Buy-Side Financial Due Diligence Delivered in 14 Days

Fagron’s Acquisition of Magilab

Buy-Side M&A Advisory in Hungary

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Overview

When Fagron’s due diligence process stalled late in the transaction, the buyer lacked an independent and defensible financial basis to hold the purchase price through final negotiations. Full-scope financial due diligence was rebuilt and delivered in under 14 days, allowing the acquisition of Magilab, a Hungary-based supplier of magistral pharmaceutical ingredients and laboratory services, to proceed to signing within the originally agreed valuation range.

Company: Fagron 

Industry: Pharma, Personalized medicine

Location: Hungary

Transaction type: Buy-Side M&A

Duration: 14 days due diligence + 1.5 months to signing

Website: https://fagron.com/ 

Status:  Successfully closed 

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The Transaction

Fagron is a global personalized medicine company with operations across multiple markets. Magilab is a Hungarian magistral pharmaceutical ingredients supplier and laboratory,  a specialized local asset in a sector where Fagron was expanding. Ferdinand was engaged to deliver buy-side M&A advisory and complete financial due diligence ahead of final negotiations and signing.

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What Happens When Pricing Relies on an Unclear EBITDA?

The due diligence process had stalled at an advanced stage of the transaction, leaving key financial areas unresolved, including EBITDA quality, working capital dynamics, and accounting adjustments.

With signing approaching, the buyer did not yet have a complete and defensible financial basis for final negotiations. In parallel, a revised EBITDA view introduced by the seller created pressure for a potential valuation adjustment at SPA stage. A full-scope financial due diligence rebuild was required within a two-week timeframe to restore clarity and support the transaction through to signing.

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Buy-Side Financial Due Diligence in Under 14 Days

Ferdinand mobilized within 48 hours of engagement and rebuilt the financial due diligence workstream from the ground up, using audited financials and management inputs rather than relying on the stalled prior process.

The work included:

• immediate red-flag reporting and targeted data requests
• full-scope financial due diligence completed in under 14 days
• bridge-ready outputs for valuation and negotiation
• counter-analysis during SPA-stage pricing discussions: 

At SPA signing, the seller attempted to re-open the purchase price on the basis of a revised 2025 EBITDA forecast. Ferdinand responded immediately, drawing on the normalized EBITDA and quality of earnings work already completed to challenge the seller’s position. The revised forecast was not supported by the audited historical financials and the analysis built on them, allowing Ferdinand to support the buyer’s pricing position.

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What the M&A Due Diligence Found

The stalled process left Fagron exposed across several key areas. Ferdinand’s QoE work and supporting analyses identified the following:

EBITDA normalization: Non-recurring items were stripped out, IFRS reclassifications were completed, and accounting adjustments were applied across the P&L. The resulting normalized EBITDA provided a robust basis for assessing profitability and for transaction pricing.

Working capital: Clean working capital established as the basis for the completion mechanism and pricing corridor.

Customer concentration: Concentration risk quantified and flagged. An item with direct implications for post-closing revenue sustainability that the previous process had not resolved.

Inventory ageing and obsolescence:  Inventory analysis completed as part of operational due diligence. Obsolescence provisions assessed against what had been reported, with material adjustments identified.

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“During our recent transaction, Ferdinand Investment Partners stepped in effectively and provided clear, workable insights at the moments they mattered most. The team was consistently on time and on target, with advice that was practical, deal-driven and directly usable in negotiations and execution. This is the kind of advisor you want around the table to get transactions done.” 

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– Michaël Dillen, Global Business Development Manager at Fagron

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The Outcome: Transaction Closed Within the Original Pricing Corridor

The acquisition was successfully completed within the originally agreed valuation range.

Key results:

• Full-scope financial due diligence delivered in under 14 days
• Quality of Earnings analysis, EBITDA normalization, and IFRS reclassifications completed within the first week
• Customer concentration risk and inventory obsolescence identified and quantified
• Late-stage valuation re-trade prevented at SPA stage
• Transaction closed within the original pricing corridor

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“ Our team delivered full-scope financial due diligence in less than 14 days, completing EBITDA normalisation, accounting adjustments, and margin diagnostics. The work provided clarity on underlying profitability and helped avoid a late-stage valuation re-trade, allowing the transaction to close within the initial pricing corridor.”

– Réka Fekete, Ferdinand Investment Partners

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Press release of Fagron’s Acquisition of Magilab

Fagron. (2026, February 5). Fagron obtains regulatory clearance for the acquisition of Vepakum in Brazil and completes the acquisition of Magilab in Hungary. Fagron.

S&P Capital IQ. (2025, November 23). Fagron NV acquired Book of business from MAGILAB Korlatolt Felelossegu Tarsasag. MarketScreener.

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Frequently Asked Questions

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What does financial due diligence actually cover in a mid-market acquisition, and why does it matter at SPA stage?

Financial due diligence in a mid-market acquisition covers EBITDA normalization, quality of earnings analysis, working capital assessment, identification of non-recurring items that distort reported profitability, and where applicable IFRS reclassifications. It matters most at SPA stage because purchase price is routinely re-opened, most commonly by the buyer on the back of identified risks, but occasionally by the seller on the basis of revised forecasts or adjusted EBITDA presentations. Without a defensible, independently reconstructed financial baseline, buyers have no counter-position and late-stage valuation re-trades become very difficult to resist. In the Fagron–Magilab transaction, Ferdinand delivered full-scope financial due diligence in under 14 days, producing a normalized EBITDA and QoE output that directly neutralized a seller-initiated repricing attempt at SPA signing.

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What are the most common risks that stall or derail a buy-side M&A process at an advanced stage?

The most frequent late-stage blockers in mid-market acquisitions are: 

• accounting quality that exposes the buyer post-closing;
• unresolved risks in customer concentration and  inventory accuracy;
•  seller-introduced valuation adjustments (revised EBITDA, restated working capital) without a counter-analysis basis; 
• an incomplete or inconclusive due diligence workstream that cannot support final negotiations.

A stalled DD process is particularly dangerous because it gives the seller informational leverage at precisely the moment the buyer needs clarity to hold the pricing corridor. In the Fagron–Magilab case, the prior DD process had left these areas open. Ferdinand rebuilt the financial workstream from audited sources within 48 hours of engagement and resolved each item before SPA.

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How do you normalize EBITDA in an acquisition, and why can't buyers rely on management's presentation?

EBITDA normalization involves stripping out non-recurring income and costs, adjusting for related-party transactions, correcting accounting treatments that inflate reported profitability, and where applicable IFRS reclassifications. Management presentations are structured to present the business in its best light and they are not audited against transaction-specific standards. Buyers who rely on management EBITDA without independent reconstruction risk overpaying, miscalibrating the pricing corridor, or accepting seller forecasts that cannot be verified against historical performance. In the Fagron–Magilab transaction, normalized EBITDA and full QoE work were completed within the first week of a 14-day DD process, providing a profitability baseline independent of management's view.

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When does a buyer need external buy-side M&A advisory support, even if they have done acquisitions before?

Experienced acquirers most commonly benefit from external buy-side advisory support in three situations: 

• when entering a new geography or sector where local market knowledge and audited deal data are not available internally; 
• when the transaction timeline compresses and internal capacity cannot deliver full-scope DD within the required window; 
• and when a stalled or incomplete prior process needs to be rebuilt quickly without creating delay. 

In the Fagron–Magilab case, Fagron, a global personalized medicine company with prior acquisition experience engaged Ferdinand specifically because the existing DD workstream was incomplete at a late transaction stage and the timeline to SPA was fixed.

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What is a quality of earnings analysis and why is it used in M&A due diligence?

A quality of earnings (QoE) analysis is an independent assessment of the reliability, repeatability, and accuracy of a company's reported earnings. It goes beyond reviewing audited financials to evaluate whether EBITDA reflects sustainable operating performance or whether it is inflated by one-time items, favorable accounting elections, or non-cash adjustments. In an M&A context, QoE directly informs the purchase price and the negotiating position at SPA. It is the analytical foundation that allows a buyer to defend the agreed valuation range against seller-initiated repricing. In the Fagron–Magilab transaction, QoE and EBITDA normalization were completed within the first week of a 14-day financial due diligence engagement.

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How is customer concentration risk assessed in a buy-side due diligence, and why does it affect post-acquisition valuation?

Customer concentration risk quantifies the proportion of revenue attributable to a small number of clients, and assesses the contractual, relational, and historical basis of those relationships. It directly affects post-acquisition valuation because concentrated revenue is inherently less sustainable, the departure of one or two key clients post-closing can materially alter the EBITDA profile that justified the purchase price. In transactions, unresolved customer concentration is also a common basis for earn-out or holdback mechanisms. In the Fagron–Magilab DD, Ferdinand identified and quantified customer concentration risk as a specific flagged item, after the prior process had left it unresolved.

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How quickly can full-scope financial due diligence be completed without compromising quality?

Full-scope financial due diligence can be completed in 14 business days when the engagement begins from audited financials and management inputs rather than relying on a pre-existing process, and when the advisory team mobilizes immediately. Compressed timelines require immediate red-flag triage, prioritized data requests, and parallel workstreams across EBITDA quality, working capital, and key risk areas. The alternative, extending the timeline to accommodate a slower DD process, typically gives sellers more leverage in SPA negotiations and increases the risk of deal drift. In the Fagron–Magilab transaction, Ferdinand mobilized within 48 hours and delivered complete financial due diligence, QoE analysis, and bridge-ready negotiation outputs in under 14 days.

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