Ignatov & Company Group - Business Consulting - Acquisition & Alliance consultingOur team provides Acquisition & Alliance consulting to our global clients since 2000. We do a full range of services – like assistance in development of acquisition selection criteria, identification of acquisition candidates and their screening, basic and investment-grade profiling, opportunity evaluation, acquisition process support, including (but not limited to) pre-feasibility studies, feasibility studies, assisting for all legal issues regarding acquisition and/or take over agreement conditions etc., regulatory and permission consulting, assistance in negotiations. 

Case study


A group of investors from the Southeast Asia decided to acquire coalmining assets in Russia; they contacted us to assist them in the process – from the search of the acquisition targets to consulting support at the negotiation and contract stages.


Stage 1: We started the job with provided a list of Russia’s coalmines and coalfields split into 3 categories:

a) Active coalmines that have the appropriate infrastructure, and where the extraction of coal is currently being conducted. Such mines are the most «adapted» to the immediate coal extraction, they don’t need any investments to their infrastructure, but all of such Russian mines already have proprietors of some kind. The Russian ferrous metallurgy was growing by fast rates and it had strong requirements both in coking coal (for coke manufacturing) and energy coal (for producing of energy for metallurgical works’ needs). Almost 70% of the Russian active coalmines are owned by the Russian metallurgical holding or integrated iron-and-steel works. Such holdings/works are experienced market players, they have large free financial resources, and they will not purchase their coal assets. To fight with them for the coal property it’s necessary to have large financial reserves. The rest 30% of the Russian active coalmines also have the proprietors but these shareholders are not metallurgical holdings (they are mostly the financial intermediates who want to re-sell the shares to the end-proprietors). The Russian metallurgical holdings also wanted to increase their coal-related possibilities, so if to try to purchase the shares of such coalmines (i.e. large-size mines with annual capacity in 2-5 million tons and that are not still affiliated with the metallurgical holdings) the investor would compete with the Russian metallurgical holdings.

b) Semi-finished coalmines. This category includes 2 sub-categories – mines at conservation; and mines under construction. These mines need investments of two types – to purchase their shares (but such shares are cheaper than the shares of active coalmines), and to finish the construction (or to de-conserve the mines). By gathered information, the most of such mines have a 75-80% level of readiness, so the investor had to invest money to finish 25-30% of construction work. These coalmines were also interesting for the Russian metallurgical holdings but the level of competition here was much lower than per active mines.

c) Non-developed coal deposits. Russia has huge reserves of coking and thermal coal. There are many discovered coal deposits that need preliminary investments before they become complete active mines. The investor potentially could purchase the licenses at such deposits (without any competition with the Russian metallurgists) but in such case investor had to invest money into the construction of deposit’s infrastructure.

Thus in Stage 1 we developed a list of possible acquisition candidates.  We compared the characteristics of the candidates against investor’s selection criteria.  The process included:

  • Generating a master list of all industry participants who were not affiliated with steel-makers
  • Comparing the master list of industry participants with investor’s selection criteria to determine which sources (companies/mines) were most appropriate and warrant further evaluation
  • Providing a brief description for each candidate included to a list

After the investors investigated the list of Russia’s coalmines/coalfields they – together with our team – re-formulated their investment requirements; in particular based on our input over current price per 1 ton of in situ coal reserves the investors decided their initial vision over investment sum has to be increased almost twice.

The investors selected 5 coalmines for in-depth investment analysis with our team.

Stage 2: We completed a detailed, investment-grade analysis of select acquisition candidates, including a thorough evaluation of the company’s worth to the investors.

For each candidate selected with investor after Stage 1 we provided the following information:

A. For existing businesses

1. Company level (i.e. information for legal entity, a mining company)

  • Coal (iron ore) cost structure
  • Calculation of investment efficiency (IRR/ROI)
  • Mining and transportation machinery fleet
  • Management
    • Key decision makers
    • Depth of management
    • Management style
  • Affiliated companies
  • Logistics data (which seaports are used, distance to such seaports, own rail cars, operators with whom they work, transportation alternative routes, etc.)
  • Extended data for owners (education, career background, political ties, other business assets, participation in clans and business groups, participation in business conflicts and scandals)
  • Key financials (sales, profit, cost of assets, debts, net worth)
  • Customer base (domestic sales, export)
  • Corporate risks

2. Mine level (i.e. information for each mine within the company)

  • Facility characteristics
  • Mining technologies used
  • Geological characteristics
  • Mining risks

B. For greenfield projects

  • Infrastructure
  • Geological characteristics
  • Reserves
  • Required investments, including license cost
  • Potential annual capacity and production
  • Calculation of investment efficiency (IRR/ROI)
  • Mining and operational risks

Stage 3: Based on in-depth investment grade analysis the investors selected 2 coalmines that fitted their requirements. One of them was an operable mine and the 2nd – the greenfield project.

In Stage 3 we did due diligence for the operable coalmine as well as pre-feasibility and feasibility studies for the greenfield project. 

Click here to see how we do company due diligence at investment and acquisition projects.
Click here to see how we do feasibility studies.



Our client selected two potential projects for investments and began negotiations with the operable coalmine's owners and with the governmental agencies (holder of the license for greenfield project, regulators, etc.). Our staff assisted the client in such negotiations.