Cross-Border Food M&A Spain: Acquisition Case | BMC

Client Background

A leading Spanish food group with €120 million in revenue and a market leadership position in the preserved foods and prepared meals segment had reached a size where organic growth alone could not achieve its medium-term ambitions. The company had identified the Portuguese market as a priority for geographic expansion, but building from scratch in a market with different regulatory requirements, distribution relationships, and consumer preferences would take years.

The strategic thesis was clear: acquiring an established Portuguese competitor with existing retail distribution relationships and production capacity would deliver market position in twelve months that would otherwise take five years to build organically. The target — a company with €35 million in revenue and an established presence in Portuguese modern retail distribution — was the right asset at the right time. The obstacle was that the Spanish group had never closed an acquisition outside Spain, had no prior relationship with Portuguese advisers, and had no M&A team internally.

The Challenge

The complexity of the transaction was compounded by the competitive process the seller was running. A Portuguese M&A firm was managing a structured sale with three other potential buyers, which meant the Spanish group needed to move quickly and submit a credible, well-funded offer on a compressed timeline.

Beyond speed, there were substantive complexities. The target was being sold by a bank that had enforced its collateral following the original owner’s insolvency — meaning the counterparty was a financial institution optimising for exit price and certainty of close, not a founder selling a business they had built. The accounting practices of the target differed from Spanish standards in ways that affected comparability of historical financials. And the transaction required parallel competition filings in Spain and Portugal, adding regulatory timeline risk on top of the commercial and legal complexity.

The seller had published an indicative price of approximately 7.5x EBITDA, in line with the sector median. The Spanish group’s internal financial projections suggested this price was only justifiable under an optimistic synergy scenario — which meant the deal’s economics depended on identifying and quantifying negotiating leverage during due diligence.

Our Approach

We structured the project in four parallel workstreams managed by specialist teams reporting to a single project director, with weekly integration calls to ensure findings in one workstream were immediately available to others.

Commercial, financial, legal, and tax due diligence was executed over six weeks, with local teams in Portugal coordinated centrally by BMC. The financial analysis identified two material findings: irregularities in revenue recognition in the prior two financial years, where promotional rebates had been recognised in periods that inflated reported EBITDA, and unprovisioned contingent labour liabilities of approximately €2.5 million arising from a social security reclassification dispute. These findings became the primary negotiating lever in the price discussion.

The valuation was performed using DCF (base, optimistic, and conservative scenarios) and a multiples analysis benchmarked against seventeen comparable transactions in the European food sector over the prior five years. The fair value range, adjusted for the identified liabilities and restated EBITDA, placed the correct acquisition price between 5.8x and 6.5x EBITDA — meaningfully below the seller’s indicated 7.5x.

We submitted the binding offer at 6.0x EBITDA accompanied by a bank financing commitment letter and an eight-week closing timeline — a factor the seller valued significantly given its institutional interest in a clean and rapid exit. After three rounds of negotiation supported by detailed financial exhibits from our due diligence findings, closing was agreed at 6.2x EBITDA.

We managed the joint notification to the CNMC and the Portuguese Autoridade da Concorrência, obtaining clearance from both authorities within six weeks through a coordinated process that pre-empted the main substantive concerns.

Results

The transaction closed in five months from the initial mandate — below the typical timeline for cross-border transactions of this complexity. The final price was 15% below the seller’s initial indicative price, representing savings of approximately €5.3 million for the buyer.

The post-merger integration plan delivered at closing identified €8 million in recurring annual synergies, primarily in procurement through volume aggregation, logistics network rationalisation, and elimination of duplicated SG&A functions. Eighteen months after closing, the group had fully integrated the Portuguese operation and exceeded 80% of the synergy targets identified in the original plan. The Portuguese business contributed positively to group EBITDA from month seven.

Key Takeaways

In competitive M&A processes, the buyer who wins is not always the one who pays the most — it is the one whose offer is most credible. In this case, the combination of a well-funded financing commitment, a compressed closing timeline that the seller valued, and a negotiating position anchored in documented due diligence findings — rather than price sensitivity — produced an outcome 15% below the asking price in a three-bidder process. The due diligence investment paid for itself many times over in negotiating leverage.