We specialize in providing comprehensive personal service throughout all of the various stages and complexities involved in M&A processes for company acquisitions in Israel and globally.
Schwartz Investment House has been involved in numerous company acquisitions in Israel and abroad since the day of its founding, and has advised its clients on complex transactions and situations that are typical to such processes.
We regularly work for professional investment entities, such as investment companies or private equity funds, and for companies that are seeking to expand through mergers and acquisitions.
How to avoid common pitfalls in an M&A transaction
The process of acquiring a company is a key strategic process in the lifetime of any company that desires to develop its businesses not only through natural evolution, but also through acquiring additional operations.
An acquisition process is complex, and is often a long process that puts a strain on resources and is fraught with pitfalls and obstacles.
A well-organized acquisition process encompasses a broad spectrum of professional disciplines – from strategizing and adapting the target company to the buyer’s needs, through financial, accounting, legal, tax aspects, to human resources, work relations, psychology and more.
Statistics show that a significant percentage of mergers or acquisitions among companies are unsuccessful. As a client of Schwartz Investment House, you have peace of mind knowing that, with our team of experts devoting all of our collective expertise and experience to your objective, you will avoid the many pitfalls that you are liable to encounter by yourself or with less experienced or less committed firms during an M&A transaction:
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Incorrect definition of the buying company’s requirements
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Problems during due diligence processes – failure to identify potential problems and existing exposures, incomplete examinations, reliance on erroneous information, failure to cross-check data and more
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Cultural differences and miscommunications between the parties to the transaction
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Cultural differences between the merging organizations
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Failure to plan for “the day after”
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Failure to identify what investments are needed in the target company “the day after”
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Focusing the analyses and examinations on past performance, without adequate consideration of the future and the acquired company’s projections and multi-year forecasts
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Basing the transaction on unrealistic synergies
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Failure to address the matter of retention of key personnel in the acquired company
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Entering new industries without the support of personnel with commensurate qualifications
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Ego problems
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Absence of essential economic services during mergers and acquisitions (valuations, business plans, etc.).
With Schwartz Investment House at your side, you avoid all of these potential pitfalls that could cause your transaction to collapse.
Stages in M&A processes
Stage 1: Understanding the needs of the company and its owners
During the initial stage of our involvement in our clients’ transactions, we conduct intensive meetings to gain insight as to the correct direction for the company and/or its owners:
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What are the needs/challenges facing the company?
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Why is a merger or acquisition process with another company expected to be beneficial to the company?
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What are the company’s core capabilities and strengths?
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In what areas does the company need to be strengthened?
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Benchmarking of development via acquisitions of similar companies elsewhere.
Stage 2: Analyzing and defining the financial resources
As our client, we analyze and identify the financial resources available to you for executing the acquisition. This stage includes analyzing your financial capabilities deriving from your free cash flow and from external sources for the potential transaction.
We take an active role vis-a-vis the financing entities and assist you in obtaining the financing you need.
Stage 3: Characterizing the target company
We analyze the target company according to your defined requirements and prepare a profile of an ideal target company for acquisition:
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The industry and sector of the target company and its geographical location.
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The optimal size of the target company in terms of turnover, market value, etc.
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The target company’s financial position (profitable/growing/in crisis) and the structure of its balance sheet. Can the transaction be leveraged?
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Special characteristics of the target company – required capabilities, customers, market share, requisite know-how, etc.
Stage 4: Market survey and identification of target acquisitions
At this stage, we review the relevant market and identify targets that match the profile of the ideal target company for you.
As a client of Schwartz Investment House, you gain the tremendous advantage of our access to databases and target companies worldwide through our membership in the international network – Terra Corporate Finance Alliance. Unlike other networks of accounting firms or capital market entities that also engage in M&A transactions, Terra is a professional network of investment banks that specialize solely in advisory services for mergers and acquisitions.
Our membership in the Terra network enables us to search and review a specific market in a special geographical region to identify companies matching your criteria.
We also use our network of close working relationships with key players in the Israeli and global markets to identify relevant acquisition targets, by making discrete inquiries among leading lawyers, accountants and businessmen and private equity funds that are seeking to sell holdings, etc.
Stage 5: Contacting potential target companies
Once specific target companies have been identified and approved in advance by you, we make discrete inquiries to potential target companies to ascertain their interest in the proposed transaction with our client and, if they express interest, we begin to conduct negotiations and examine the target company. Frequently, our clients do not want us to disclose their interest in a target company at the outset, and, in such instances, we conduct the initial stages accordingly.
Stage 6: Initial analysis of the target company
At Schwartz Investment House, we are careful to minimize expenses to our clients and focus only on the most relevant opportunities. Over the years, we have developed an efficient methodology for performing initial analyses of target companies, including a financial analysis, an analysis of the operative market, the degree of its compatibility with our client’s requirements, and analyzing and characterizing the risk factors and problems in the proposed company and/or transaction.
Stage 7: Conducting negotiations, performing a valuation and due diligence examinations
If the target company has passed the initial screening and you give us the green light to proceed with the process, we begin a more in-depth examination of the company and perform a valuation prior to commencing commercial negotiations on the transaction terms and conditions.
We conduct the negotiations and formulate the principles and conditions of the transaction with the target company. Our clients recognize that this is one of our strongest spheres of expertise, since our extensive experience with both buyers and sellers and our impeccable handling of all details of the transaction are invaluable to navigating the transaction to a successful closing.
Concurrently, we perform a complete due diligence process in conjunction with your other advisors (accounting, legal and operational due diligence examinations).
Stage 8: Transaction documents and closing
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We take a pivotal role in the negotiations, and work in conjunction with your lawyers until the agreement is finalized and signed.
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We also provide assistance in obtaining requisite approvals for the transaction (Antitrust Commissioner, bank approvals, franchisers, etc.).
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