Mergers and acquisition


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guide the seller through the acquisition process. ‘An advisor would be a buffer between you and a potential acquirer,’ he said. ‘It takes out some level of subjectivity you might have as an owner, particularly if it’s a company you started yourself.’ Ollivier agreed that in most cases the seller


needs to be equipped with an M&A advisor. ‘If you have founded a company you are really selling your baby, and you put so much emotion in the process that you are unable to manage it,’ he observed. ‘It’s important to have this M&A advisor to determine the limits for the deal, and to run the process as a project manager.’ He also advised prospective buyers and sellers


Martin Wäny, CEO of consultancy firm


TechnologiesMW, founded Awaiba in 2004. Awaiba was acquired by Cmosis in 2014, and Cmosis was itself acquired by Ams in 2015. Wäny explained that Awaiba had developed technology for two markets, machine vision and medical imaging, but it did not have the structure to make a success of both. Awaiba therefore looked for partners so that those technologies could reach their full potential. Wäny commented during the EMVA panel


discussion that one of the reasons for selling a company is that it has difficulty in accessing certain markets or geographical regions. It’s therefore important to check that the buyer has a strong sales team in the targeted regions, and an operational organisation that can realise the potential of the seller when volumes ramp up. Also, does the buyer have the right certificates required by the market? ‘It’s important to check, because once you start the process, as an SME, you cannot easily do this in parallel with multiple buyers,’ he remarked. Tere’s also the question of whether the owner


of the company selling is happy to become an employee in a larger organisation, rather than the boss of the firm they founded. Also, the team, particularly in a small company, can be quite close-knit, and those people have to be able to flourish and expand within the larger company. If the seller goes down the private equity route,


Wäny warned that the money is attractive, but that it comes with a risk: the investor looks for a


return on investment in the short term. On the one hand this can help focus efforts, but on the other it can be frustrating if the company has long-term plans.


Good advice Ollivier said that the value of the company will be estimated by the earnings before interest and tax (EBIT) multiplied by a factor. Te factor is influenced by the track record of the company over the past five years, as well as its business plan, which Ollivier said should be realistic. Due diligence plays a


Discuss with your


buyer how you can bring your existing sales force and your existing experience into the big organisation


critical role in the valuation of the company, according to Modrich. He said that, as a buyer, Zeiss would inspect the company’s finances and scrutinise: the technology development; the production processes integrated in that development; how HR is managed; how sales


are managed; logistics; and whether there are efficiency programmes already established in manufacturing. All this is evaluated in addition to the finances. It’s also important to make a plan for the employees aſter the merger, especially when it comes to leadership. Intellectual property is also a strong value


generator, but it’s something that can be difficult to value, Yates noted – ‘it takes a lot of effort legally to go through IP’. He said that it’s important to find a way to communicate IP effectively, whether that’s patent IP or knowhow IP, because it can be a powerful selling tool. Yates recommended hiring an advisory firm to


6 Imaging and Machine Vision Europe • Yearbook 2018/2019


to involve their management. ‘If you buy without your management then you will have to run the company yourself,’ he warned. ‘If you sell, it’s the same, because if the management decide to leave, you face a problem and the value of the company will drop. It’s also important to convince the management that it’s a good step for the company, either to sell or buy.’ Lawyers will need to be involved, who are a


step removed from the business. Yates advised that, from the seller’s side, lawyers ‘definitely need to be directed’. He said: ‘You cannot expect to go through complex share purchase agreements and leave it to the lawyers. You need to go through and understand the implications of the agreement on yourself as sellers.’ Modrich summed up that it’s important to be


clear on what kind of acquisition the seller wants: ‘Is it an exit strategy, do you just want to sell and leave the company? Is it something where you want to step back from being a CEO and having financial pressure? Or is it something where you want to grow faster, then who is the right partner? If you can answer this question and be clear on the direction you are going, you should be attractive for your future buyer.’ He added that the seller should ask the


buyer what the synergies are between the two companies. In terms of sales, for instance, the seller should ask about the buyer’s sales structure, and how easy it would be to adopt new technologies in that structure. ‘Tis is crucial, absolutely crucial,’ Modrich stated. ‘If this is not clear and if it’s not done well,


then it will take a long time to implement new technologies in these big organisations and have success on the sales side. All the sales people in the organisation have to learn to deal with your technology, and it takes a lot of time to train and build the right organisation on a global scale. Ask for the existing structures and discuss with your buyer how you can bring your existing sales force and your existing experience into the big organisation.’ O


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