M&A Due Diligence: Oil and Feedstocks Industry in Europe (2024)

M&A Due Diligence for the Oil and Feedstocks Industry in Europe

This comprehensive merger and acquisition (M&A) due diligence report offers an in-depth of a specific company's commercial position within the oil and feedstocks industry in Europe. Tailored for both buy-side and sell-side, this report is an invaluable tool for assessing a firm as a potential merger or acquisition target, evaluating a possible acquirer, or considering a partnership with a third party. It delves into the nuances of the company in question and encompasses a thorough examination of the local market dynamics, competitive landscape, and key factors influencing the development of the targeted market in Europe.

The M&A due diligence report is focused on a particular product group within the oil and feedstocks industry in Europe. Specifically, it will be tailored for one of the below product groups:

• Crude oil and refined products


• Naphtha


• Methyl tertiary butyl ether (MTBE) and Ethyl tertiary butyl ether (ETBE)

The aim of this oil and feedstocks M&A due diligence report is to significantly reduce the information asymmetry typically encountered in the initial stages of mergers, acquisitions, and partnership negotiations. This service provides a thorough examination of opportunities and potential risks across Europe, catering to your specific interests. The oil and feedstocks M&A due diligence report can also focus on up to 3 countries within Europe, effectively navigating market complexities.

You will receive the M&A due diligence report within 3 to 5 months after purchase. After project delivery, your team will have enough time to study it thoroughly and ask questions. Our team will be available for any clarifications or questions you might have in up to 3 months after the project delivery.

In the same industry and geographical region, you can also benefit from detailed market reports, feasibility studies, business plans, market entry, market development, product launch, and product development studies, direct access to millions of potential new consumers, partner search and selection and more. Contact us for more information.

Overview of the Buy-Side and Sell-Side Companies and Integration Goals

This section of the oil and feedstocks M&A due diligence report provides an overview of the target company's history, business vision, and goals. It includes an insightful analysis of the company's planned integration and the rationale behind the strategic move.

Additionally, the report presents an in-depth evaluation of the company's size, standing, and competitive position within the oil and feedstocks industry in Europe. It elaborates on the company's key value proposition and offers a concise summary of its main products, services, and operations. For a balanced perspective, similar information is also included for the other side of the deal.

This part of the oil and feedstocks M&A due diligence report also sheds light on the reasons behind the company's decision to sell, including any previous attempts to do so. Such insights are crucial for understanding the broader context of the transaction and assessing potential opportunities and challenges that may arise from the merger or acquisition.

The chapter answers the following questions:

• What are the goals, vision, mission, history, and values of the buy-side and sell-side companies?


• What are the strengths and weaknesses of both companies (SWOT Analysis)?


• What are the characteristics of the major products?


• What are the key factors behind the two companies' industry success?


• What is the reasoning behind the merger, acquisition, or partnership deal? How will it affect the current day-to-day activities of the companies?


• What are the expected synergies of a potential integration?

Market Research

The market analysis section provides an overview of the market size, dynamics, and segmentation in volume and value terms for the last five years in Europe. It also contains data on the market trends, competitive landscape, and various factors influencing the market's development. The section also gives a forecast for the market development in volume and value terms in the next six years. It answers the following questions:

• What are the size and the dynamics of the market in Europe in volume and value terms?


• How is the market segmented (by origin, product type, application, end-use, etc.)?


• Is the domestic market self-sufficient?


• What are the major trends and regulatory factors affecting the market?


• Which are the major companies on the market? What are their main characteristics?


• How intensive is the competitive landscape?


• What is the degree of competition based on Porter's five forces?


• What are the drivers and challenges affecting the market's development?


• How has the volume, value, and segmentation of production changed over the past five years?


• How is the value chain of the market formed and what is the structure of price formation?


• What are the average producer and retail prices on the market? How have their dynamics changed for the last five years?


• How has the volume, value, and segmentation of imports and exports changed over the past five years?


• What are the average import and export prices on the market? How have their dynamics changed for the last five years?


• How has the total consumption and the per capita consumption changed over the past five years?


• How will the market develop over the next six years under three possible scenarios (base, optimistic, and pessimistic)?

Operational Due Diligence

This section of the oil and feedstocks M&A due diligence report dives deep into the intricacies of the supply chain management of the target company and its current operations. It provides you with a fact-based understanding of the different supply chain stages, evaluating their resilience and efficiency.

This chapter will inform your decision regarding the compatibility of the supply chain with your own operations. It will also pinpoint any potential synergies after the agreement is finalized. It will also provide insight into any bottlenecks that might arise as part of the integration process. Furthermore, the section helps assess the overall ability of the target company to execute its day-to-day operations.

The operational due diligence chapter answers the following questions:

• What is the nature of the manufacturing process?


• What are the key phases of the operational process and their efficiency?


• Where are the main business facilities (production plants, offices, warehouses, and retail locations) situated? How do they support the operational activity?


• What is the availability of raw materials? Are there multiple sources of supply for critical inputs?


• Is there room for operational improvement? Are there any supply chain bottlenecks that are imperative to address?


• What is the degree of automation?


• What are the key assets owned by the firm, as well as their age, state, and value?


• What is the target company's operational performance? How does it compare to industry standards?


• How to ensure a seamless supply chain integration following the deal, and mitigate possible negative consequences on operations and overall customer experience?


• Will the post-integration capacity available be enough to meet current demand, or should additional investments be made?

Review of the Marketing and Sales Strategy

This section of the oil and feedstocks M&A due diligence report delves into the target company's sales and marketing strategies, advertising programs, and customer relationship management (CRM). It offers an in-depth analysis of the effectiveness of the target company's efforts to attract, retain, and expand its customer base in Europe. The report analyzes the product portfolio of the firm, enabling you to determine its compatibility with your current products in terms of positioning, pricing, and customer perception.

The analysis focuses on estimating the penetration rate of the products, the total serviceable market, and the actual realistically obtainable market post-integration. Thus, it assesses the growth potential of the products in Europe. That will help you select the proper strategy and market penetration tactics, which will support the establishment of your products and brand name, promoting loyalty, and positive customer perception.

This section of the oil and feedstocks M&A due diligence report also includes a consumer behavior survey with 250 respondents who align with the target audience profile. The survey provides directly applicable insights to your market of interest. It captures the sentiments and thought processes behind consumption decisions, offering a deeper understanding of consumer behavior. For a more tailored analysis, you have the option to include additional respondents and customize questions for an extra fee. Contact us with your specific requirements to enhance the service.

This chapter answers the following questions:

• Are your products positioned correctly on the market in Europe?


• Do your consumers perceive your product segments and brand(s) as you want them to?


• Is the company reaching out to the right customers for its business?


• What is the current marketing strategy of choice? Which communication channels are used to reach the target audience?


• Is the target company's marketing strategy efficient, including advertising, media, and other sales promotion programs?


• How many active customers has the business lost?


• What are the unique selling propositions (USPs) of the sell-side company's products? What are their strengths and weaknesses?


• Are the products of the target company superior to competing ones? In what respect?


• Are the products of the target company aligned with the overall reasoning behind the deal? Are they conducive to success, or will they act as an impediment?


• Will any changes to your current products be needed prior to the consolidation deal?


• How challenging would the successful integration of the marketing strategies be? How should you cope with difficulties in the process?


• What is the target company's brand identity and perception in the market?


• Will the strategic move unlock access to new markets and previously untapped consumer segments?


• Are there any seasonal sales patterns and factors affecting the company?


• What are the main types of distribution channels employed by the target company?


• How will the consolidation deal affect the marketing and sales results in terms of new sales channels, enhancements in customer perception, experience, and behavior?

Organizational Due Diligence

This section of the oil and feedstocks M&A due diligence report analyzes the recruitment and human capital management strategies, organizational structure, and the management team of the target company. It provides a detailed overview of the key decision-makers within the team, highlighting their qualifications and roles. This analysis is crucial for gaining insights into the company's leadership and their impact on its overall success.

Additionally, the report aids in understanding the various departments within the target company. It will identify essential employees, while also evaluating risks and opportunities associated with the workforce. This chapter is instrumental in guiding your decisions regarding the adoption of aspects of the organizational structure and culture. It also provides a basis for determining the necessity of recruitments or layoffs post-integration, ensuring a strategic approach to workforce management during the merger and acquisition process.

The organizational section answers the following questions:

• Does the target have a functioning organizational structure that enables effective decision-making and execution?


• What are the number and type of employees by department and geographic location?


• Who are the key leaders and executives in the management team?


• What are the backgrounds, experiences, and qualifications of the most important employees and managers? Can they support the considered strategic move?


• What recruitment and onboarding strategies are utilized?


• What are the employee relationship management policies in place?


• What social benefits are provided to employees?


• How are the working conditions assessed?


• Does the company have a high rate of employee turnover?


• What is the productivity of the labor force?


• Would any employee training be required before, during, and following the integration?

Based on the client's requirements we can provide optional research on employee sentiments and employer branding of the target company.

The organizational section of the report, enhanced by an employee survey, offers valuable insights into employee sentiments towards the company and their level of satisfaction. This aspect is pivotal in understanding the internal dynamics of the target organization.

Furthermore, it provides an opportunity to evaluate the strength of the target company's employer branding and its potential impact on future recruitment efforts. Such insights are essential for gauging the organizational health and the effectiveness of its human resources strategies.

This optional part of the chapter will answer the following questions:

• Is the current labor morale high enough to support the organizational fit between your company and the target company?


• What are employee perceptions of the organizational culture of the company?


• How is the target company culture characterized? Can clashes between the workplace cultures be expected? What can you do about them?


• How can the employer branding of the target company be assessed? If needed, how easy would it be to attract new talent to the team?

Financial Due Diligence

This chapter of the oil and feedstocks M&A due diligence report offers an extensive examination of the financials of the target company. It provides clear view into the company's financial standing by investigating cash flows, income statements, and balance sheet details. The primary objective of the financial due diligence chapter is to illuminate whether the investment aligns appropriately with the company's current financial health. This section equips you with a fact-based understanding of the target company's finances. Thus, it is essential for formulating a knowledgeable and financially prudent offer.

A thorough review of the company's finances will aid in developing key financial indicators, essential for painting an accurate picture of the company's financial status. Through financial modeling, you will gain a forward-looking view of the financial implications of the strategic deal.

The chapter also includes several key performance indicators such as Net Present Value (NPV), discount rate, Internal Rate of Return (IRR), Return on Investment (ROI), Profitability Index (PI), and the investment payback period. These indicators are instrumental in optimizing your business model from various financial perspectives. Notably, some of the world's leading financial institutions have endorsed new business ventures and projects based on the robustness of our financial models.

The financial section answers the following questions:

• How has the target company fared in the context of the market developments over the last few years?


• What is the historical revenue and profit margin of the business?


• What is the cost breakdown of the operations of the target company?


• How have the cash inflows and outflows of the target company developed over the last few years?


• What is the value of key assets the target company owns, including machinery, equipment, and intellectual property?


• Is the target company in overall good financial health?


• What is the overall effectiveness of the integration?


• How profitable is the consolidation project expected to be based on the internal rate of return (IRR)?

Possible Risks and Mitigation Strategies

This chapter of the oil and feedstocks M&A due diligence report looks at the risks that might challenge the possible integration, and post-deal operations. It analyzes the variety of business risks that could be expected across each main stage of the merger, acquisition, or partnership deal. These include risks associated with untapped synergies, overpayment or underpayment, integration challenges, cultural clashes, loss of key talent, commodity pricing, regulatory changes, interest rates, foreign exchange exposure, future capital requirements, and product life cycles.

This section answers the following questions:

• Are there any business risks that might hinder the implementation of the planned merger, acquisition, or partnership deal?


• What technical, operational, market, financial, or regulatory risks might appear following the consolidation in the short- and medium-term?


• What strategies should be employed to mitigate those risks and work around them?

Strategic Fit Due Diligence

This part of the oil and feedstocks M&A due diligence report aims to answer a crucial question - whether the consolidation or partnership is advisable for your business in light of the due diligence conducted. It showcases the key success determinants and the main hurdles to be overcome before, during, and after the deal. The section also provides a reasonable timeframe for different stages of the process.

The strategic fit chapter answers the following questions:

• Does the consolidation opportunity align with the vision, purpose, and goals of your business?


• What are the key success factors for the deal? Which challenges should you be mindful of? How can you efficiently address them?

Short Methodology

The oil and feedstocks merger and acquisition due diligence report is prepared using WMStrategy's proven research methodology. It includes a blend of qualitative and quantitative data. The market information comes from official sources and includes insights from at least 30 market experts (representatives of the main market participants), gathered through semi-structured interviews.

The oil and feedstocks M&A due diligence project goes through two main stages. The first step involves a tailor-made questionnaire. It will gather essential information about the buy-side and sell-side companies to support the development of the due diligence process framework. The second stage presents a detailed analysis of the target business to identify and address potentially significant areas of loss, liability, and potential areas of improvement.

A crucial component of the methodology is the consumer behavior survey. It is an indispensable tool for monitoring customer perception, sentiment, preference, and behavior. The oil and feedstocks M&A due diligence report includes a survey with 250 respondents, who align with the target audience profile. The survey methodology utilizes precision targeting to identify and engage respondents who closely match the profile of the target audience. Depending on your requirements, a survey with a larger sample of respondents can be commissioned and you can directly ask your target audience specific questions to get verified insights.

The approach also includes an in-depth financial analysis, which is built on carefully researched data. It will provide insight into the financial status of the target company and support your decision-making process on whether the reviewed strategic partnership is appropriate. The classic valuation method of discounted cash flow (DCF) is utilized. In the process, some key financial indicators are developed to measure the expected financial effects of the consolidation. The collected data is then applied in the analysis of the main business strategies, maximizing the synergies of a potential integration with the target company.

Due Diligence Report Benefits

• Get an insight-based due diligence, 100% developed for your specific business, taking into account your goals, needs, and targets;


• Achieve time and cost savings by reducing the risk of expensive errors and misunderstandings;


• Reduce the information asymmetry characteristic of M&A and partnership deals, and know what you get into in advance;


• Obtain evidence of the compatibility of the target company with your business;


• Vet your potential partner prior to engaging in long-term agreements;


• Conduct fact-based negotiations and deal structuring;


• Benefit from the disclosure of an appropriate level of clear and relevant information, thereby minimizing potential difficulties, promoting a smooth and trouble-free transaction for all parties involved;


• Eliminate potential inefficiencies and identify areas of possible cost savings by employing improved corporate planning and policy-making;


• Discover how your market of operation performed in the past (in the last five years) and how it will perform in the future (in the next six years);


• Base your acquisition offer on relevant data, and make sure you do not overpay or undersell;


• Track and identify market trends and insights on drivers behind recent market changes;


• Strategically assess the competitive position of the main market players;


• Understand how the deal would affect your product portfolio going forward;


• Find out which markets and customers you will gain access to following the deal, and ascertain if they are worth the investment;


• Assess what it would take to carry out a seamless supply chain integration process without disturbing your current activities;


• Get a glimpse of the corporate culture and values of the target company and their potential impact on the synergies;


• Increase your chances of securing investments through data-rich and easy to understand due diligence;


• Understand and evaluate in advance potential risks and receive recommendations on possible strategies to work around them;


• Assess growth potential, opportunities, demand drivers, and challenges in the market;


• Discover the unique selling points of the target company's products;


• Improve your pitches and presentations by using verified market data and expert insights.

Due Diligence Report Users and Target Audience

This oil and feedstocks M&A due diligence report is ideal for people involved in business transactions, mergers and acquisitions, and strategic decision-making, who need to gain a comprehensive understanding of the commercial activity of a company. The service will help you outline important operational aspects of the company you are interested in and assess the best way to go about seamlessly integrating the newly acquired venture or onboarding the new partner. The oil and feedstocks M&A due diligence report is tailored to an audience, which could include the following stakeholders:

• Investors (such as private equity firms, venture capitalists, and angel investors);


• Bank managers;


• Investment managers;


• Shareholders;


• Financial professionals;


• M&A managers;


• C-suite executives;


• Directors;


• Industry strategists;


• Marketing professionals;


• Business development professionals;


• Management consultants;


• Product developers;


• Product marketers and strategists;


• Product managers;


• Project managers.

Deliverables

• Detailed due diligence report in PDF format;


• Excel-based, editable financial model covering several possible scenarios that will serve as a benchmark to estimate the post-integration performance in terms of marketing, financial performance, supply chain, etc.;


• Compelling investor pitch deck PPT presentation.