Cross-border food sector acquisition: closed 15% below asking price

The Challenge

A leading Spanish food group with €120 million in revenue and a market leadership position in the preserved foods and prepared meals segment had identified a Portuguese competitor as a priority target for accelerating its expansion in the Portuguese market. The target company, with €35 million in revenue and an established presence in Portuguese modern retail distribution, was the right asset at the right time.

However, the Spanish group had never closed an acquisition outside Spain. The challenges were multiple: understanding the specifics of the Portuguese legal and tax framework, coordinating a multidisciplinary due diligence in a bilingual environment, correctly valuing a business with accounting practices different from Spanish standards, negotiating a Portuguese-law SPA with the selling bank (which had enforced collateral following the original owner’s insolvency), and managing the notification to Iberian competition authorities.

The seller had published an indicative price of approximately 7.5x EBITDA, in line with the sector median, and was running a competitive process with three other potential buyers managed by a Portuguese M&A firm.

Our Approach

We structured the project in four parallel workstreams managed by specialist teams reporting to a single project director.

Commercial, financial, legal, and tax due diligence was executed over six weeks, with local teams in Portugal coordinated by BMC. The financial analysis identified irregularities in revenue recognition in the prior two financial years and unprovisioned contingent labour liabilities of approximately €2.5 million. These findings became the primary negotiating lever.

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 liabilities identified in due diligence, placed the correct price between 5.8x and 6.5x EBITDA.

We submitted our binding offer at 6.0x EBITDA accompanied by a bank financing commitment letter and an eight-week closing timeline — a factor the seller, a bank with an interest in liquidating the asset, valued significantly. After three rounds of negotiation, closing was agreed at 6.2x EBITDA.

We managed the joint notification to the Spanish competition authority (CNMC) and the Portuguese Autoridade da Concorrência through the single-stop mechanism, obtaining clearance within six weeks.

Results

The transaction closed in five months from the initial mandate, below the typical timeline for transactions of this complexity. The final price was 15% below the seller’s initial indicative price, generating 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, logistics, and elimination of duplicated 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.