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

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:

                          | EV/Sales | EV/EBITDA | EV/EBIT

• Average      0,84x            4,90x               8,23x
• Median       0,79x            4,50x               8,02x
• Average 

        without 

        extremes   0,83x            4,92x                8,01x

• Min            0,10x             0,03x               0,04x
• Max            1,69x            9,59x              18,15x

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

• tougher rules and regulations for CO2 emissions, fuel efficiency and safety standards based on EU and US standards
• increasing importance of high quality standards in components and systems to Tier 1 suppliers and OEMs
• increasing importance of auto electronics as well as
• incentive schemes for electric and hybrid vehicles

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:

STRATEGIC FIT

• Clear self-interest: Know what you want to (realistically) get out of the Alliance
• Wisdom: Short-term investment vs. long-term benefits 
• Sustained value creation for all participants

CULTURAL FIT

• Careful selection of participants: Chain of trust, compatible values, track record
• Fairness and win-win-win-thinking and –acting
• Respect for differences in strengths, culture, working style, personality, etc.
• Building and investing in personal relationships and trust
• Commitment, reliability and accountability 
• Contribution and involvement to create value and multiple ties
• Rich, multi-levelled and redundant communication, listening
• Being patient, taking time, courtesy
• Keeping things simple and pragmatic
• Flexibility, adaptability and learning
• Keeping the goal in mind

Post by M. Hirt.

On March 17, members of ICFN met at the ICFN 2016 Global Summit in Munich/Germany to:

• Exchange ideas on interesting cross-border opportunities for their clients
• Share their experience in the execution of corporate finance transactions
• Increase the scope and potential of the Network

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:

• Which parts of the company see the strongest impact of a change to SaaS models?
• What needs to be adapted in the company organization?
• How does a switch to recurring revenues affect revenues/P&L, balance sheet and cash flow?
• How to value a company switching to a SaaS business model
• Lessons learned from companies having successfully switched to SaaS

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:

1. Restructuring of your corporate portfolio and focusing on businesses and regions that have the largest growth potential
2. Igniting growth with a new and more vigorous approach to your marketing, sales and pricing strategy
3. Geographic expansion to enter new markets with growth potential
4. Mergers & Acquisitions (M&A) to achieve fast growth in new markets or market segments by acquiring or merging with other companies, or forming joint ventures and strategic alliances
5. Classic Innovation through new or improved products or services and new processes
6. Strategic Innovation through new business and operating models
7. Management Innovation, focusing on novel approaches to culture, organization and leadership to become a true high-performance organization

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:

• The crime must be committed to directly or indirectly benefit the company.
• Some elements are introduced to check the effectiveness of the Corporate Compliance Programs
• The new identification of the insolvency offence creates a blurred line with the bankruptcy regulated in the Bankruptcy Law

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. ...

You cannot „save yourself to success“. The future can only be conquered by growth

If a company is not successfully growing, most of the time, this is the beginning of its end. It is the essence of entrepreneurship to recognize market opportunities or to create and grasp them and it is  obvious that this cannot be achieved by pure cost-cutting, savings and efficiency improvements. You cannot „save yourself to success“. Success and achievement require investments to take carefully crafted growth steps and controlled risks, in order to conquer the future.

Post by M. Hirt

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.

Among others, the most important changes are the following ones:

• A general clause has been added to the previous list of typified conducts in order to extend the sphere of application: “or the one who operates economically in any other way, total or partially”. In addition, new conducts are expressly typified, e.g. providing an access on the net to legally protected contents without permission of the rights’ owners.
• The concept of “profit motive” is extended, becoming sufficient the aim to obtain direct or indirect economic profits.
• The penalties stablished for each modality of the Intellectual Property Offences have been increased.

However, the legislator goes on trying to maintain the balance between the Intellectual Property Right and the right that comes from the legitimate use of the new information and communication technologies.

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.

Indeed, banks’ rejection rate is getting lower, making easier the access to credit for the SMEs. Different factors demonstrate the fact:

• First, during the third quarter of 2014, there has been a rise on the stock of business funding (it had not increased since 2010).
• Second, the difference on the interest rate paid by a Spanish SME comparing to a European one has been largely reduced.
• Third, the margin added to the Euribor by Spanish Banks has been decreasing since 2013.

Among these factors, it is important to notice that debt has become available and affordable, which means companies are more willing to obtain funding in order to invest.

Nevertheless, the Governor of the Bank of England, as well as the President of the FED, have announced that there will be an increase on the interest rate sooner or later, making leverage more expensive. So, it remains to be seen whether or not the rise on the credit will go on.

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:

• Selling a company requires time and attention
• Measures aimed at optimizing the company’s set-up for a sale should be planned well ahead of talks with potential buyers
• Quality of information is essential and information should be readily available
• Unrealistic and/or unfounded valuation expectations will lead to a failure of discussions with potential buyers
• A successful company sale without a structured sales process will generally require a number of attempts. Exploratory talks with several potential buyers in parallel can provide better appraisal of realistic valuations and strategic alternatives

A professional check-up will help identifying the most relevant action points and potential deal-breakers. With value-driving measures successfully implemented potential sellers will be able to make use of interesting opportunities coming up.

BITKOMs latest survey has revealed a highly positive outlook for the second half of 2015.

Close to three quarters (72%) of mid-market ICT companies are expecting growing revenues in the 6 months ahead. 19% are expecting stable revenues; only 9% falling revenues. IT services and software companies are the most optimistic: 77% of the companies in the mid-market IT services sector and 77% of the software companies are expecting growing revenues in 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%.

In reference to the lower middle market, the evolution of EV/EBITDA multiples has been quite linear since 2009, but there has also been a rise in 2014, according to Pursant’s newsletter M&A Insider. More specifically, the average multiple has been 6’7x, resulting from the average multiples of the different segments by size. Indeed, size is very critical when evaluating a company, since the bigger a company, the higher the multiple.

M&A advisors in Germany are expecting strong M&A activity in the months ahead...

According to a panel research led by FINANCE Research/CMS Hasche Sigle in June 2015 M&A advisors in Germany are expecting the strongest M&A activity in the software & IT industry as well as in retail/e-commerce and pharma/health care. Financing conditions are being rated as highly positive for strategic buyers as well as for private equity investors. Accelerating growth is the primary motivation for acquisitions; buyers are, however, getting more cautious and with increased (price) expectations on the sellers’ side negotiations are getting more intensive and taking more time.

Finance Advisors

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 to take the buyers perspective and conduct a due diligence and SWOT analysis on your own company. This will allow you to:

• Identify potential problems early on and to fix them before they become a deal breaker or valuation problem
• Identify the assets to be sold and handle any items that should not be part of the sale (e.g. IP, real estate)
• Understand what impact the transaction will have on the vendor (e.g. shared infrastructure, sales synergies, financing synergies)
• Develop your preferred transaction structure and key deal terms
• Collect all necessary information for the sales documentation (teaser, deal memo, management presentation), the first valuation and the data room documentation, to identify any gaps, problems and action points
• Have a clear understanding of your starting position in the negotiation and the opportunity to prepare your lines of argumentation to maximize value from your strengths and mitigate/optimize the effect of your weaknesses

The result of this is not only clarity on the action plan to maximize the valuation, but also an important opportunity to evaluate whether the sale of the unit really is the best way forward.

Post by M. Hirt

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.

INTERVENTION: On the basis of a strategic analysis of the group and interviews with representatives of all major family shareholder groups, we looked at the universe of potential buyers and created a prioritized shortlist of buyers, according to the explicit and implicit criteria of the key decision-makers among the shareholders and facilitated the decision making process.

RESULT: Consensus was achieved among the shareholders and the group was sold in one of the largest sector transactions of the decade at a top valuation and became the Central European hub for the further expansion of the new corporate owner.

Before engaging in M&A, top management and the acquisition team need to develop the acquisition strategy including:

• Transaction goals (incl. strategic alternatives) and transaction strategy
• Acquisition criteria
• Framework and constraints for transaction, e.g.
  • Maximum financing/deal size
  • Ownership structure
• Commitment of top management and investor(s)
• Planning to execute
  • Time schedule
  • Internal M&A team
  • Advisors
  • Communication strategy
• To make this a meaningful effort, it is critical to:
  • Set realistic expectations for strategic benefits and synergies
  • Set up professional project management and effective coordination of the acquisition effort right from the start

Post by M. Hirt

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.

With the aim of strengthening the corporate governance, it is compulsory now that the Board of Directors meets four times per year. Key questions like the conflict of interest and diligence are regulated more accurately. It is also relevant that it is necessary for the Shareholders to approve the disposal of significant assets which represent a value of over 25% of the total assets of the company, according to the last approved balance sheet.

For further information on the changes to Spanish legislation, please contact Aitor Arteaga from BAUM PARTNERS (aitor@baum.es).

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.

INTERVENTION: Development of a strategically prioritized long list of potential purchasers, management of the sale process as a confidential, competitive bidding-process, with a selected number of potential purchasers.

RESULT: Sale of the company to a privately-held national technology group which has not only invested substantially in the further global expansion of the company, but has also listed it on the national stock exchange, making it one of the top-performing companies on the stock market.

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.

Largely, this reactivation is due to the landing of foreign funds. As example, the US fund Lone Star has become almost the largest real estate of Spain. Some of the funds choose as vehicle for their incorporation in Spain the SOCIMI formula. This kind of legal company is quite new under Spanish Law, but widely used in other countries as UK.

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.

Industrie 4.0 in association with M2M and internet of things will also remain a top issue in the following years in many areas including production and logistics, smart energy, automotive and health care. The intelligence of the individual device will increasingly be linked to other devices and intelligently controlled. Industrie 4.0 is being supported by the investment in new technologies and methodology for data analysis and data management as well as cloud computing.

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...

SAXO M&A workshops aimed at entrepreneurs, management and M&A directors provide valuable information on key aspects of a transaction including strategic and legal issues, valuation and market insights as well as case studies related to typical transaction issues.

Upcoming dates 2015: January Frankfurt (D), May Vienna/Linz (A), June Munich/Berlin (D)

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.

Speakers:

Dr. Michael Hirt, CEO HIRT&FRIENDS. Dr. Michael Hirt supports companies in the development and implementation of innovative strategies, organizational set-ups and HR management approaches. He is author of numerous publications relating to management innovation.

Martin Renker, member of the executive board of SYCOR GmbH, responsible for human resources. SYCOR group, a full-services IT provider with more than 450 employees and 17 locations worldwide has been awarded in the “TOP JOB – Die besten Arbeitgeber im deutschen Mittelstand” national best employer competition.

Peter Laggner, co-founder and CEO of Trimetis AG. Peter Laggner has more than 20 years of experience in professional services, most recently as Corporate Vice President and managing director of Capgemini responsible for package-based solutions in Germany/Austria/Switzerland.