We’ll tell you whether a target supports your investment thesis—before you invest in a full due diligence process.
Our Pre-Acquisition Strategy helps private equity funds and industrial companies in the mechanical and plant engineering sectors, as well as in related service and software businesses, evaluate potential target companies at an early stage. Through market assessment, target screening, and review of the investment thesis, we establish a solid foundation for further transaction decisions.
Structured Preparation of Transactions
A well-thought-out pre-acquisition strategy lays the foundation for successful transactions. By evaluating markets, target companies, and strategic fit at an early stage, opportunities and risks can be realistically assessed even before a comprehensive due diligence process begins.
Review of the Investment Thesis
The focus is on validating the investment thesis. We analyze the market environment, competitive dynamics, and the target company’s positioning to assess whether the strategic and economic assumptions underlying an investment are sound.
Market Assessment and Target Screening
Through a structured assessment of markets, competitors, and potential target companies, we help our clients identify suitable targets. This creates a solid foundation for further transaction planning.
Basis for Decision-Making Prior to Due Diligence
The results of the pre-acquisition strategy provide a solid basis for decision-making regarding the rest of the transaction process. This allows resources to be allocated in a targeted manner and enables efficient preparation for subsequent due diligence processes.
Our approach
Before committing resources to a full due diligence process, it should be clear whether the effort is worthwhile. That is exactly what we examine first—at the sub-segment level, not just at the industry level. Since we are already familiar with target companies and competitors in many relevant segments, we can arrive at an initial, well-founded assessment more quickly than providers who first have to familiarize themselves with the market and segment.
Through market analysis, target screening, and a structured review of the investment thesis, we identify opportunities and risks early in the transaction process—validated, if necessary, by our network of more than 100 senior industry experts.
This is how we help our clients make well-informed investment decisions and allocate resources effectively. Even before a formal engagement, we’ll provide an initial assessment of a target —at no obligation— upon request.
Context within the Transaction
The pre-acquisition strategy serves as the starting point for many transactions and lays the groundwork for the subsequent commercial due diligence. The insights gained can also be applied to value enhancement and post-merger integration by taking strategic objectives, value enhancement opportunities, and integration requirements into account at an early stage.
Frequently Asked Questions About Pre-Acquisition Strategy
What Does a Pre-Acquisition Strategy Entail?
A pre-acquisition strategy answers the question of whether a segment and a target support the investment thesis—before budget is allocated to a full due diligence process. It includes market assessment, target screening, and a structured review of the investment thesis. The result is a robust basis for decision-making regarding whether—and under what terms—the transaction process should be pursued.
How do you evaluate an investment thesis before committing to a full due diligence process?
The first step is to assess the market, not to evaluate individual targets. It is important to determine whether the relevant segment fundamentally supports the investment thesis: size, growth drivers, competitive structure, and margin logic are examined at the sub-segment level. Building on this, target screening can be specifically focused on suitable candidates.
How does A&P identify suitable targets in a fragmented mechanical engineering segment?
Through structured target screening along the value chain. In fragmented segments, relevant companies are often small, unlisted, and misclassified in standard databases. A&P covers component and system suppliers, machinery manufacturers, and industrial end-users, and operates at the sub-segment level—where standard screenings often stop. This results in a more robust pool of candidates for further evaluation of the investment thesis.
How does the pre-acquisition strategy differ from commercial due diligence?
The pre-acquisition strategy determines whether a target should be pursued at all; commercial due diligence then conducts an in-depth review of the specific company. The initial phase focuses on segment attractiveness, candidate selection, and the viability of the investment thesis—while due diligence examines the selected target’s market position, competitive dynamics, and revenue quality.
At what point in the investment process should a pre-acquisition strategy be launched?
As early as possible, ideally before a concrete process is underway. Those who wait until they receive a teaser to begin will find themselves making decisions under time pressure regarding a segment that has never been systematically evaluated before. As an upstream step, the pre-acquisition strategy keeps the target pipeline full and shortens the subsequent due diligence process because the market definition, segment understanding, and investment thesis are already in place.
What happens to the findings if the pre-acquisition strategy indicates that a transaction is not advisable?
Then that’s a result, not a failure: A process terminated early ties up only a fraction of the resources that a full due diligence process and a later-corrected investment would cost. Furthermore, the market research remains useful—insights into the segment, the competitive landscape, and the list of candidates can be reused for the next opportunity in the same sector.