PRESIDENT'S WELCOME

H. Gammer - Introduction

Buying or selling a company seems to be getting more and more complex. If you are a buyer in the market for strategic investments these days, you no longer compete only with strategic buyers such as yourself, but also with financial/private equity buyers. Of course, there have always been financial buyers. What’s new is the fact that financial buyers have become very aggressive - and, contrary to the past, will pay the same or higher multiples than strategic investors.

Selling companies is also more complex because in our global economy buyers now come from all corners of the world - and can be more specific about what they are looking for. So even a small seller who wants to find an optimal buyer - both in terms of valuation and other “soft issue requirements,” - needs to reach out into the world market. Throw in the fact that new legal requirements, accounting rules and shareholder protection laws are also mushrooming, and the investment scene becomes an almost impenetrable thicket of obstacles for the novice buyer or seller.

Many of our friends around the globe frequently ask us how to initiate the buying or selling process. To address some of those questions, we have decided to put together this quarterly “M&A Digest.” Each issue will cover important aspects of legal and tax matters, shed light on specific opportunities around the globe, and cover other practical material. Of course, you, the reader, are welcome to ask questions. We'll provide the answers.

There is hardly an area in business where as much depends on the right attitude towards negotiations as in M&A deals. An out-of-tune mindset, poor expectations, and insufficient preparation can break a deal, or cost you millions of dollars. We, therefore, begin the first issue of the Digest with a feature on how best to approach and carry out difficult negotiations - so all the parties can walk away as winners. This article was written by Professor Margaret A. Neale of Stanford Graduate School of Business.

Germany - the land of opportunity? Had we suggested this merely a year ago, we would have been the laughing stock of the M&A world. But, since then, much as changed in Germany: the intimidating rigidity of labor relations and business regulations is breaking up, profits are rising and - most importantly - there are still a lot of good companies to be had at comparatively decent prices. In an interview with the Digest, Werner Specht, our man in Germany, sheds some light on the situation and explains how the renewed attractiveness of the German market for the international investor community offers great opportunities to German sellers.

Hanna Tikkanen Merk, GGI director sell-side, offers our sell-side clients her insights on a typical sales process. In her first of four contributions to this topic, Hanna covers the very first steps in a sell process: analyzing and positioning your company, assessing its value, and determining where the industry is going. These should be very helpful insights for our clients and friends who don’t sell a company every day.

We round off our first Digest with a brief contribution from our man in China. Karl-Heinz Däumler provides strategic advice to American and European manufacturers with intentions to set up shop in China. Typically, this service is of interest to GGI clients with labor intensive manufacturing processes, who are looking to buy a Chinese company, do a joint-venture/cooperative or simply source from China. GGI helps you analyze the various options and the alternatives under each option: Finding companies to buy in your specific industry, locating multiple joint-venture partners or sourcing partners. In China we also offer “post deal service”, i.e. in a joint-venture/sourcing arrangement GGI ensures the quality of products sourced in China.

We hope you enjoy our first Digest, and encourage you to give us your feedback or send questions.

Hubert Gammer