here are some of the key insights of the event:

 

Wider scope, longer process

The current environment of economic downturn and uncertainty causes investors to be more cautious when conducting due diligence. The process has become longer, with investors wanting to understand the full scope of tech, data, cybersecurity, and digital due diligence to better protect themselves from downside risk. This also means deal makers need to be transparent and provide detailed information about potential risks associated with the investment, to build trust with investors and increase the chance of a successful transaction.

 

Ensuring Exit Readiness

By embracing digital transformation, dealmakers can position their companies for success and make them more attractive to potential buyers. For example, the implementation of cloud-based software, automation tools, AI, and other digital solutions can improve workflow, streamline operations, and reduce costs, ultimately maximizing exit opportunities. Assessing digital and commercial readiness and implementing key value creation initiatives before initiation of the sales process leads is key to creating a more compelling equity story and enterprise value maximization.

Unveiling potential risks

Conducting deals without airtight due diligence can create severe consequences. There is significant downside risk in the cases where a company turns out to be a bad investment, due to undisclosed liabilities, fraud, weakness to cyber attacks, or other issues like technology replacement of services. Strong due diligence is the most important factor for good deal outcomes, and deal makers should conduct it thoroughly to protect themselves and their investors from potential losses.

In conclusion, the Mergermarket M&A Forum highlighted the importance of comprehensive due diligence and exit readiness in today’s economic climate. The M&A landscape is evolving rapidly, and dealmakers need to stay ahead of the curve to make the most of their investment opportunities. In addition to the technology itself, dealmakers should also thoroughly examine the financials and operations of the company through a commercial due diligence. This includes reviewing the company's revenue streams, profit margins, and cash flow, as well as examining its business operations and management team. By conducting a thorough due diligence process, dealmakers can identify any red flags or warning signs that could impact the investment. We at OMMAX recommend full commercial, tech, digital, and data due diligence for a holistic approach.

Please feel free to contact the author Dr. Stefan Sambol to learn how to leverage our expertise for your needs.

By Dr. Stefan Sambol

Contact an expert

Do you want to know more about our expertise? Get in touch!

Financial data analysis graph

Industry Insights

The digitalized soccer fan: understanding the fan journey

Soccer not only takes place in the stadium, but has also long since become a digital market. In fact, the global sports technology market is expected [...]

Industry Insights

8 lessons learned from over 2000 digital transformation projects

In the fast-paced realm of digital consultancy, where change is constant, and innovation is key, the journey of digital transformation is often filled [...]

Industry Insights

Decoding Data & AI: Machine Learning, Deep Learning, Artificial Intelligence

OMMAX holds in-depth expertise in data strategy, data engineering, and advanced data analytics. We have a proven track record of successful projects [...]

Industry Insights

Top 5 Insurance Industry Trends for 2024

In this article, Johanna von Geyr shares her forecasts of the top 5 insurance trends valid across all lines of business in 2024.

Case Studies

TISSO: Ensuring long-term success with a digitalization strategy

TISSO Naturprodukte specializes in the development and production of high-quality natural nutritional supplements. Founded in 1999, TISSO's range [...]

Case Studies

LucaNet: Unlocking marketing and sales efficiency

LucaNet, the market leader in Corporate Performance Management tools, offers certified software for the preparation of financial statements, financial [...]

Case Studies

Klafs: Transferring digitalization potential across the value chain

KLAFS is the leading sauna manufacturer in Europe in the premium segment. In 1952, Erich Klafs delivered the first Erich Klafs Sauna, the first [...]

Case Studies

Westwing: Harnessing AI for content creation and optimization

Westwing is a leading home & living e-commerce company headquartered in Munich. With a product offering that covers all Home & Living categories, [...]

Sign Up for the Newsletter

Development and Execution of a Customized Digital Growth Strategy