Proventis Partners Review Second Half Year 2014

Mergers & AcquisitionsReview 2nd Semester 2014Proventis PartnersProventis Partners

Hamburg | Munich | Zurich

Issue January 28, 2015

Inhalt

1 – M&A Market Development 2014 and 2015

2 – Our Closings of the 2nd Semester 2014

3 – The Proventis Partners Team

4 – Contacts in Munich, Hamburg and Zurich

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Review M&A-market in 2014.

1 – Market Development 2014 and 2015

2014 was a very active M&A-year both in Germany and Switzerland and also on a

world-wide level.

� Germany – Similarly like during the first semester 2014, the German M&A marketcontinuously grew further during the second semester and reached a peak since 2008.

� The high aggregated transaction volume is mostly due to some megadeals, some of themwith transaction volumes with double digit billion $ amounts. These huge deals create acertain trust also for smaller deals in the small and midcap segment. The number of M&A-deals increased notably in the small- and midcap segment in 2014. Small- and mid capM&A-activity will continue to be the basis for further growth in M&A-activity in Germany.

� M&A activities also increased in the German Private Equity sector in 2014. Favorable financialconditions and a huge deal flow in the small- and midcap segment as well as a rather robustcapital market in Germany, coupled with increasing listed share prices (which have aninfluence on valuations) played a key role.

178

82

122

85

107

55

+117%

2014 – a very active M&A year on a global scale. Transaction volumes in bn. US$.

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influence on valuations) played a key role.

� Strategic buyers played a key role in the bulk of transactions in 2014 and M&A deals with astrategic rationale crossed borders in many cases. German target companies become evermore attractive for foreign investors: The share of inbound cross-border investments reached82% of all M&A deals in 2014, this is a 10% year-on-year increase.

Source: Allen & Overy: M&A Index – Germany (Fourth quarter 2014)

55

201320122010 20112009 2014

Review M&A-market in 2014. (Continued)


� Switzerland – 2014 was a very active M&A-year in Switzerland. The total volume of all

transactions with Swiss buyers or sellers increased to a whopping 130 bn. US$, like in

Germany mainly due to some mega deals, like the merger between Holcim and LafargeGermany mainly due to some mega deals, like the merger between Holcim and Lafarge

cement. But 2014 also saw a strong increase in smaller and medium sized deals. The number

of transactions increased by 33% year-on-year. We think that today, M&A is an integrative

part of corporate strategies in larger groups and likewise in small and medium enterprises

which are so typical for the Swiss economy.

� We believe that one of the main reasons for this increased activity is the record low level of

interest rates for corporate lending but also the US economy which returned to growth

during the year. In addition, many Swiss companies are cash-rich and are able to act as

strategic buyers. 2014 was also a year which saw increasing trust of decision-makers in the

economy. This was also reflected in the increased share price of Swiss company stocks.

� In the small and medium company universe, quite many targets were valued favorably which

200

300

400

500 +33%

Increase of M&A-transactions in Switzerland. Number of M&A-transactions with Swiss buyers or sellers involved.

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� In the small and medium company universe, quite many targets were valued favorably which

also spurred M&A activity. And the low interest level helped here too. The ever progressing

globalization seems to be a key deal rationale for acquisitions for small and medium

enterprises in Switzerland. Since the end of the 70s, cross-border M&A increased while pure

domestic deals decreased in numbers.

� All in all we see a positive correlation between M&A transaction volumes and the stock price

development in Switzerland.

Source: Neue Zürcher Zeitung, 2015.

0

100

20142012 201320112009 2010

Outlook M&A-market 2015.


� Germany – Despite revised growth perspectives for the Germany economy there no clearsigns for a downturn in M&A activity visible for the time being. The M&A market is still ingrowth condition. Companies receive very attractive financing conditions and they generallygrowth condition. Companies receive very attractive financing conditions and they generallyhave favorable valuations / multiples. Therefore, in our opinion, the M&A activity in Germanywill remain strong through 2015.

� We believe that many German small and mid-cap companies focus on profitable growthstrategies in 2015 and that this will should be an important strategic rationale foracquisitions. Due to the fact that the German capital market is still not quite as developed asthe US or the UK markets (despite ample growth during the last couple of years) thereshould be room for further growth in M&A activity.

� In addition, the M&A market for small and mid-cap transactions is further fueled by an everincreasing interest in German targets from foreign investors. The development of the Euroagainst the US$ could be an additional driver of M&A-activity but it could also slow downthe market if the Euro develops adversely.

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the market if the Euro develops adversely.

� We also expect a strong M&A activity in the German Private Equity segment due to the factthat Private Equity funds show a growing interest in acquiring family owned businesses.

� All in all, 2015 looks promising and will likely continue the trends of 2014 in the Germanmarket.

Outlook M&A-market 2015. (Continued)


� Switzerland – In mid January 2015, The Swiss National Bank (SNB) has decided todiscontinue the minimum exchange rate of CHF 1.20 per Euro. The minimum exchange ratewas introduced during a period of exceptional overvaluation of the CHF and an extremelywas introduced during a period of exceptional overvaluation of the CHF and an extremelyhigh level of uncertainty on the financial markets.

� It is not clear yet how this SNB decision will affect the M&A market in Switzerland. Theexchange rate is currently CHF 1.00 per Euro, 20% less than before. Therefore, as one of theconsequences, many targets in Europe and elsewhere become really affordable for Swisscompanies if they have appetite for acquisitions.

� Many Swiss mid-cap companies are cash-rich and just completed (or will complete in theshort term) their portfolio clean-ups so they entirely focus on their core business. Hence,many of them plan to progress with further acquisitions in their core business, for instanceto strengthen their market presence on the global markets and often they have a focus togrow in Asia. Many companies have established best practice M&A processes which are anintegrative part of the business strategy.

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January 2015

integrative part of the business strategy.

� In addition, we expect further consolidation in some of the industry sectors. Certaincompanies will also be for sale due to lack of management or financial strength, which willpartly be the effect of the (too) strong CHF.

� Bottom line, we expect somewhat less M&A activity in the Swiss market compared to 2014,but the outlook is difficult due to higher volatility of the capital market since the beginningof the new year.

Inhalt





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Proventis Partners achieved 16 Closings in 2014.


16 Closings in 2014

Proventis Partners has completed 16 successful closings during the entire year 2014, at all

three office locations in Germany and Switzerland. After having completed 6 closingsEV = Enterprise Value = Company

value (cash free, debt free). three office locations in Germany and Switzerland. After having completed 6 closings

during the first semester, there were an additional 7 successful transactions in the second

semester. In addition, we supported a number of industrial companies with strategy

development projects, for example in critical turnaround situations or with a view to a

later company carve-out sale.

We would like to thank our clients for the excellent co-operation during 2014.

Expected Value Added from M&A Transactions

These 16 transaction closings created substantial stakeholder value for our clients. Such

value was measurable in certain situations. For example, we divested a division for a listed

company. After the sale, the share price increased substantially, so the total value from

the divestment was actually definitely higher than just the EV of the company sold (see

value (cash free, debt free).

EV of the divested company:

Total value

added of the

M&A-transaction

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January 2015

the divestment was actually definitely higher than just the EV of the company sold (see

chart). Short-term or medium-term value creation is always the focus of what we do and

our partners are fully committed to this aim for our clients.

A good transaction structure, a detailed risk analysis, reasonable planning which is

backed by years of experience, a professional valuation which also includes synergies are

all key elements of a successful M&A transaction. If done professionally, they demon-

strate early on in the project whether a transaction will be successful or not.

EV after divestment

EV before divestment

Sale of AFG’s surface technology division STI Group to a private investor.


Company saleRequirements and scope

AFG Arbonia-Forster-Holding Ltd, a listed Swiss industrial company, sold its surface

technology division STI Group on December 1st, 2014, to private investor Dr. Edgartechnology division STI Group on December 1st, 2014, to private investor Dr. Edgar

Oehler. STI Group is specialized in high-end hard chrome and other functional surface

technology applications. In June 2014, Dr. Oehler already acquired the Chinese unit of

STI Group. Simultaneously, Swiss investor Artemis Holding Ltd. acquired a stake in AFG

from Dr. Edgar Oehler and became the single biggest shareholder in AFG.

Assignment and value added by Proventis Partners

Proventis Partners was exclusive M&A Lead Advisor to AFG and was responsible for the

sale of the company which was conducted as an auction. Proventis Partners led the

Due Diligence and Vendor Due Diligence and coordinated the final negotiations. In

addition, Proventis Partners developed the strategy for STI Group, together with its

management and was responsible for the the valuation. For AFG, closing safety was

paramount, as well as a discreet and professional conduct of the M&A project.

AFG Arbonia-Forster-Holding AG sold its surface technology division STI Group to Dr. Edgar Oehler.

Simultaneously, Artemis Holding Ltd. acquired a large stake in AFG from

Dr. Edgar Oehler.

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January 2015

paramount, as well as a discreet and professional conduct of the M&A project.

Proventis Partners’ long time experience with surface technology played an important

role for the strategy development and the information memorandum.

Contact

Dr. Christoph Studinka, Proventis Partners Zurich, [email protected]

Dr. Edgar Oehler.

Proventis PartnersM&A Lead Advisor to AFG

Corporate FinanceRequirements and scope

Proventis Partners was the exclusive Corporate Finance Advisor to Addcon GmbH, a

German Group. The company’s financial setup had to be restructured and improved

Financing Addcon GmbH.


Financial Restructuring and Capital Increase of the Geman Addcon Group by factoring, an increased credit line and a loan conversion.

German Group. The company’s financial setup had to be restructured and improved

according to new strategic requirements. The company had strong seasonal changes in

terms of revenues and material cost and had therefore a need for higher working capital

during certain months of the year.


Proventis Partners was responsible for Addcon Group’s restructured corporate funding,

including the approach to a number of new/additional financial partners and for the final

negotiation of conditions with them. A combination of factoring, working capital loans

and a new credit line for material purchases secured the optimum coverage of the

Group’s financial needs.

Contact

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January 2015

Contact

Rainer Wieser, Proventis Partners München, [email protected]

Proventis PartnersCorporate Finance Advisor to Addcon.

Sale of a minority stake of Wajer & Wajer shipyard to a private investor.


Sale of minority stakeRequirements and scope

As M&A consultant, Proventis Partners accompanied the owner of a Dutch shipyard

with the sale of a significant minority share to a Dutch private investor. Together with

Sale of a minority stake in the Dutch shipyard Wajer & Wajer to a Dutch

private investor.

with the sale of a significant minority share to a Dutch private investor. Together with

the new investor Wajer & Wajer will develop and distribute the new Osprey 55 and

expand into new geographic market primary in Europe.


Proventis Partners supported the entire transaction process including the preparation of

investment documentation, selection and approach of potential investors, due

diligence, transaction structuring as well as the negotiations regarding the purchase

agreement.

Dorus Wajer, owner of Wajer & Wajer, stated: „Never thought that the search process

for the best investor and the related sale of a part of my company would require so

much specialism. Not only this specific knowhow, but also the commitment, the

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January 2015

much specialism. Not only this specific knowhow, but also the commitment, the

persistence and the personal approach of Proventis (Teun de Ven) impressed me.”

Contact

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

M&A Lead Advisor of the owner

Entrepreneurial succession for Syntela IT-Dienstleistungs GmbH.


Sell-sideRequirements and scope

Over the last 10 years, Syntela IT Dienstleistungs GmbH has established itself as

one of the most successful service providers for German health insurance companies and

The founders and shareholders of Syntela IT-Dienstleistungs GmbH sold a majority of the company to

Caldec Holding GmbH

one of the most successful service providers for German health insurance companies and

stands for high performance and individual service and software solutions helping its

clients optimize the business processes. After handing operational leadership to the

management team, the founders of Syntela sought to initiate the growth phase with a

suitable new majority owner.


Proventis Partners acted as exclusive M&A advisor for the founders of Syntela. In this role

Proventis Partners not only analyzed the company and strategic options for the

shareholders, but also evaluated and approached potential investors, coordinated the due

diligence process and supported the commercial negotiations until the successful closing

of the transaction.

With the involvement of an entrepreneurial-minded and long-term-oriented partner as

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January 2015

With the involvement of an entrepreneurial-minded and long-term-oriented partner as

well as the participation of the management team as shareholders, Proventis was able to

successfully achieve the goals set out by the founders of Syntela.

Contact

Jost Hartmann, Proventis Partners Hamburg, [email protected] Partners

Exclusive M&A Advisor for the shareholders

Quickborner Team and macon merge to “combine Consulting”, a leading commercial real estate consulting firm.


MergerRequirements and scope

In order to strengthen its strategic position as well as to resolve internal succession issues,

Quickborner Team, a leading consulting firm for commercial real estate planning, modern

Quickborner Team GmbH and macon Gesellschaft für Unter-

nehmensberatung mbH merged to form combine Consulting GmbH, a leading commercial real estate

consulting firm

Quickborner Team, a leading consulting firm for commercial real estate planning, modern

work environments and change management, intended to merge its business with a

suitable partner. macon, a leading consulting firm with focus on CRE management and

strategy was an ideal fit for a business combination. This resulted in the requirement of a

fair valuation of both companies as basis for a merger of equals.


Proventis Partners acted as exclusive M&A advisor to Quickborner Team and provided

both parties with an independent valuation of their businesses as well as an assessment

of the synergy potential with respect to the proposed merger. Based on the valuation,

Proventis Partners moderated the negotiations between the shareholders of both

companies. The successful merger resulted in combine Consulting, a market leading

consulting firm in the fields of real estate planning, organizational development and CRE

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January 2015

consulting firmconsulting firm in the fields of real estate planning, organizational development and CRE

consulting in the German-speaking region.

Contact

Jost Hartmann, Proventis Partners Hamburg, [email protected] PartnersM&A Advisor to

Quickborner Team GmbH

Strategy and operational improvement Process for a German Medium Size Company.


Strategy development with a view on a potential company sale

Requirements and scope

The medium sized company, located in Southern Germany suffered from weak revenues

and gross margins. The Swiss owner mandated Proventis Partners to review and developview on a potential company sale

An industrial company in Southern Germany which is a portfolio

company of a listed Swiss industrial holding. The company is an important provider of

electromechanical machinery to the automotive industry.

and gross margins. The Swiss owner mandated Proventis Partners to review and develop

the company’s strategy and to identify and implement immediate actions for

improvement initiatives with a view on a potential sale of the target company.


Proventis Partners redefined the company’s strategy, validated the revised strategy with

the Board of Directors of the Swiss holding and started the implementation. Proventis

prepared and moderated a number of cross-functional strategy workshops during which

several improvement initiatives were identified and implementation plans agreed,

notably in the areas market access and operational efficiency. In addition, Proventis

provided financial benchmarks with peer companies and valuated the company

(Enterprise Value) with a view on various scenarios. The valuation was also done

concerning a potential later sale of the company.

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January 2015

concerning a potential later sale of the company.

Contact

Peter Trinkl, Proventis Partners Zurich, [email protected]

Proventis PartnersStrategy development and analysis of the sellability of the German target for the Swiss industrial holding company.

What clients report about Proventis.


Daniel LippunerCEO

“We have experienced Proventis Partners AG (Partner Peter Trinkl) as result oriented, pragmatic and pleasant M&A advisor. He supported us at the disposal of OC Oerlikon's Textile Machinery Division (Division Natural Fibers and Textile Components with the Brands Saurer, Schlafhorst, Alma Volkmann

“Since 2008, we’ve been working very successfully with Proventis Partners on a basis of mutual trust. The team’s dedication is what convinces me, as does their understanding of the characteristics of the speciality chemicals sector, their negotiation skills, their assertiveness and the network that the two partners Rainer Wieser and Jan Pörschmann can draw on. And on top of their professional competence, the entire team’s warmth was amazing, one which the ADDCON management always felt very comfortable with and that they were in good hands. In the meantime, we’ve been able to close two cross-national transactions and are working together on the next project. Keep it up, Proventis team!“

Bernd KochannekCEO ADDCON Group

CEOSaurer AG

(Division Natural Fibers and Textile Components with the Brands Saurer, Schlafhorst, Alma Volkmann with about 1 bn. CHF turnover) to the Chinese Jinsheng Group. He guided and significantly contributed to the overall process including carve out to ensure a successful closing.”

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cross-national transactions and are working together on the next project. Keep it up, Proventis team!“

What clients report about Proventis (Continued).


“Proventis Partners supported us in the sale of our multinational surface technology division during more than 1 ½ years. From the beginning we were impressed with their deep industry sector experience (notably Christoph Studinka' sector insights and company relations) which were a key success factor

Felix Bodmer CFOAFG Arbonia- (notably Christoph Studinka' sector insights and company relations) which were a key success factor

during the strategy development for the division, for the information memorandum and which paid out nicely during the search for potential buyers. The very experienced and discreet Proventis Partners team convinced also during the execution of the M&A project with pragmatic approaches and a good coordination between the many internal and external professionals involved in the project. We are happy that we could close the transaction successfully and on time together with Proventis Partners. To conclude: We chose the right partner.”

“Never thought that the search process for the best investor and the related sale of a part of my company would require so much specialism. Not only this specific knowhow, but also the commitment, the persistence and the personal approach of Proventis (Teun de Ven) impressed me.”

AFG Arbonia-Forster-Holding AG(Switzerland)

Dorus WajerOwnerWajer & Wajer Yachts

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January 2015

Yachts(Netherlands)

Inhalt





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January 2015

Partners.


Teun de VenPartner, ZurichTel +41 44 536 [email protected]

Peter TrinklPartner, ZurichTel +41 44 536 [email protected]

Jan PörschmannPartner, MunichTel +49 89 388 881 [email protected]

Jost HartmannPartner, HamburgTel +49 40 36097 [email protected]

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January 2015

Dr. Christoph StudinkaPartner, ZurichTel +41 44 536 [email protected]

Rainer WieserPartner, MunichTel +49 89 388 881 [email protected]

Ulrich SchneiderPartner, HamburgTel +49 40 36097 [email protected]

Dr. Axel DeichAssociate Partner, MunichTel +49 89 388 881 [email protected]

Inhalt





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January 2015

HamburgProventis Partners GmbHBei den Mühren 91

Three offices based in Germany, Austria and Switzerland

represent Proventis Partners. From Hamburg, Munich

and Zurich, a team of approximately 20 people super-

Proventis Partners at important hubs.

Contact

Bei den Mühren 9120457 Hamburg, Germany+49 (0)40 3609759-0

MunichProventis Partners GmbHPrinz-Ludwig-Str. 780333 Munich, Germany+49 (0)89 388 88 1-0

ZurichProventis Partners AGFeldeggstr. 288008 Zurich, Switzerland

and Zurich, a team of approximately 20 people super-

vises national and international projects. The clients

profit from the regional roots and our partners’ inter-

national 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 simpli-

fies the contact with international purchasers or sellers.

We know: the M&A business is a global business. A

happy twist of fate, then, that our team speaks ten

languages.

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January 2015

8008 Zurich, Switzerland+41 (0)44 536 3630

languages.

Investor Relations

Proventis Partners Review Second Half Year 2014