Clairfield Review Q3 08 - Syncap

Third quarter 2008
CLAIRFIELD REVIEW
A publication of Clairfield Partners: leaders in mid-market M&A and corporate finance in Europe, the USA, and Australia
European buyers look to the USA
Crosby O’Hare explains how market conditions are right for US acquisitions
Crosby O’Hare
In May, Clairfield Partners held its quarterly international
meeting in Vienna and Crosby O’Hare,
senior partner and founder of Clairfield USA, gave
a talk at a press conference regarding the climate
for cross-border transactions for European companies
seeking expansion opportunities in the United
States. Cross-border transactions is a field of expertise
for Mr. O’Hare, who holds an MBA from SDA
Bocconi in Milan and is fluent in Italian and Spanish.
Mr. O’Hare has led numerous cross-border dealflow,
including Rentokil Initial’s acquisition of pest
control company Ehrlich, and Fenner’s acquisition
of technical-fabric producer Prodesco.
“The data shows an increase of European acquirors
buying companies in the USA in recent years,” says
Mr. O’Hare. “The last peak of such transactions
was between 1999-2000, immediately before the
burst of the Internet bubble.” Although it could be
argued that the M&A market is currently in a similar
situation, Mr. O’Hare believes that there are
fundamental differences worth noting. “I expect,
as does most of the market, a significant drop in
global M&A activity due to the current credit crisis,
the knock-on effect of the US real estate downturn,
and the general stalling of the US economy.
Tight credit markets are especially having a negative
impact on the private equity market. Many
PE firms are simply opting out of putting portfolio
companies on the block until the recovery of the
capital markets. However, the majority of midmarket
companies that are not specifically active
in afflicted industries continue to enjoy relatively
strong balance sheets and a continued strategic
drive to expand via M&A deals.”
Number of mid-market deals between Europe and the USA
450
400
350
300
250
200
150
100
50
0
1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007
Number of deals, US targets Number of deals, European targets
European companies, apart from select financial
players, have also gone largely unscathed from
these issues and remain in good health.
There are a number of factors that currently favor
European companies in the cross-border acquisition
market and have created a window of opportunity
for European buyers:
•
•
•
Source: Thomson Financial
the euro/dollar exchange rate: the appreciation
of the euro has sharply reduced the competitiveness
of European products. European
companies are increasingly turning to acquisition
of American companies as the most viable
manner to maintain a market presence.
European economic conditions: the economic
climate in Europe is perceived as more stable.
a frozen US market: M&A is down 40% in Q1
08 vs. Q1 07. Tight credit markets are having a
profound effect.
The time is now to capitalize on this window of
opportunity. Mr. O’Hare advises buyers to “do your
homework”, especially for first-time entrants. Due
diligence is even more important in periods of instability.
Potential buyers must familiarize themselves
with the legal and regulatory environment,
and gain a deep understanding of the terms and
conditions of transactions. Mr. O’Hare also stresses
the importance of valuation. “Buyers must obtain
a clear understanding of the pricing parameters of
their industry. On average, US companies trade at
higher multiples, particularly for quality assets,”
says Mr. O’Hare. He also advises acquirors to focus
on quality companies rather than bargains, keeping
in mind the level of investment necessary to manage
the acquired company post-transaction.
Mr. O’Hare recommends that buyers move
forward on a timely basis. The pace of US
transactions is generally quicker than in Europe.
The ability of a buyer to move quickly
is often a litmus test for sellers. A deal team
must be in place from the beginning, including
legal and audit experts.
Finally, as anyone who has conducted an
international transaction will agree, a skilled
and experienced financial advisor can make
the difference. Engaging financial advisors
who are experienced in guiding and advising
clients in cross-border transactions is often
the most important thing a buyer can do.

Q2 NEWS
Clairfield Partners, clients, and friends meet in Vienna
Clairfield Partners gather for a quarterly meeting on the Kahlenberg mountain in Vienna.
Eric Pierson, COO of Clairfield Partners, addresses the guests at the
cocktail party in Kahlenberg.
Clairfield Partners and guests enjoy the view from the top of the
Kahlenberg mountain.
Roman Göd (Austria), Crosby O’Hare (USA), and Wolfgang Quantschnigg
(Austria) speak to journalists about transatlantic deals.
Eric Pierson (COO), Sharon Doyle (Australia), and Crosby O’Hare
(USA).
2 Clairfield Review Q3 08

SynCap
Acquisition
Germany
Laser Vision Institut
intuitu
Flash
acquired
Flashline
The minority
shareholder
sold all remaining
shares to
ssniff Spezialdiäten
SynCap
was sold to
DCM Limited
Sale
Morocco/Switzerland
intuitu
Sale
Germany
Sale
France/UK
SPM
was sold to
a private Swiss
investor group
FLASH Europe International provides timecritical
transportation services throughout
Europe and forms part of Groupe Symbiose of
Luxembourg, an industrial holding focused
on business services such as transportation,
security, and storage. Flashline - the
european courier GmbH is active mainly
in Germany and focuses on time-critical
logistics. Flashline is a founding member
of Profex, a leading European network of
specialized transportation.
A minority shareholder sold all outstanding
company shares to ssniff Spezialdiäten
GmbH. The seller is a private investor and
managing director of ssniff who held a
49% stake. ssniff Spezialdiäten is a leading
European company active in research
& development for the production of
specialized animal feed. Its products are
used primarily in laboratory environments
for the development of pharmaceutical
products.
LVI, headquartered in Nîmes, is the leading
player in the French refractive eye surgery
market. DCM Limited is a holding company
that controls the Optical Express Group,
the leading provider of laser eye surgery
in Europe. Optical Express Group operates
48 laser vision correction centers in the
UK, Ireland, the Netherlands, Germany,
Croatia, and the USA.
Acquisition
Poland/Hungary
TETA
acquired
VT-Soft
MP Corporate Finance
Acquisition
Australia
Chris Freney &
co-investors
acquired
Sunnybrand Chickens
Tolhurst InterFinancial
Sale
Netherlands
Bandolera
was sold to
Halder
and
management
Boer & Croon
Spotlight on: sale of Sunlight Power Morocco
Stefano Ermacora
Clairfield Review Q3 08
SELECTED TRANSACTIONS Q2 08
Sunlight Power Maroc (“SPM”) was sold to a private
Swiss investor group with investments in many
European renewable energy companies. Stefano
Ermacora of Clairfield Partners in France (intuitucapital)
originated and executed the transaction,
including negotiations with Moroccan authorities.
SPM is Morocco’s third largest player in the solar
energy sector and has a market share of approximately
25% in the field of individual solar panel
kits. SPM offers excellent national coverage
through eight offices in eight different provinces.
Historical SPM’s shareholders include Gaia Capital
Investments GmbH & Co KG, EPS Plus Value AG and
Swiss Re.
SPM provides installation and maintenance of solar
home systems and installs and maintains electrical,
mechanical, and HVAC engineering systems for
industrial, services, transport, and environmental
applications. Part of SPM’s solar business is providing
services to rural areas that are not connected
to the electric grid, making solar panels available
for rent at a low monthly cost and collecting the
fees at local souks (markets) on market days.
TETA specializes in the creation and
marketing of enterprise resource planning,
human resource, customer-relationship
management, and business-intelligence
software for small and medium-sized
enterprises. TETA S.A. has been quoted on
the Warsaw Stock Exchange since 2005. It
is headquartered in Wroclaw, Poland. VT-
Soft, based in Budapest, produces human
resources and financial management
software.
Chris Freney, together with a group of coinvestors,
acquired Sunnybrand Chickens,
a vertically-integrated Australian chicken
processing and marketing company.
Clairfield Partners in Australia acted as
lead advisor in this complex transaction.
Its diverse role included determining
deal structure, coordinating the due
diligence process, raising debt and equity,
negotiation, and final documentation
(including the shareholder agreement).
Bandolera Holding B.V., the Dutch
manufacturer of branded clothes for
women, was sold to Halder Holdings B.V.,
a private equity firm, and management of
Bandolera in an MBO. Bandolera Holding
reported sales of €52 million in 2007 and has
a workforce of 135 employees. Bandolera
Holding consists of Bandolera and NTS
womenswear brands. This acquisition will
allow Halder to expand its operations in
the European markets.
SPM was the first independent company of its
kind in Morocco, with visionary foreign investors
who believed in the potential of Morocco and the
renewable energy sector. The nature of the original
business model (dealing with a rural customer base
where bank accounts are unknown and micro-credit
type services must be provided) means that SPM
is an important contributor to Morocco’s general
development.
This transaction clearly presented unique
challenges. SPM participates in national tenders
in the solar sector and is part of the Moroccan
electricity development program. SPM is also a
beneficiary of structural loans from developmental
institutions. All parties – from the company, the
government, and the developmental bodies – had
to play a part in the negotiations.
“This transaction was one of the most challenging
I have ever worked on,” says Mr. Ermacora.
“However, the humanitarian aspect was enormously
satisfying, especially with the knowledge that the
new investor can further strengthen the company
and its services to Morocco’s rural population.”
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New colleagues
Christos Votsis has joined Clairfield Partners
in the UK (Carlton Partners) as an analyst.
Prior to joining Carlton Partners, Mr. Votsis
worked at CIBC World Markets on the M&A
team. He graduated with a bachelor’s degree
in economics with Chinese studies from the
University of Nottingham.
Stefan Brunner has joined Clairfield Partners
in Austria and the CEE (MP Corporate Finance)
as an analyst in charge of research activity,
market and competition analysis, compilation
of business profiles, business plans, and
surveys. He also supports project teams
through financial analysis and financial
planning. Mr. Brunner studied business
administration at the Vienna University of
Economics and Business Administration,
specializing in banking and tax law.
CLAIRFIELD PARTNERS
www.clairfield.com
Australia
Level 3, 167 Eagle Street
Brisbane
Tel: +61 07 3218 9100
Fax: +61 07 3218 9199
www.interfinancial.com.au
Austria, Czech Republic,
Slovakia, Hungary, Poland
Cobenzlgasse 32
A-1190 Wien
Tel: +43 1 470 2388
Fax: +43 1 470 2670
www.modern-products.net
Germany, Belgium
Mendelssohnstrasse 72
D-60325 Frankfurt am Main
Tel: +49 69 707 969 60
Fax: + 49 69 707 969 99
www.syncap.de
intuitucapital
Ambrosetti invests
in Clairfield Italy
In June 2008 The European House - Ambrosetti became a shareholder of
Clairfield’s Italian partner, K Finance.
The European House - Ambrosetti has performed consultancy and
research work for the top management of public and private institutions
since 1965.
Ambrosetti also organizes many events focused on high-level communication
among executives and sector experts. The most well-known is the
forum “Intelligence on the World, on Europe, on Italy”, held every year
in September at Villa D’Este on Lake Como, Italy where global leaders,
policymakers, and academics come together to discuss the issues of
greatest impact for the global economy and society as a whole.
Filippo Guicciardi, senior partner and founder of K Finance, said, “we are
pleased that after a thorough search of many M&A boutiques, Ambrosetti
selected us to cover their M&A business. Our new relationship with
Ambrosetti is a wonderful opportunity for all clients of the Clairfield
partnership to expand their connections to Italy’s top executives and
politicians.”
The website for Clairfield Partners Italy has been redesigned and can
be visited at www.kfinance.com.
The website contains an M&A database focused on European deals
that is now searchable and updated daily.
France
Place Vendôme
356 rue Saint Honore
75001 Paris
Tel: +33 1 40 20 12 34
Fax: +33 1 40 20 12 35
www.intuitucapital.com
Italy
Via Durini 27
20122 Milano
Tel: +39 02 763 948 88
Fax: +39 02 763 109 67
www.kfinance.com
The Netherlands
Amstelveenseweg 760
1081 JK Amsterdam
Tel: +31 20 301 4350
Fax: +31 20 301 4359
www.boercroon.nl
Spain
Diagonal 520, 6-5
08006 Barcelona
Tel: +34 93 487 0330
Fax: +34 93 215 8186
www.coram-clairfield.com
United Kingdom
38 Berkeley Square
London W1J 5AE
Tel: +44 207 355 2211
Fax: +44 207 355 1633
www.carltoncf.com
United States
18 East 41st Street
New York, NY 10017
Tel: +1 212 370 4343
Fax: +1 212 370 4044
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may be regulatory, compliance or other reasons that prevent us from doing so. Much of the information contained in this report is subject to variation due to changes in market conditions,
legislation or regulatory matters and Clairfield Partners does not undertake to notify any recipient of the report of changes to the information contained herein. This report is not to be
construed as an offer to sell or the solicitation of an offer to buy any security in any jurisdiction. Additional supporting information is available upon request. Please contact: Research Desk,
Clairfield Partners, Tel: +34 93 487 4623, email: research@clairfield.com
Clairfield Review Q3 08