We maintain close links to the private equity market. We help individual buyers identify options and opportunities, and ensure that the right potential investors are contacted and presented with the right information.
We possess extensive and broadly based experience from the sale of companies in a variety of different sectors. Our highly competent organisation and close networking partners enable us to provide solid advice to business owners, including the setting of realistic goals and the efficient execution of the entire sales process to very high standards.
Typical clients in connection with company sales:
- Businesses which are facing succession, or which are thinking about selling to an industrial partner, an existing or new management (MBO/MBI), a private equity fund etc.
- Corporate groups/companies wanting to divest companies/activities outside their core area of activity.
- Private equity and venture capital firms that want an exit strategy for their portfolio companies.
The sales process involves several phases and often stretches over a long period of time. It is therefore advisable to begin preparations in cooperation with us as early as possible, in order to pave the way for a solution which is optimised from both a commercial, legal and financial point of view.
We also act as consultants, where a company has been contacted by a buyer. In such situations, there will be considerable need for specialist advice on topics such as valuation, acquisition model, terms of negotiation and negotiation tactics, the management of the due diligence process and the assessment of alternative buyers.
We basically handle the entire sales process from the initial analysis and preparatory phase to the final negotiations and structuring of the closing – all in close collaboration with the company’s other advisers, including auditors and lawyers.
We have extensive experience in advising both companies and individuals with the relevant managerial background on business acquisitions.
Our advisory services include an initial talk to agree on the success criteria for the acquisition, and does not end until the transaction has been finalised and completed.
In connection with company acquisitions, we add significant value for our clients during both the analysis phase and when negotiating the final terms and conditions. In our role as external advisers, we contribute to creating an efficient negotiating climate, and thus ensure a strong basis for the subsequent working relationship and integration of the companies.
Typical clients in connection with acquisitions:
- Companies which – due to their growth strategy or due to structural conditions in their line of business – see acquisitions as a strategically sound move with a view to realising synergies through mergers – either in Denmark or internationally.
- Foreign businesses wanting to establish themselves in Denmark.
- Private equity firms wanting to execute buy-outs or industrial consolidation.
- Individuals with solid business experience who are interested in taking over companies which are ripe for succession – in the form of either a management buy-in (MBI) or a management buy-out (MBO).
The acquisition process involves several phases, and often extends over a long period of time. It is therefore advisable to begin preparations in cooperation with us as early as possible, so as to pave the way for a solution which is optimised from both a commercial, legal and financial point of view.
We basically manage the entire acquisition process, from the initial analysis of the buyer’s situation, the definition of success criteria, the identification of selected companies which are then contacted, to the final negotiations and structuring of the closing. This process is carried out in close cooperation with the buyers and the selected company’s other advisers, including accountants and lawyers.
The various phases of the acquisition process differ, depending entirely on the type of buyer. In other words, depending on whether it is an acquisition process for a company where the target company has not been identified, an acquisition for a working buyer (MBI), or the acquisition of a specific business, where the company has been identified by the acquirer (MBO, MBI, strategic acquisition).
Independent and experienced advisory is important to ensure the optimum injection of capital for companies. If a company needs venture capital, there are many questions which the company owner will need to clarify. How large an ownership interest, in the form of shares, is the owner prepared to provide? How much capital is needed, and how much can be injected into the company? Where and how are buyers for the shares or shareholdings in the company to be found? It is important for the company owner that fresh capital is provided on the best possible terms.
Analysis of the company and pricing of shareholdings/shares
No two companies are the same. The owner knows his own business extremely well, but his concerns are often not the same as those of the investors. At Cigno, we know all about the factors that either add or detract from the value of a company, and when pricing an enterprise, we apply various methods that take account of both earnings and equity as part of an overall holistic analysis. Our pricing is a realistic assessment of the company based on both the seller’s and the buyer’s objective risk assessments.
Cigno conducts a thorough review of the entire company, the company’s external partners, customers and suppliers as well as competitors and the market. In addition, our analysis comprises an internal review of the company’s products, services, production and skills of the management and employees as well as a financial analysis of the financial reporting.
Presentation of the company to buyers and investors
It is important that the company is presented in the best possible way, both as regards the positive aspects, and with explanations that support any negative aspects. Through our extensive network, both in Denmark and internationally, we can look for potential investors or buyers, and we prepare sales material in connection with capital injections.
Looking for the biggest synergies
Potential investors with knowledge of the market offer the most value for the company. We know that insight creates value for the company, and therefore we strive to find buyers who are able to make the most of the company’s potential. It might also be investors who can add expertise within various fields. Investors who can realise synergies through their ownership are usually willing to pay a higher price.
The negotiation phase is sensitive, and we handle the entire process between the buyer and seller, solving any sticking points or disagreements that may arise. The price of the shares or shareholding is an important point of negotiation, where the best possible solution – and the compromise that best meets the wishes of the owner while at the same time making it possible to sell shares or shareholdings – must be found. It is important to know about different acquisition models that may cater to both parties. This is an area where Cigno possesses considerable experience.
Throughout the process, less important aspects may carry an undue amount of weight, but here we are able to guide and advise and so ensure that the interests of both parties are considered and that a compromise can be found that keeps the process on course and creates results. Our active involvement in the negotiations only comes to an end once the company’s shareholding or shares are sold, and the transfer agreement is signed.
When performing a value assessment, we start with a general analysis of the company, including its commercial foundation, and look at the market conditions, the make-up of its customers and suppliers etc. We look at the company’s products, services, production, and also assess its management and skills and basic company-specific factors. We conduct a thorough analysis of the company’s financial situation. In addition, we assess the level of interest among potential buyers within the industry in question, as this has a key bearing on the company’s value.
On the basis of our company analysis, we work out a tangible value assessment using reputable tools and models, as well as databases.
This may, among other things, include:
- Normalisation of earnings, separating property from the calculation etc.
- Calculation of value according to the discounted cash flow (DCF) model and the EBIT multiple model. Calculation of the substantial value.
Important factors of relevance to company value
All businesses are different. History, prospects and general conditions are all relevant when valuing a company. Does the company, for example, have a couple of very large customers who account for most of its revenue, while the rest of the customers are thinly spread out, and what does this mean for value and risk? And if a number of big investments have been made which are not yet reflected in the earnings, how do you take this into account?
In one scenario, a company may have enjoyed high earnings for several years, but over the past year or two they have fallen – how do you make the valuation? Perhaps the company has grown very rapidly, and, therefore, earnings have grown dramatically in recent years, so it may be difficult to arrive at a value. Or how is the valuation affected if the owner performs all the managerial functions, and there is no management group beneath him or her?
Our financial analysis involves a review of the financial statements. The income statement and balance sheet including liabilities are included in the analysis, and if budgets have not been prepared, we estimate the level of revenue and earnings.
All factors that we have listed on this page are included in the value calculation. We base our calculations on well-established methods, which are all based on the company’s earnings and balance sheet. We apply several different methods to cross-check the value assessment. We compare the figures with any registered company transactions in the same line or related lines of business. We look at the facts in light of our market knowledge and our ongoing dialogue with investors, banks, accountants etc. In this context, we also assess the saleability of the company.
The value assessment cannot factor in potential synergies that may be realised, for example, if the company is bought by a competitor, which can lead to savings or greater earnings through a business combination. Synergies are totally dependent on who the buyer is. We are happy to advise on how potential synergies can be valued if there is a concrete buyer for the company. The value assessment is thus based on the company as an isolated entity.
The total value assessment, background, observations and assumptions are compiled in a report for the company’s management/owners.
Cigno was established by CEO and partner Jens Møller in 2005. Since then, we have become one of the leading Danish specialists in valuation, acquisition and sale of companies and the raising of capital for growth and business development.
At Cigno, we are involved in a significant number of Danish and international transactions every year. We usually represent the seller as their exclusive adviser in the area, and we are always independent of other advisers such as banks, lawyers and accountants.
We aim to be the business community’s preferred partner within our primary areas of expertise, and to provide competent and flexible services at a competitive price in the market.
Our services and consultancy are delivered in a down-to-earth, straightforward and direct way that sees eye to eye with all the parties involved. We want to breathe fresh life into the consultancy industry, and provide competent professional advice that gives our clients the best possible basis for making decisions.
CEO & Partner
Tel.: +45 22 91 04 17
Former partner at Gaarn Thomsen & Partners A/S.
Previously worked as a manager at Deloitte SME M&A, and in executive positions in large enterprises in Denmark and abroad for several years.
Qualified accountant, Graduate Diploma in Business Administration and Accounting from Aalborg University.
8920 Randers NV
1260 København K