If 2018 was a remarkable year for the Italian M&A sector, both in terms of number of transactions and value, 2019 started with a net drop continuing the outlined trend of last year´s fourth trimester. This, reflecting a complicated Italian and European scenario.
According to KPMG´s report on Italian M&A activity, volumes remained almost unchanged at 165 transactions against the 167 closed the previous year. However, a significant drop in the market is observed in the value of transactions: The first trimester of 2019 recorded closed operations for 4.3 billion euros; less than half the 10 billion in the first quarter of 2018 (see chart below for more data)
According to experts, the main reasons for the contraction are to be found in (i) the uncertain political framework (Internal political instability as well as external: Brexit, the European elections, the change at the top of the ECB), (ii) the slowdown in expected GDP growth, but, above all, the average expected multiples on the Ebitda of companies on the market, which 2018´s very high values the market does not regard as sustainable expectations (10x vs 8.3 in 2015, 7x in 2010 and 7.6 in 2005 for Private Equity and strategic acquisitions- KPMG). In addition, due to the mentioned political and economic framework debt for acquisitions is less readily available.
In this context, however, there are sectors of the market that continue to progress. Cosmetics, design and furnishings, the software world and food are sectors that will continue to prosper in the coming months of 2019. The sectors with low technological and innovative content (manufacturing sectors and producers of intermediate goods), are instead those that risk suffering the most.
According to some observers, the remainder of 2019 will be a “not very lively year” and characterized by strong caution with more contained multiples; always keeping in mind that in a country with a strong manufacturing vocation like Italy the “industrial logic” tends to prevail over financial trends.
Post by Studio Alberti.
BAUM, together with BSK, closes the first round of financing of Alias Robotics for an amount of 750,000 euros, which will be completed with a second round of financing for another three million euros in 2020. This investment has been provided by the founders of the startup, as well as by several private investors, including Baron Capital and other professional investors.
In this time, Alias Robotics has made a niche worldwide with the development of a product for robotics that allows analysis of the behavior of industrial robots, identifying malfunctions, external computer attacks or alterations of the 'Blackbox' that controls the operation of these robotic devices. The Spanish company's business forecasts for 2019 will multiply by 10 the business registered in 2018, surpassing those foreseen in the firm's strategic plan.
In parallel, Alias Robotics is offering and consolidating its security consulting services for companies that use robots for their automation processes as well as for robotics manufacturers. Among them is one of the leaders in the field of collaborative robots: Acutronic Robotics. More here.
Post by BAUM.
Bitkom has published a recent survey conducted by Bitkom Research on the use of artificial intelligence in German industrial enterprises. According to the survey 12 percent of German industrial enterprises are already using artificial intelligence in the context of Industry 4.0.
49 percent of companies interviewed expect that machine learning, allowing for an exchange of data from different sources, error prediction and problem solving in the context of Industry 4.0 will profoundly change existing business models. Artificial intelligence in smart factories is expected to improve scalability and reduce costs especially for personnel, maintenance, inspection and development.
With regards to connectivity in general more than half of the companies surveyed are using special applications for Industry 4.0 and 21 percent are planning to do so. On average approx. one quarter of all machines in the German manufacturing industry are already linked to the internet. See all survey results in Bitkom’s April 1, 2019 press release.
Post by S. Legtmann
3D printing is set to have radical implications on manufacturing companies. With the pace of technological development in the sector, manufacturer´s sourcing practices and production strategies are entering a new dimension.
According to the 3D Printing Industry site, 3D printing market is expected to reach USD 30.19 billion by 2022, at a CAGR of 28.5% between 2016 and 2022. 3D printing is used to develop prototypes and end products in industries such as automotive, medical, aerospace, defense, dental, art, architecture, fashion designing, biomedical, jewelry, interior designing and more. Electronics, spacecraft, construction, organ transplantations, food, robotics and other industries have also started adopting the 3D printing technology. The market is expanding rapidly,and is now focusing on the production of end parts with the development of technologies and metal powdered materials.
Desktop Metal, a company that this summer raised $115 million from a group of investors, including Google Ventures, epitomizes this boom. Desktop Metal’s claim to fame is that it’s platform can be used to 3D print things in metal 20 times cheaper and 100 times faster.
Desktop Metal is not the only company showing great progress. Australian Titomic’s printer can print a titanium bicycle frame in 25 minutes, a test de force that helped the company record an impressive IPO on the Australian stock market. NASA has also been working with 3D printing to make rocket parts.
As is often the case, new technological solutions and advances have led to M&A activity. The driving factors behind the increase in M&A activities include the need to increase scale, substantial growth of startup companies, the intense competition, and the need for companies to improve their technology, product, and services portfolio.
GE’s acquisitions of Arcam and SLM Solutions, worth a combined $1.4 billion, is the start to M&A good times for 3D printing.
Other large companies are making similar acquisitions: Siemens, acquired Material Solutions and HP bought David Vision Systems, pointing out a target to establish itself as a producer of 3D printers that can print objects in metal.
In the start-up landscape, CB Insights data shows that funding activity is also on the rise, with Ultimaker picking up $17 M and Carbon 3D $81 M.
The race for competition in the market will still intensify in an extraordinary way, making new products and innovations lead to an increase in product/service extensions, which in turn will boost M&A activity in the sector.
Post by A. Arteaga
Since the beginning of the year, 224 mergers and acquisitions transactions have been carried out in Portugal, totaling a closing of 16 billion euros. These figures represent respectively a 12% decrease and an 81% increase over the same period in 2017. And the value of operations this year is inflated by the takeover bid launched in May by China Three Gorges over EDP – Energias de Portugal, amounting to EUR 9.1 billion.
Sectors such as real estate, technology, finance, and tourism & hotels, respectively registered 57, 33, 23 and 18 transactions.
In September, there were 22 deals, - which represent a drop of 21% - for a total of 224 million euros, 26% down in comparable terms.
These numbers includes Mergers and Acquisitions, Private Equity and Venture Capital.
Posted by V. Afonso
Investment activity in the vacation rental sector, a specific sector within travel tech, is intense.
The growth of platforms such as Airbnb has generated a set of companies and business models focused on providing services to this new holiday model: channel or reservation managers, property managers, ...
Recent operations have refocused on the sector, such as the $8.5 million round closed by Properly, a provider of cleaning services for owners, or the $64 million B series closed by the property manager VACASA.
Such is the attraction of the sector that traditional players such as Accor (hotels) or SOCIMIS (Real Estate Investment Companies) have placed the focus of investment in the vacation rental sector.
The question now is whether this amount of investment will allow the sector to evolve in a healthy way in the medium term.
Post by A. Arteaga
DealRoom is an industry leading virtual data room software, as well as the only solution that combines file sharing with project management for mergers and acquisitions (M&A) due diligence. Elit Capital is an independent firm, specialized in financial and strategic advisory for corporate transactions, M&A, complex divestments and cross border deals, focused on maximizing clients shareholders value and a member of ICFN.
The strategic partnership between DealRoom and Elit Capital will leverage an unparalleled level of capability and global reach to offer corporate M&A solutions which ensure a 40% faster due diligence process along with analytics that track buyer behavior.
Through this partnership, the companies will collaborate closely on product development and broad customer engagement in order to further educate the industry on agile M&A and its benefits. Agile M&A enables an iterative process that focuses on client needs first, puts team interaction over tasks, and adapts to the current project state instead of following an inflexible plan.
Speaking about the partnership, Daniel Rivera, Elit Capital’s CEO, said: “A key part of Elit Capital’s strategy is growth within mergers and acquisitions. This partnership with DealRoom further enhances the skills and capabilities to accelerate our ambitions in this sector.”
Kison Patel, CEO of DealRoom added: “DealRoom has always been an innovative and customer-centric company, so we are pleased share our software as a value add. The capability fit between our two companies is very clear. Beyond that, we are excited about this opportunity because we share a common belief in efficiency for our customer. Our complementary capabilities and shared values make me confident that this partnership will flourish.”
Post by D. Rivera
We are witnessing a real revolution in business law.
On the one hand, the main technological trends of our times (robotics, artificial intelligence, bitcoin and blockchain, industry 4.0,...), represent a challenge for legal firms to be able to advise their clients in these sectors, and require constant investment in training and new technologies.
But, even more importantly, these technological trends, especially artificial intelligence, have a direct impact on the sector, mainly by automating repetitive processes with little added value. A new wave of startups has arrived to create a new sector, legaltech, made up of companies that generate technology for the legal sector (according to Thomson Reuters, in recent years the number of patents in the legal field has multiplied by 5), and tech-centric alternative legal providers (Axiom Law).
All major firms worldwide have their own developments in artificial intelligence. And even the Big Four are adopting certain strategies in this field (for example, the recent acquisition of Riverside Legal, a technology-based legal advisory firm).
Post by A. Arteaga
The Dutch M&A market is, equal to the European market, at its highest point in 10 years. Due to the large amount of capital flowing in to the market and private equity shifting to smaller (mid market) deals, prices still increase. As a result the Dutch mid market shows a yearly significant increase in the number of deals. The ‘hunger’ for deals by private equity and the large amounts of capital made the average mid market transaction multiples show an increase year on year.
The recent average transaction multiples (EBITDA) per industry and the % of transactions per industry are as follows:
- IT 6,1 (17%)
- Healthcare 6,0 (6%)
- Wholesale 5,65 (12%)
- Agricultural & Food 5,5 (5%)
- Industry 5,25 (16%)
- Services 4,95 (21%)
- Advertising & communication 4,65 (3%)
- Building & Construction 4,05 (8%)
- Hospitality / tourism 4,0 (5%)
- Automotive, transport & logistics 3,75 (5%)
- Retail 3,65 (2%)
Since transaction multiples have shown a year on year increase the last few years and private equity and strategic buyers are still looking for interesting deals (add ons) in the mid market, more and more business owners are now considering to sell their business.
Post by B. Brusche
The Spanish province of Castellón continues to play a leading role in the consolidation of the tile sector. A consolidation process driven by private equity. Some of these companies (Equipe and Rocersa) have passed bankruptcy proceedings due to the financial crisis and have emerged stronger thanks to the increase in exports.
Miura Private Equity has recently taken a majority stake in the tile manufacturer “Equipe Cerámicas” for an estimated value of €80M, which represents a multiple of about 6x ebitda. Additionally, Rocersa, which also faced real struggle during the crisis, is now experiencing an increase of about 20% in the turnover (€50M). Indeed, Rocersa has been acquired by an American investment fund, Avenue Capital. Even though the value of the transaction remains unknown, the debt is to be restructured in order to obtain profitability.
Last but not least, SK Capital Partners have just materialized the acquisition of Halcón Cerámicas, which turnover in 2017 was about a 130 millions €. The transaction means around €180M Enterprise Value and represents a multiple of about 6x ebitda (€30M).
Post by A. Arteaga
Post by M. Hirt
Posted by M. Hirt
ICFN members met on April 24, 2018 for the fourth ICFN Global Summit. New Alliance Members for Asia and the UK were introduced to the Network. Exchanging ideas on how to facilitate and stimulate deal flow through the network and further increase value to ICFN members‘ clients the meeting brought new adjustments to ICFN strategy to line up with the growth of the network. In 2018/19 ICFN will be further expanding its geographical scope covering selected additional regions worldwide.
Drawing on +25 years of successfully winning business in investment banking, corporate finance advisory and high-end management consulting services, HIRT&FRIENDS has put together a comprehensive and action-oriented package of high-impact measures to win new clients, develop existing client relationships and dramatically accelerate business development & growth of investment banks and corporate finance advisory firms. To learn more, contact ICFN Director & Founding Member Michael Hirt here.
On September 21st Van Beest acquired the majority of the shares of Irizar Forge. Founded in 1922, Van Beest is the leading manufacturer of premium quality below-the-hook lifting and lashing fittings such as Green Pin® shackles, Excel® hooks and Tycan® chain.
BAUM PARTNERS has provided full legal and financial support to the transaction.
SONY has invested in Acutronic Robotics, a Swiss company which specialises in the Hardware Robot Operating System (H-ROS).
One of the companies associated with Acutronic is Erle Robotics, which has built a range of components and machines, such as drones, small cars, and computing boards.
BAUM PARTNERS has provided legal support to part of Acutronic´s shareholders, with regard to the Shareholders Agreements and other collateral agreements.
This week, ANTOLING GROUP, the industrial group based in Burgos, northern Spain, has announced an increase of 50% in the turnover during 2016 (5.215 million€), with an investment of 380 million€, mainly focused on new green-fields in USA and China.
CIE AUTOMOTIVE, the Basque Group, also increased the sales a 9% (2.879 million€), with an EBITDA of 407 million€ (+11%), while executing several acquisitions in USA (NEWCOR), India (BILL FORGE) or Spain (AMAYA TELLERIA).
And GESTAMP, the third big player, plans a 3.900 million€ listing, while announcing 7.549 million€ in sales in 2016.
These three TIER-1 and 2 global manufacturers are the best example of an industry (Spain is the eighth car manufacturer in the world) that has adapted to the requirements of the OEMS, and that at the same time has increased the efficiency and profitability.
In fact, the Spanish Automotive Sector turnover represents 10% of GDP and 19% of the total national exports. There are 9 multinational brands and 17 manufacturing plants all over the territory.
And the auto-parts industry, with 720 groups and added turnover of 30.000 million€, are one of the key factors for the success of the automotive industry in Spain.
The standard methods used for the evaluation of companies are mainly based on the following elements: appraisal of qualitative and quantitative elements, analysis of the organizational structure, portfolio of assets, the financial structure, risk profile and sustainable profitability of the enterprise. As control methods, usually the evaluation process compares the results from the main method, i.e. the analysis of the fundamentals, with the values of the so-called Method of Comparable Transaction Multiples. This method, estimates the value of the company considering comparable M & A transactions occurred in the market. The following table lists the multiples from transactions, which have been completed in Italy in the last 6 years in the IT-Application Industry:
By 2020 approx. 73% of vehicles produced worldwide are expected to be sold in emerging markets, with Asia-Pacific and South America accounting for 55% and 10% of this total respectively. The number of new car registrations in the Indian market is expected to exceed new registrations in Europe by 2020.
Given this growth scenario and due to
UC Capital sees attractive opportunities for European companies/SMEs in the Indian market.
Thanks to their existing technology, know-how and advanced solutions they are seen as well positioned to enter this market and to consider establishing alliances and partnerships with well-established local players. More here.
In spite of ongoing uncertaincies in the economic outlook German companies are increasingly interested in acquisitions. 61% of German companies surveyed in the most recent Ernst&Young „Capital Confidence Barometer“ (Oct 2016) are intending to invest in acquisitions within the next 12 months – up from 50% six months ago. This marks the highest value since the start of the survey in 2010. For companies worldwide the number went up to 57% from 50% six months ago. German companies are mainly looking for acquisitions in Germany with France, Switzerland, the US and Italy also being considered attractive markets for investments. Digitalization of major industries is seen as one of the driving factors for increasing M&A activity with companies adjusting their portfolios to enable new business models.
ICFN members met on November 17, 2016 for the second ICFN Global Summit in 2016. Exchanging ideas on how to facilitate and stimulate deal flow through the network and further increase value to ICFN members‘ clients the meeting brought new adjustments to ICFN strategy to line up with the growth of the network. In 2017 ICFN will be further expanding its geographical scope covering selected additional regions worldwide.
According to a recent survey by DBK INFORMA, the road transportation market in Spain grew more than 2% in 2015 with total sales of EUR13.500m. Profitability is also steadily growing, due to an increase in demand and lower costs. Roughly, 80% of the turnover is originated within Spanish borders. Nonetheless, one of the main characteristics of this activity in Spain is the high level of atomization with almost 100.000 companies - with the first five big players generating only 10% of sales. Hence, mergers are foreseen in the coming years.
The German M&A market remains strong in 2016. According to the latest FINANCE M&A Panel deal activity remains at a high level with increasing activity in the small cap segment. International buyers are becoming increasingly active in the German market including buyers from emerging markets and increasing activity by Chinese buyers. Price expectations remain high and diverging price expectations the most relevant deal breaker. Major M&A motivations reported by the panel M&A advisors and investment banks include accelerated growth, expansion of product and technology portfolios as well as industry consolidation.
According to the EY M&A-Index Austria, transactions involving Austrian companies have shown a considerable increase in the first half of 2016 (+38%). Transactions predominately involved strategic buyers with 169 out of 182 transactions. Those players need to adapt their business models with digitalization becoming increasingly relevant and acquisitions being an interesting option to support strategic re-alignment.
Companies of the industrial sector were the most active buyers followed by the real estate/building and technology sectors. Cross-border transactions accounted for approx. 73% of total transactions with inbound transactions accounting for approx. 37% and outbound transactions accounting for approx. 36% of total transactions.
Approx. two thirds of inbound transactions in Austria (which increased by 31,4% in the first half of 2016) were from investors in Europe; Germany being the most active player with 36% of total inbound transactions. Interestingly, Chinese investors had a are very low impact with only 2 transactions.
Outbound transactions showed an increase of 36% with German companies being by far the most attractive targets (42,5% of total outbound transactions).
The year 2016 has kicked off on a positive note with over 400 deals valued around US$11.9bn in the first quarter compared to US$9.4bn across 352 deals in the corresponding quarter 2015.
While key drivers for the deal activity continued to be domestic transactions and cross-border transactions maintaining last years' pace with deals valued over US$5.9bn outbound deal values grew more than four times compared to the previous year owing to four big ticket transactions demonstrating revived business sentiments.
Around 50% of the total markets’ deals revolve around Ecommerce and the IT sector accounting for 15% of the total deal value.
The 29th International Machine Tool Exhibition (BIEMH) has taken place in Bilbao, Spain, from May 30th to June 4th including national and international exhibitors in the fields of metal cutting machine-tools metal forming machine-tools, cutting and flame cutting machinery, surface treatment equipment, tools for machine-tools, parts for machine-tools, components for machine-tools, metrology, product development and manufacturing software, automation of processes, handling, robotics, welding, chemical products, workshop & company services.
Machine tool is a key industry in the Basque region with 80% of the Spanish players generating sales of EUR1.000m per year (80% export sales).
According to Invest Europe data European private equity investment increased 14% to €47.4bn in 2015 with investments into almost 5,000 European companies, 86% SMEs. SMEs attracted nearly half of the total attracted private equity funding for the first time. Venture capital investment increased by 5% at €3.8 billion, while buyout investment grew 16% to €36.3 billion. Growth investments reported an increase of 11% to €6.5 billion, reaching their highest level since 2008.
Strategic Alliances can be very effective ways to cooperate with others without having to invest in equity, but they require another form of investment, mostly in the form of time and commitment. Here some key success factors that all parties to a Strategic Alliance should consider and maintain to make the alliance work:
On March 17, members of ICFN met at the ICFN 2016 Global Summit in Munich/Germany to:
The event was deemed a big success by all participants, again emphasizing the positive effects for both clients and advisors of being able to work on an international level with partners sharing common ethical and business standards.
Software companies are increasingly faced with a trend towards SaaS business models. Switching traditional, licence-based revenue models to recurring revenues business models has a considerable impact on R&D, company organisation and finances.
SAXO Equity and Main Capital’s joint event in Munich/Germany targeted specifically at owners and managers of IT/software companies provides information and opportunity for Q&A on:
Sven van Berge Henegouwen and Charly Zwemstra, Main Capital also share their experiences from their own portfolio companies.
In a joint event of SAXO Equity and HIRT&FRIENDS in Munich, Dr. Michael Hirt, management consultant, executive coach, author and growth expert delivers a keynote speech on „Taking Your Company To The Next Level. How To Master Fast Growth“ in front of owners and managers of leading South-German medium-sized IT-companies.
According to the October 2015 Finance Magazin private equity panelist survey software/IT companies are increasingly attractive to German mid-market private equity investors. Of all target industries in the survey the software/IT sector shows the highest growth in investment attractiveness and now has a top position in the leading M&A targets for German mid-market private equity investors.
According to the Intralinks Deal Flow Predictor, the number of global M&A deals announced in 2015 will be between 6 and 9% higher than in 2014. The figures of 2015 are similar to those reached in 2007. Regarding the first quarter of 2016, it will be 7% higher than the similar period of 2015. By sectors, industrial deals remain in the first position (15-22,5%) in all the regions (LATAM, EMEA, NA, APAC), followed by Consumer Products & Services (10-15%).
You have 7 key growth levers for your company, that we can activate together:
Post by M. Hirt
The Law 1/2015, published the 1st of July of 2015, has introduced relevant changes in the criminal responsibility of the legal entities regulated in the Criminal Code. Among the changes, we must highlight the following:
For most companies and entrepreneurs growth is a key success driver. In certain development phases or situations of companies cost-cutting, restructuring and divestments can be appropriate steps, but in the final analysis, they can only serve to prepare the ground and create a suitable platform for profitable growth. ...
US-led deal also includes Japan, Australia, Brunei, Canada, Malaysia, Mexico, New Zealand, Peru, Singapore and Vietnam. Chile and eleven other countries achieved historic agreement and seal Transpacific trade pact. After five years of negotiations, representatives of the twelve countries involved in the Trans-Pacific Partnership Agreement (TPP, for its acronym in English) definitely sealed the alliance that covers 40% of the world economy.
This trade agreement led by the United States, also includes Chile, Japan, Australia, Brunei, Canada, Malaysia, Mexico, New Zealand, Peru, Singapore and Vietnam and has been defined by President Barack Obama as "the commercial framework of the XXI century ". The document explained that negotiators from each country will continue to work in technical meetings to prepare a complete text, including a legal review and an eraser.
According realizes the Spanish newspaper El Pais, the pact had to overcome last minute clashes between the US and Australia by the new regulations of the pharmaceutical industry. USA wanted to impose a limit of 12 years of market exclusivity for drugs before allowing other companies employ the same formulas, to match the rules of TPP US law.
However, countries such as Australia defended for a maximum period of exclusivity of five to eight years, for fear that a delay in innovation increase costs and prevent the creation of generic drugs. The objective of the agreement is the reduction of trade tariffs and establishing new common rules among the 12 economies involved, besides the exchange of information and intellectual property.
The recent modification of the Criminal Code, on the 31st of March 2015, has introduced significant changes in the regulation of the Intellectual Property regulation. The aim is to protect the intellectual rights and to strengthen the legal consequences in case of violation.
Since 2009, getting funding has been one of the greatest problems for a large amount of Spanish SMEs. Even though the percentage of worried SMEs regarding funding issues is still superior comparing to the Eurozone, it seems that Spanish companies are beginning to see the light at the end of the tunnel.
In July 2015’s edition of Munich’s IT entrepreneur platform newsletter (“UnternehmerBrief Münchner UnternehmerKreis IT”) Peter Harter, managing partner of SAXO Equity, shared his insights on how entrepreneurs can prepare for talks with potential buyers:
BITKOMs latest survey has revealed a highly positive outlook for the second half of 2015. ...
2014 was a good year for the European private equity; indeed, it experienced a revival, number of deals rising a 20% according to PWC’s Private Equity Trend Report 2015. In particular, there was an increased number of mega-deals (valued over 1bn €), as well as the number of deals over 500m € and under 15m €. The value of the transactions was also higher, increasing a 46%.
M&A advisors in Germany are expecting strong M&A activity in the months ahead...
In order to achieve the maximum sale price and best terms when selling a company, it is critical for the vendor to thoroughly prepare for the sale. The best way to do this is ...
SITUATION: After decades of successful expansion in Central and Eastern Europe, the family-owners of a large beverages group are considering to sell the group to a strategic buyer that will not only secure the highest possible purchase price, but also to provide a credible and sustainable strategy for the successful future of the group with the new owner.
Before engaging in M&A, top management and the acquisition team need to develop the acquisition strategy including:
The recent modification of the Spanish Corporate Act or “Ley de Sociedades de Capital”, on the 3rd of December 2014, has introduced several changes in the regulation of the Board of Directors and Shareholders.
SITUATION: A national privatization agency wants to sell the high tech manufacturing company, which is a global technology leader and make sure that national interests in the form of local
manufacturing and technology footprint and the long-term optimal future of the company are optimally achieved.
Since 2008 Spanish Real Estate market has been on a deep crisis. Despite some real estate specialists understand that the property bubble still has not deflated, the truth is that the market shows early signs of recuperation.
Top IT trends in Germany according to PAC research will focus on Digital Transformation and Customer Experience, Cloud Computing/inhouse private Cloud & hosted private Cloud, Big data/Analytics and Industrie 4.0.
Preparing for a transaction ahead of time and knowing about possible pitfalls is a prerequisite for any successful M&A project – be it on the buy-side or on the sell-side...
Management professionals, HR gurus and consultants share their success strategies, practical approaches as well as tips and tricks on how to win the battle for the best talents.