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18 Oct, 2023

M&A Transaction

The electroerosion machine technical assistance industry plays a crucial role in supporting the efficient operation of essential equipment for various companies in Portugal. This case study illustrates a remarkable transaction that occurred between a leading company in this sector and a competing company. The successful sale demonstrates the resilience and success of an organization that has flourished in the field of technical assistance.

Context:

In the late 1970s, the technical assistance company began its journey, initially focusing on the repair of electroerosion machines. During this initial period, they established a working partnership with a renowned manufacturer to provide after-sales technical assistance in Portugal. This collaboration allowed the company to accumulate experience in the sector and gain the trust of customers who depended on these machines for their operations.

Evolution:

As the market evolved and grew, the company recognized the need to expand and diversify its operations. In the 1980s, they took a significant step by creating a new company dedicated exclusively to the maintenance of electroerosion machines in general, with a special focus on the ONA and Maxsee brands. This strategic shift allowed the company to enhance its expertise in the industry, providing high-quality service and solidifying its position as a significant player in the industry.

Diversification:

In addition to technical assistance, the company gradually expanded its activities. They began selling used machines, acquiring equipment, requalifying them, and offering sales with warranties. This strategic move expanded the company’s reach in the market, attracting a diverse clientele looking for reliable machines at affordable prices.

Sale Intermediation:

The company continued to grow and excel in the industry, attracting the attention of a respected competitor. Mercal, a renowned company specializing in Mergers and Acquisitions (M&A), played a crucial role in facilitating this transaction.

Strategic Analysis: Mercal initiated the process by thoroughly evaluating the target company, examining its structure, operations, assets, and revenue flow. This involved comprehensive strategic analysis to understand the company’s market position and future prospects.

Preparation for Sale: Mercal worked closely with the company, assisting in the preparation of documentation and the sales strategy. This included preparing the company’s valuation as well as presentation materials for potential buyers.

Identification of Potential Buyers: Through its extensive network of contacts and partnerships, Mercal identified potential buyers on an international level. This included promoting the sale opportunity through international platforms.

Negotiation and Closing: Mercal managed negotiations between the stakeholders, facilitating the purchase process. The result was the formalization of a non-binding offer, followed by a deeper due diligence process, conducted in close collaboration with the client.

Conclusion:

The transaction was a remarkable success, providing significant value to the target company. The entire process, which extended over a considerable period of time, from initial preparation to transaction completion, was successfully conducted thanks to Mercal’s expertise in M&A and its proven track record of over 30 years and more than 400 completed transactions, both nationally and internationally. This case study highlights the importance of strategy, expertise, and specialized support in facilitating complex transactions and achieving remarkable results in the electroerosion machine technical assistance industry in Portugal.

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