Analyse der Auswirkungen von Due Diligence-Ergebnissen und ausgewählten Kaufpreis-Mechanismen auf den finalen Unternehmens-Kaufpreis im Vergleich zu WACC-Kaufpreis- Sensitivitäten und Markt-Multiples

Abstract

This thesis investigates the impact of due diligence findings and various purchase price mechanisms on the final acquisition price of a company. It compares the price sensitivities using the Weighted Average Cost of Capital (WACC) and market multiples. The initial chapters outline the objectives and background of corporate transactions, emphasizing Return on Capital Employed (ROCE) as a key metric for evaluating acquisition success, which is revisited in the empirical section. A significant focus is on due diligence, categorized into Financial, Commercial, Tax, Legal, Technical, Environmental, and Human Resources Due Diligence. Both Vendor and Purchaser Due Diligence are discussed. Due diligence aims to uncover risks in the target company, which can either reduce the purchase price or be reflected in the warranties and indemnities of the purchase agreement. Valuation of companies is conducted using various methods, particularly the Discounted Cash Flow (DCF) method and the multiples approach. The study examines both the equity and entity methods of DCF, as well as the WACC and Adjusted Present Value (APV) approaches. It also explores the limitations of these methods and the integration of DCF and multiples. The analysis includes the consideration of sustainable and one-time effects from due diligence, such as net financial debt, debt/cash-like items, working capital adjustments, and equity-reducing deductions. It highlights the unique aspect that some balance sheet items can be defined as purchase price deductions or not, due to the lack of standardized definitions. The significance of goodwill and badwill, as well as the structuring of transactions and the design of purchase price mechanisms like Locked Box, Closing Accounts, and Earn-Out, are thoroughly analyzed. The work also addresses Asset Deals and Share Deals, along with key tax aspects of deal structuring. Finally, the psychology in the M&A process is examined, focusing on the auction process. Empirically, the thesis draws on interviews with a financial investor, advisors, and a strategist, as well as the analysis of use cases from transaction documents of past deals. These case studies include buy and sell transactions with Locked Box and Closing Accounts mechanisms, illustrating how different mechanisms and the risks uncovered during due diligence affect the final purchase price in practice.

Date of Award	2024
Original language	German (Austria)
Supervisor	Peter Hofer (Supervisor)