Commercial Due Diligence Industry
How are market size and market growth determined for new technologies or market niches?
A market analysis is a central component of any Commercial Due Diligence in the industrial sector. The starting point for this is external sources, e.g., market studies, industry reports and statistics. However, our claim is to develop our own market models for our clients. For this purpose, we estimate market sizes and market growth rates by combining external sources and interviews with market experts, which we conduct by ourselves. We can thus provide our clients with concrete market forecasts.
The special feature of new technologies and market niches is often the poor data situation and the increased uncertainty regarding future developments. This makes first-hand information, i.e. interviews with market experts, all the more important. In addition, we define different scenarios in our market models to reflect the high level of uncertainty regarding future developments.
How important is a competitive analysis in a Commercial Due Diligence in the industrial sector?
A competitive analysis is highly relevant because industrial companies —especially medium-sized ones —are now more than ever in global competition, regardless of whether they are in the mechanical engineering, automotive or electronics sectors.
German industrial companies are in particular demand to achieve competitive advantages through quality and innovation, especially in the face of increasing competitive pressure from China and other emerging markets.
The question of these potential competitive advantages of the company under review is the focus of a Commercial Due Diligence.
What role does customer and sales analysis play in a Commercial Due Diligence for industrial companies?
Just as for all other industries, customer and sales analysis is also an important part of the Commercial Due Diligence for industrial companies. Due to the high competitive pressure in the industrial sector, companies are more dependent than ever on building up a stable customer portfolio, achieving a high level of customer loyalty, acquiring sufficient new customers, and developing sales in such a way that they can enable the planned company growth. These issues are examined intensively as part of a Commercial Due Diligence.
What impact does the increasing digitisation of industrial companies have on a Commercial Due Diligence?
The digitisation of industrial companies (keyword Industry 4.0) is becoming increasingly important, which is why issues surrounding this topic are playing an increasingly important role in our Commercial Due Diligence.
Two aspects of digitisation need to be distinguished here:
- Operational aspect: The operational processes of companies are becoming increasingly digitised and linked. Naturally, this has an impact on performance and thus on our valuation of the target company. This aspect is examined as part of operational due diligence.
- Strategic aspect: This plays an important role in our Commercial Due Diligence if the target company develops new business models and services through digitisation, thereby opening up new sources of revenue and earnings. Particularly due to the high competitive pressure in the industrial sector, an expansion of the core business to include digital services can have a value-driving influence.
Does CODEX also perform production testing?
Here, a distinction must be made between an economic and a production / engineering perspective:
- Economic issues around production (e.g., whether production capacities are sufficient for the planned growth of the company under review) are often part of our Commercial Due Diligence.
- We can answer production-related questions (e.g., quality of machinery and production processes) together with external production experts brought in by us.