A rePort: How is a head- liner actually produced? friedrich ... - polytec

Mr Huemer, rumour has it, that you carried out your most important
company acquisition – F/O/R, nucleus of the current
POLYTEC GROUP – without ever having set foot inside the
company?
The rumour is not false. I went in this factory for the fi rst time
as majority owner, having known neither production nor the fi gures
of the company at the time the contract was concluded. I
knew, that the fi gures were so bad, that I didn’t want to analyse
them.
What made you certain you had done the right thing?
Nothing at all, since it was dealt with at the request of the
house bank on the basis of the danger of insolvency which of
course limited my fi nancial risk. The opportunity to purchase
F/O/R doubled the size of POLYTEC and placed us in another
league but now in the area of automotive supply. It was tempting
enough to take a calculated risk. The fact that the majority of
F/O/R’s parts were manufactured from Polyurethane made the
decision substantially easier since Polyurethane production has
been the core competence of POLYTEC since its inception.
Would you invest using to the same criteria today?
No. At that time I was not familiar with the concepts of Due
Diligence or Enterprise Value. Up until then I had not spent a single
Schilling on advice, lawyers or auditors. With the status and
reputation that we currently enjoy, it is no longer possible to buy
something simply because you believe that you can make something
of the investment – that would be irresponsible, although I
am sure we have missed all some opportunities.
What are the fundamental characteristics encourage you to
buy a company?
There are three concrete assessment criteria. Firstly, what are
the products and technologies? We do not want to move far away
from our core technical competencies. Secondly, who are the customers
and customer groups? A higher priority would be given to
existing customers than would be given to gaining new business
partners. Finally, of course the geographical location is important.
It is a clear goal to have more locations in low cost countries
– thus it is more likely that we will purchase Western European
companies with locations in Eastern Europe. We would also give
consideration to the US and China, where our major customers are
already established. The main goal of our strategy is to broaden
what we have and what we know and then grow from there.
Which business areas have the biggest growth potential?
Based on market conditions the Automotive Systems Division,
and therefore serial car production has the biggest potential and
it may be that we have to sub-divide this area in future. We must
take into consideration that the smaller Car Styling Division (Original
Accessories) and Composites Division (mainly HGV parts)
have narrower growth limits since they deal with niche products in
areas where we already hold a signifi cant position.
How many opportunities to buy companies still lie on the
table?
We always have something on the table, but at the end of 2005
and the beginning of 2006 we were not able to follow these up as
our attention was taken by the impending IPO. Towards the end
of 2006 we were close to signing contracts for two purchases but
as the asking price did not agree with our assessment we did not
complete.
How much could a company cost then?
Every acquisition must have favourable effect for us on the
Earnings per Share in the year of acquisition or at the latest in the
following year. This is absolutely fundamental to us, a timescale of
3 to 5 years is inconceivable. This is the acid test for every acquisition.
Even if there are strong strategic arguments for an acquisition
we will not overpay.
“A higher priority would
be given to existing
customers than would
be given to gaining new
business partners.”
Friedrich Huemer about acquisitions
INTERVIEW
17
What is the secret of your success? Do you know earlier than
others what you want to buy?
I do not know earlier than others – usually we are not the only
party involved in the discussions. It is an advantage that our management
structure allows me free reign for acquisitions and I can
quickly concentrate on the Due Diligence process. In contrast to
many of our competitors I am largely autonomous and the fl at
management structure enables decisions to be made very quickly.
It helps to be well known and trusted in the industry, so that when
someone wants to sell a company, pre-discussions can commence
at short notice and if those go smoothly the probability of
concluding a deal may be higher.
They say that you use 90 percent of your working time on
checking and assessing acquisitions. Is that true?
This is incorrect. If it was the case, the person would naturally
not be the CEO. I certainly spend a considerable amount of my
working time on acquisitions but only as an important part of the
management of the existing Group. Acquisition is not the only strategic
issue for our company, I must also be concerned with our
customers, our price policies, our management structure and our
fi nancial structure.
POLYTEC
ANNUAL REPORT 2006