How does a bidding process (NBO, LOI, due diligence) work?

A bidding process is a structured method in which several potential buyers submit bids for a company simultaneously. The process consists of three main phases: the NBO (Non-Binding Offer), the LOI (Letter of Intent) and due diligence. This systematic approach maximises the sale value and ensures the transaction proceeds in a controlled manner. A bidding process is a structured sales procedure in which several interested parties submit bids for a target company simultaneously. This method creates competition amongst potential buyers, resulting in higher valuations and better terms for the seller. The process is used when companies generate sufficient market interest to attract several serious candidates. […]

How is goodwill calculated and accounted for in practice?

Goodwill is calculated as the difference between the purchase price and the carrying amount of identifiable assets in an acquisition. This intangible asset represents factors such as brand value, customer relationships and market position. The correct calculation and recognition of goodwill is crucial for accurate financial reporting and tax treatment in transactions. Goodwill is an intangible asset that arises when the purchase price of a business exceeds the fair value of all identifiable tangible and intangible assets less liabilities. It represents the premium that a buyer is prepared to pay for factors such as established customer relationships, brand recognition, specialised staff and market position. In M&A transactions, […]

What is a teaser and an Information Memorandum?

A teaser is a concise marketing document of 2–4 pages that informs potential buyers about a sales opportunity without revealing the identity of the company. An Information Memorandum, on the other hand, contains comprehensive company information spanning 20–40 pages for serious candidates. Both sales documents play a crucial role at various stages of the M&A process and determine how a company is perceived in the market. A teaser serves as an initial introduction between the seller and potential buyers in the sales process. The document presents key data on the sector, turnover, profitability and growth potential without mentioning the company name or any specific identifying details. The primary aim is to generate interest […]

Trends in the Managed Services Sector

The Dutch ICT Managed Services sector continues to evolve. The most obvious trends are the increase in cloud adoption and the consolidation that has been going on for some time. The most common customer queries to Managed Service Providers ('MSPs') relate to AI solutions. More and more organisations are trading on-premises infrastructure for cloud solutions because of scalability, standardisation and lower cost [...]

What role does growth (organic vs acquisitive) play in valuation?

Growth plays a crucial role in business valuation, with investors and buyers assigning fundamentally different valuations to organic growth (internal expansion) versus acquisitive growth (growth through acquisitions). Organic growth is generally valued more highly due to lower risks and proven operational excellence, whilst acquisition-driven growth entails more complex integration challenges that can influence the valuation. Organic growth arises from the internal expansion of existing activities, whilst acquisition-driven growth is achieved by taking over other companies. Investors value these types of growth fundamentally differently due to differing risk profiles and predictability. Organic growth demonstrates that a company can strengthen its market position through its own efforts. This type of growth […]

Why can the value for buyer and seller differ?

Differences in valuation between buyer and seller arise from differing perspectives on risk, growth potential and strategic advantages. Buyers focus on future cash flows and opportunities for synergy, whilst sellers often base their assessments on current performance and market multiples. These differing perspectives lead to varying valuations of the same company. Company valuation is determined by three main methods: DCF analysis, market multiples and book value. These methods can produce different results for the same company because they emphasise different aspects. The DCF method examines future cash flows and discounts them to their present value. This approach is sensitive to assumptions regarding growth, profit margins and the discount rate. Small changes in these parameters can result in significant differences in value. Market multiples […]

Explanation of EBITDA and multiple in valuations

EBITDA and multiples form the basis of modern business valuations in mergers and acquisitions. EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortisation) measures operational performance excluding the impact of the financing structure and accounting depreciation. Multiples compare this performance with market value to produce objective valuations. These methods determine asking prices and negotiating positions in transactions. EBITDA measures a company’s operational profitability by excluding interest, tax, depreciation and amortisation. This metric shows the actual cash flow generated from operating activities, independent of financing structure, tax regimes or accounting depreciation methods. The strength of EBITDA lies in its ability to facilitate comparability between companies. Whereas net profit is influenced by different financing structures and depreciation methods, […]

How long does an M&A process take on average?

An M&A process takes an average of 6 to 12 months, with smaller transactions taking less time and complex international acquisitions taking longer. The duration depends on factors such as company size, due diligence scope, financing structure and regulatory approvals. A well-structured process with professional guidance significantly shortens the turnaround time. The average turnaround time for an M&A process is between 6 and 12 months for mid-market transactions. Smaller company acquisitions can be completed within 4 to 6 months, while complex mergers or international transactions can take 12 to 18 months. The timeline varies depending on the type of transaction. Strategic acquisitions by existing market players often proceed more quickly than private equity transactions, […]

Difference between strategic buyers and private equity investors

Strategic buyers and private equity investors differ fundamentally in their motivations and approach to company acquisitions. Strategic buyers seek synergies and market advantages, while private equity investors focus on financial returns within a specific time frame. This choice determines the valuation, integration and future of the acquired company. Strategic buyers are companies that make acquisitions to expand or strengthen their existing activities. Private equity investors are financial parties that acquire companies to create value and resell them after a few years. The key difference lies in the investment philosophy. Strategic buyers integrate acquired companies into their existing operations and seek […]

When is the right time to sell my business?

The right time to sell your business depends on internal business performance, market conditions and personal circumstances. Optimal timing arises when there are strong financial results, favourable market conditions and clear strategic considerations. Selling from a position of strength maximises value creation and negotiating power, whilst waiting until problems arise has a negative impact on the valuation and deal structure. Four categories of indicators point to the optimal time to sell: strong financial performance, favourable market conditions, personal considerations and strategic factors. Financial indicators include consistent profit growth, stable cash flows and healthy margins over several years. Internal signals are evident in operational excellence. The business runs without day-to-day intervention from the owner and has a […]