Technical and Compliance due diligence activities of ICT Advisory in Bearing Merger & Acquisition projects

 

M&A projects have been widely impacted in 2020 by Covid-19. Average deal value and volume contracted respectively of 22% and 49% respect to year 2019. Many deals have fallen by the wayside due to the uncertainty that the pandemic has generated to the worldwide economy, especially in those cases involving small and medium companies. On the other side, the large and financially strong companies have intensified the acquisition projects trying to take advantages of the special offers available in the market.

In any crisis, there are discrete, strategic opportunities to acquire high-quality talent, intellectual property and capabilities, often in distressed situations. For those in a position to acquire, these investments can be critical to long-term resilience while also helping distressed companies preserve capabilities and talent versus facing potential insolvency. Even in bearings and power transmission industry there are opportunities of concluding great deals with aim to strategically reinforce the company’s equity and know-how.

Experiences of past crisis shows clearly that those leaders who leverage M&A well as part of a holistic response to the crisis over the next 12-24 months will be more likely to overcome uncertainty and outperform those who do not in the next three to seven years.

ICT Advisory is an “atypical” organization made of chartered accountants, lawyers, tax experts and engineers who are specialist of bearings industry and who can assist those leaders who intend to relaunch and to strengthen their companies entering an acquisition deal. In the same company, in fact, financial and technical competences are available at once to complete the whole due diligence processes that are strongly recommended to assure the buyer about the acquisition itself: in addition to the financial certification of the company performance, ICT team can assist in completing the verification of compliance to the laws and the absence of pending future liabilities for the buyer.

ICT Advisory engineers are expert of anything related to safety and environmental compliance of both manufacturing and non-manufacturing sites. The typical compliance due diligence activity includes the following steps:

  • Documents analysis and check of compliance with the current legislation;
  • Analysis of the aspects related to the protection of health, safety and environment, with respect to the production cycle;
  • Inspection at the site under investigation, with collection of objective evidence;
  • Identification of anomalies (findings: Non-Conformities, Observations and Recommendations);
  • Final report to the client, with estimate of the relative costs, consequent to the findings found in detail on both anomalies already found and of which the objective evidence is clear and on potential or non-evaluable liabilities;
  • Drawing up of conclusions.

In case necessary, in agreement with the buyer, ICT Advisory can execute verification of pollution of soil, aquifers and air through specific spot measurements or by on-line control of them for the required period of time. This approach is essential to guarantee that any remediation activity needed to establish normal conditions in the site are adequately taken in account in the M&A deal. In the same way, company risk assessment is completed and properly “translated” to the client for opportune consideration. Such assessment includes also the evaluation of the conformance of machinery and tooling, the appropriateness of the organizational model and its compliance with the requirements of the law, the compliance of central plants and of fire system, the proper handling of hazardous substances and the adequacy of the wastes management system.

ICT Advisory engineers can also complete business due diligence of target company and strategic assessment of its fitting to the buyer organization. The technical and commercial competences of ICT will support the forward-thinking leaders to take a holistic approach, making necessary short-term moves for stability and resilience while keeping opportunistic growth plays on the radar, where possible. It will also help to make rapid prioritization calls on M&A activation, to decide what should be put on pause, what should be shifted to a different timeline and what should stop. For new moves such as divestitures, ICT Advisory shall help to decide if seeking an exclusive arrangement or an auction; in case of alliances, ICT will help to define the most critical elements in the ecosystem to address, and to identify potentially new partners most able to solve these needs, to evaluate opportunistic plays with long-term potential upside, to start with another look at the investment strategy for in-flight and near-term deals, to evaluate opportunities to place bets on assets such as insolvent start-up IP, talent acquisitions, and distressed tuck-ins. Since the flow of these opportunities can come fast, having a clear idea of what is on strategy and what is not is essential.

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Of course ICT Advisory can offer such assistance also on the sell-side. Being a qualified partner for the industry, our engineers can play a technical reference role and dialogue with the buyer’s advisors. ICT Advisory Division aims to become the reference advisor for all company sales, partnerships and acquisitions operations in the bearings industry in Europe, Asia and America.

For more info get in touch with them writing to m&a@consulting-trading.com.