proventis m&a review 1. half year 2015

Proventis Partners

Mergers & Acquisitions Review

First half of 2015

Hamburg | Munich | Zurich

September 13, 2015

September 2015

M&A Review First half of 2015 – Proventis Partners

1 – M&A Market Development

2 – Our Closings during the first half of 2015

3 – The Proventis Partners Leadership Team

4 – How to contact us

Content

September 2015


Review M&A market during the first half of 2015.


The first half of 2015 was marked by a dynamic M&A market in Germany – notably in the Small & Mid-

Cap M&A segment. The Swiss and Austrian markets were weaker than in previous years.

Germany – During the first half of 2015, German companies were involved in more than 450 mergers and

acquisitions (first half of 2014: 363 deals), which is an increase of almost a quarter.

At the same time, the recorded volume of transactions has significantly declined. It amounted to Euro 15.4

billion in the first six months of 2015 compared to Euro 40 billion in the first half of 2014. This suggests a

significant decline in mega-transactions and a strong increase in Small & Mid-Cap M&A transactions.

In terms of industry, the focus of deals is on services (140 deals) and financial services (126 deals). They

are followed by media with 71 deals, 69 engineering deals and IT / telecommunications with 63

transactions.

Analyzing the geographical coverage, half of all transactions were carried out purely within Germany. The

other half is distributed to almost 30% foreign buyers acquiring German companies and about 20%

German buyers who have invested abroad.

The private equity segment was marked in the first half by an increasing number of add-on transactions,

fueled by a very positive debt re-financing environment and a high number of available targets.

Furthermore, an increasing focus on exits was noted that met corporates with “M&A-appetite” and

financially well-funded Secondary Buyout funds.

Sources: BvK, Zephyr, M&A Review

Source: M&A Review/University of St. Gall

M&A market Germany

Number of deals first half of 2015 compared to 2014.

129197

234

255

First half

year 2014

363

First half

year 2015

452

+25%

Q1

Q2

September 2015


Review M&A market during the first half of 2015 (continued).


2010 2013 2011 2015

1,000

500

0

2016

1,250

2014

250

2012

750

A

CH

D

Source: M&A Review/University of St. Gall

Analysis Proventis Partners

Market development Germany, Austria and

Switzerland

Number of deals 2010 – 2014;

Proventis estimates for 2015 and 2016 .

Switzerland – The performance of the M&A market with Swiss participation during first and second

quarter 2015 was weaker compared to 2014. Only 130 Closings were recorded, this is much less than the

long-term average. Since the decision of the Swiss National Bank in January this year, the Swiss Franc is

too strong against the Euro and is clearly retarding the Swiss economy, and in particular the export

oriented sectors (e.g. chemicals, construction materials, mechanical and electrical engineering, retail and

consumer goods). The Seco (Swiss State Secretariat for Economic Affairs) reported a first-quarter decline

in GDP, while at the end of the second quarter, a slight increase was recorded. Whether the Swiss

economy could really avoid a recession remains to be seen. The strong Swiss franc is in any case

hindering economic growth.

However, the described decline in the number of M&A transaction mainly affects large deals. The last

quarters of the Swiss M&A market were characterized by large mergers such as Lafarge / Holcim, and the

takeover of HolcimLafarge assets by the Irish CRH or the majority takeover of World Duty Free by Dufry,

while no such big deals in Q2 were closed. A notable transaction is the announced merger between the

German family enterprise Dorma and the Swiss company Kaba. The merged company will become the

number two behind Assa Abloy in the global market of access control.

In the Small & Mid-Cap M&A market (with transactions up to CHF 500 million), which is most relevant for

Proventis Partners, a strong restraint at the beginning of the year was felt, as many directors

(Verwaltungsräte) wanted to wait and see how the exchange rate situation develops. However, from about

June onwards, the market recovered.

Austria – The first semester in the Austrian M&A market was rather restrained and thus the moderate

market development (in comparison with the German market) continued.

September 2015


Outlook M&A market 2015/2016.


Germany – Looking at the current market evolution, we expect uninterrupted market dynamics during the

second half of 2015, in particular in the Small & Mid-Cap M&A segment. There are manifold transaction

rationales for M&A deals: market consolidation, succession issues, acquisitions of technology, capital

deployment pressure and positive debt financing environment for financial investors, internalization,

market access, etc.

From the M&A perspective we anticipate consistently ambitious company valuations. The high price

expectations are accompanied by ever more extensive due diligence processes, thus negative findings

and disunity in purchase price expectations remain the two most common deal breakers. Though, they

can be compensated with smart deal structures.

It remains a challenging task to assess the macroeconomic parameters for the next months, assessing for

example the Euro sovereign debt crisis, the exchange rate development of the Euro, or the slowdown of

market dynamics of the emerging markets – especially in China – or the development of the energy

sector “Energiewende” in Germany and the stock exchange performance. All these factors impact the

German M&A market. According to leading economic research institutes, Germany is still on a solid

growth path.

The appetite for acquisitions in Germany is currently higher than in the previous years. In our view, there

are several reasons for this increase: the economic uncertainty, and the fluctuation in commodity prices

and currencies drives cross-border acquisitions. Some, especially medium-sized companies are forced to

compensate for lack of innovation or internationalization steps through acquisitions.

Image source: Can Stock Photo

September 2015


Outlook M&A market 2015/2016 (continued).


Switzerland – In light of the current market development only a modest growth in big deal M&A with

Swiss participation is expected in the second half of 2015 and in 2016. By contrast, we expect a

considerable dynamics in the Small & Mid-Cap segment. M&A is positively evaluated by CEOs and CFOs,

due to the renewed increase in risk appetite of Small & Mid-Cap market participants, which is caused

among other factors by the record-low interest rates and the high purchasing power of the Swiss franc.

This will in our opinion find its continuation in the coming year. However, we believe that the negative

effects of the exchange rate begins to show in the balance sheets and income statements of many export-

oriented SMEs. Reserves are consumed and in many SMEs a liquidity crunch is emerging. This latest

development will revive the M&A market in Switzerland. The rapid sale of distressed com-panies will likely

increase.

Austria – For the Austrian M&A market, we expect – after a weak 2013 and a disappointing 2014 (with

242 transactions) – a similar further development. The Austrian economy, which is mainly composed of

SMEs which are often family-owned, is usually not a target for acquisitions. However, highly specialized

companies, and many global know-how leaders can be found in Austria (e.g. in the energy, telecom, real

estate and tourism sectors). In particular, the cross-border nature of many transactions is significant. An

estimated more than two thirds of the Austrian transactions contain an international angle (traditionally

with participation from Germany, the United States or Switzerland). Overall, the Austrian M&A market is a

Small & Mid-Cap market, even more than the German and Swiss market.

In this environment Proventis Partners plans to defend its market position in the Swiss and Austrian Small

& Mid-Cap M&A market and will further expand.

Image source: Can Stock Photo

September 2015






Content

September 2015


Sale of the building materials group Max Dietrich to Ammon Group.


Sell-side M&A

Building materials sector

In February 2015, the Ammon

Group acquired 100% of the

company shares in the Munich

based building materials trade

group

Max Dietrich GmbH as part of a

succession solution.

Requirements and scope

Max Dietrich Group is a family business in the fourth generation. The company,

headquartered in Munich, consists of two business units, the DIETRICH Türtechnik

GmbH & Co. KG – a strong specialist wholesaler for all the products required by the

processors in the range door and safety engineering and DIETRICH Security

Systems – an innovative system specialist and full service provider for electronic and

mechanical door and security systems. The challenge for Proventis was to identify a

buyer being committed to both the Munich location and to invest into the future

growth of the business.

Assignment and value added by Proventis

The role of Proventis was to seek a culturally appropriate buyer who maintains on

the one hand the “DNA” of Dietrich Group but, on the other hand, was willing to pay

an appropriate price for the group. Furthermore, a smooth and fast transition had to

be negotiated since the seller was tied up in other projects that require his full

attention. This has been achieved with the acquisition by the Ammon Group from

Northern Bavaria.

Contact

Jan Poerschmann, Proventis Partners München, [email protected] Proventis Partners

Exclusive M&A Advisor to the Seller

September 2015


Sale of Sitag Ltd. (Switzerland) to Nowy Styl Group (Poland).


Sell side M&A

Office furniture sector


Proventis Partners has accompanied Nimbus, a Dutch Private Equity Company, as

exclusive M&A advisor with the sale of its Swiss portfolio-company Sitag AG. Sitag is

a high-end quality office furniture company.

Proventis Partners identified one of the leading European office furniture players in

Poland as final best owner in a challenging market environment.

Assignment and value added by Proventis Partners

In this type of M&A transaction, the Proventis team could exploit its strengths

particularly well: this cross-border transaction required a good sense of language and

cultural differences as well as the complexity of the different jurisdictions. In addition,

the needs of a private equity house had to be reconciled with this of a strategic

investor. Proventis Partners ensured a smooth cooperation between the buyer and

seller as well as with the Swiss M&A lawyer, which was crucial for the success of this

complex transaction.

Contact

Teun de Ven, Proventis Partners Zurich, [email protected] Proventis Partners

M&A Lead Advisor to Nimbus Private

Equity (Netherlands).

Sale of Sitag Ltd, a Swiss company

in the office chair and furniture

industry with headquarters in

Sennwald to the Polish company

Nowy Styl Group, the number three

European company in office

furniture. Sitag was a portfolio

company of the Dutch Private

Equity company

Nimbus B.V.

September 2015


Sell side M&A

Media sector


The European Professional Publishing Group (EPPG), based in Munich, has

developed since 2008 a publishing group with a broad media portfolio for the

segments construc-tion and architecture, retail, hospitality and fashion by means of a

selective buy & build strategy.

Proventis Partners has been mandated by EPPG to approach acquirers for the retail

and hospitality title in order to generate a competitive bidding environment.


The task of Proventis was to assist the client in the ongoing M&A negotiations with

the final purchaser on an operational level and to create effective closing pressure –

without a broad market approach.

Contact

Jan Poerschmann, Proventis Partners München, [email protected]

Proventis Partners

Exclusive M&A Advisor to the Seller

Sale of professional publishing group Lebensmittel Praxis to Landwirtschaftsverlag.


The European Professional

Publishing Group, one of

Germany's leading specialist

publishing groups, based in

Munich, has sold the assets of the

LPV Media Group to the

Landwirtschaftsverlag Muenster in

February 2015,

September 2015


Corporate Finance

Chemicals sector


ADDCON has the motto "Green Chemistry" written on its flags. The company refines

organic acids and salts at its production sites at Bitterfeld (Germany) and at

Porsgrunn (Norway). These products are used in the food and feed industries, in oil

exploration as well as in the deicing of large area applications. The company

employs 130 people and can look back on 60 years of history.

For capacity expansion in production for less seasonal products, a mezzanine

financing was needed in addition to existing corporate finance solutions.


The task of Proventis consisted in convincing possible financial partners

quantitatively and qualitatively of the opportunities and the business potential of

Addcon’s expansion strategy. Through a thorough understanding of the company

and the direct access to the decision-makers at the PartnerFonds AG Proventis has

been able to close the transaction in record time.

Contact

Rainer Wieser, Proventis Partners München, [email protected] Proventis Partners

Corporate Finance Advisor to Addcon

PartnerFonds AG provides a mezzanine facility to the ADDCON group.


In April 2015, the ADDCON Holding

GmbH, a leading manufacturer in

specialty chemicals, obtains a

mezzanine finance by the

PartnerFonds AG.

http://www.partnerfonds.ag/

September 2015


Sell side M&A

Textile manufacturing sector


Proventis Partners advised the shareholders of the well-known European producer

and importer of socks, Crönert, in their sale of the company to Wünsche Group,

helping the Crönert family in finding a succession for their company. The main goal

for the family was to find a strategic and long-term-oriented partner for the future

development of the activities of Crönert. In addition, it was intended that the

operational management remained responsible for day-to-day operations, while the

new partner was capable of providing central administrative support.


Proventis Partners acted as the exclusive M&A advisor to the Crönert family,

producing the sales documentation, advising and approaching potential buyers,

coordinating the due diligence as well as supporting the transaction structuring and

negotiations. Due to the specific industry know-how, Proventis was able to conduct a

very selective approach of suitable partners and to structure a tailor-made

transaction for all parties. With Wünsche Group, Proventis identified an owner-

managed expanding trading company with complementary products as new

shareholder of Crönert, who is capable of securing a smooth transition of ownership

as well as the sustainable continuation of business.

Contact

Jost Hartmann, Proventis Partners Hamburg, [email protected]

Proventis Partners

Advisor to the sellers

Sale of Crönert to Wünsche Group.


Wünsche Group acquired Crönert,

one of the best-known European

producers and importers of socks.

September 2015


RTL Group and management of UFA Sports sold the company to Lagardère Unlimited.


Sell side M&A

Sport marketing sector


RTL Group, the majority owner of UFA Sports was interested in selling the company,

which was no longer considered a core asset for the group. Based on a trusted

business relationship of over twelve years, UFA Sports management mandated

Proventis Partners to secure its interests as minority shareholder throughout the

transaction process.

Assignment and value added by Proventis Partners

Proventis Partners has helped UFA Sports in identifying potential buyers, preparation

of the management forecast as well as the optimization of the transaction structure.

Together with the UFA Sports management, Proventis was able to create a

sustainable solution for UFA Sports and its employees as new part of Lagardère

Unlimited.

Contact

Jost Hartmann, Proventis Partners Hamburg, [email protected]

Proventis Partners

Adviser to the Management

Majority owner RTL Group and

management of UFA Sports, a

leading sports marketing agency,

have sold 100% of the company to

Lagardère Unlimited.

September 2015


What clients report about Proventis Partners.


Frank Löffler

Investment

Manager

HANNOVER

Finanz

HANNOVER Finanz has worked together with Proventis Partners for many years, whereby we

have mostly acted as an acquiror for companies which have been advised by Proventis on the

sell side. The Proventis team has developed an excellent knowledge and judgment of the

buyer universe for their mandates. We often found a good fit of their views with our

requirements. With Jost Hartmann we have always had a reliable partner who has a

constructive and solution-oriented transaction-style. This is supported by a highly professional

project preparation and efficient implementation process of all Proventis professionals. In this

way we were able to implement several transactions and I am sure that we will cooperate in

the future with confidence at both sides of the table.

Ed van Dijk

Partner

Nimbus Zeist,

NL

Private Equity

Nimbus, a well known Dutch private equity company, experienced Proventis Partners (Teun de

Ven) as a persistent and process-focused M&A advisor for the sale of its Swiss-based office

furniture company Sitag. Proventis Partners identified one of the leading European office

furniture players in Poland as final best owner in a challenging market environment. Moreover,

Proventis Partners took care of a seamless cooperation with the M&A lawyer in this complex

and very competitive transaction. Teun de Ven skillfully helped to negotiate a successful exit

for us. All in all, Proventis Partners proved to be the right choice for this deal.

September 2015


What clients report about Proventis Partners.


During the last four years the Hamburg team of Proventis Partners successfully accompanied

and advised me on a variety of challenges and several acquisitions. From the very beginning I

was impressed by the deep industry knowledge in the areas of retail and consumer goods and

the excellent network of the team in these sectors. Due to the strong corporate finance skills,

the team is able to efficiently and pragmatically develop business plans and to implement M&A

processes in a target-focused way. I have come to appreciate the long term trusting and close

cooperation with Proventis Partners.

Peter Wolf

Owner

Bree Collection

GmbH

New publications available on our website

www.proventis.com/en/press

(these publications are available in German at this time)

Mergers & Acquisitions – Die zunehmende Wichtigkeit der IT-

Due-Diligence im Rahmen von Unternehmenskäufen

Effekte des starken Schweizer Frankens auf M&A-Aktivitäten

der Industrie (Blitzumfrage)

“M&A Facts” – Development of M&A multiples

in various industry sectors

On our website you may find valuable indications on the prices paid in M&A transactions in various

sector. Our research teams in Germany and Switzerland maintain special databases and review the

capital market’s evaluation of M&A transactions in these sectors.

► http://www.proventis.com/den/ma-facts.html

Media

Mechanical Engineering

Logistics

Industrial Services

Cleantech

September 2015






Content

September 2015


Our Directors and Partners.


Teun de Ven

Partner, Zurich

Tel +41 44 536 3630

[email protected]

Dr. Christoph Studinka

Partner, Zurich

Tel +41 44 536 3630

[email protected]

Peter Trinkl

Partner, Zurich

Tel +41 44 536 3630

[email protected]

Jan Pörschmann

Partner, Munich

Tel +49 89 388 881-11

[email protected]

Jost Hartmann

Partner, Hamburg

Tel +49 40 36097 59-0

[email protected]

Rainer Wieser

Partner, Munich

Tel +49 89 388 881-30

[email protected]

Ulrich Schneider

Partner, Hamburg

Tel +49 40 36097 59-0

[email protected]

Dr. Axel Deich

Associate Partner, Munich

Tel +49 89 388 881-0

[email protected]

Dr. Nina Gjukez

Director, Zurich

Tel +41 44 536 3630

[email protected]

Florian Liepert

Director, Munich

Tel +49 89 388 881-12

[email protected]

September 2015






Content

September 2015


Proventis Partners at important hubs.

How to contact us

Three offices based in Germany and

Switzerland represent Proventis

Partners. From Hamburg, Munich and

Zurich, a team of approximately 20

professionals supervises national and

international projects. The clients profit

from the regional roots and our partners’

international network.

The local presence provides for short

distances and a deep understanding of

the needs particularly of mid-size

customers. The location at important

hubs broadens the reach for potential

partners in transactions and simplifies

the contact with international purchasers

or sellers. We know: the M&A business

is a global business. Luckily our team

masters ten languages.

Authors of this publication

For questions about this publication or to make use of our long standing

Small & Mid-Cap M&A expertise, please contact:

Dr. Christoph Studinka

Partner, Zurich

Tel +41 44 536 3630

[email protected]

Jan Poerschmann

Partner, Munich

Tel +49 89 388 881-11

[email protected]

Jost Hartmann

Partner, Hamburg

Tel +49 40 36097 59-0

[email protected]

proventis m&a review 1. half year 2015

Economy & Finance