You must be able to seize the opportunity
Crisis? For active managers like you, now is a good time to consolidate. Contact us. We will face this challenge together.
Consolidation projects
Now in particular, many companies, including yours, are struggling with bigger or smaller problems. Treat it as an opportunity, an impulse for development and look for new opportunities actively. Get a partner to go through this process – the one who can offer you the ‘know-how’ and experience in this type of transactions. This may be us – Avallon MBO.
Why now?
Why with us?
We are an offensive-minded and experienced partner which will help you make bold decisions. And these in the long run will prove to be the most important step in the development of the company, allowing you to compete for the position of the market leader.
We are ready to negotiate the purchase of your competitors – our portfolio includes projects involving the purchase of up to three competing companies and their efficient consolidation.
Company
Mangata Holding
Thanks to the Avallon Fund’s investment in 2007, a capital group was established which soon placed itself as a leader on both local and CEE market.
How did the cooperation between Mangata’s managers and Avallon MBO begin?
Quite by accident – during a conference in Łódź, I had the pleasure to meet the fund’s managers. I was quite interested in what they talked about and how they implemented those projects involving the participation of people managing companies. It made me think and inspired me. We started talking about whether Avallon MBO would be interested in supporting our management team in carrying out the process of leaving the Riverside fund from our shareholding structure. The talks were carried out quickly and efficiently. Our managers invested some capital in this project, and Avallon MBO got also financially involved. The fund offered sa little extra and supported us in this way that it invited industry investors to invest in the project as well. This process was very effective and lasted only a few months. We were all under the impression that we had managed to smoothly reach a consensus between Riverside’s expectations and the possibility of rearranging the financing structure and taking over its package.
What – apart from financing – did the cooperation with Avallon MBO bring at that stage?
First of all, we did not have any transaction or capital experience at that time. We had experience in the operational management of companies. Thus, we may say that the support we received from the Avallon MBO team at that time was simply fantastic. Thanks to them, we managed to finalize the transaction in a way which was beneficial for each party. It is enough to look at our development: now we employ 2,000 people; and have a turnover of PLN 700 million.
As a manager, did you have any doubts or concerns when making the MBO decision?
I had had a few moments in my life when I was wondering about my future. Then, I set some goals for myself that I wanted to achieve by a certain age. What we did together with Avallon MBO, was that we managed to achieve our plan and my dream at the same time a little earlier than assumed. I felt quite comfortable when, together with the fund, we carried out the first or second acquisition project, because I understood that the risk I was taking was ironically accompanied by a certain sense of security related to the fact that my partners would not leave me if the situation happened to be difficult. And it was no longer just an impression – it was a conviction. I like to undertake interesting and unique things, which is why it was a kind of adventure for me. It turned out that my partners gave me much more security than I could have assumed at the beginning. Subsequent projects, subsequent risks and opportunities were therefore easier to implement.
What would you advise managers thinking about following the same path?
In today’s world, it is of value for a businessperson to be able to be responsible for what one manages and controls. Sometimes, there may be a certain amount of stress, because it also happens. However, it is satisfying to have a piece of your personal work in your own hands. If managers dream of becoming business owners, I strongly encourage them to do so. You have to dream and make these dreams come true. Certainly with an offensive, confident partner, it is easier to gather this courage.
The results of the actions:
Share price on the exit day PLN 117.
Adam Demusiak
Head of M&A PWC Poland
Uncertain times are an opportunity for the best managers.
Is looking for a financial partner an advisable solution? Czy poszukiwanie partnera finansowego jest dobrym rozwiązaniem?
Therefore, I would encourage management boards and entrepreneurs to be open to the scenario of partnership with the fund, as there are many cases in history in which the entrepreneur benefited greatly from several years of cooperation with a private equity fund, from which they then exited, either through the stock exchange or by selling shares to an industry investor, on a valuation that is significantly higher than what they could build only on their own funding.
Growth through acquisitions – will this year be favorable for managers implementing such a strategy?
Private equity funds, which are one of the main driving forces and a source of consolidation financing for private entities, have great appetites and considerable financial resources and can support the management boards of companies in these processes. On the other hand, COVID caused quite a large polarization in selected industries between leaders – with financial resources and solid human resources, and smaller companies – having liquidity problems and falling margins, which were poorly acquiring new customers during the pandemic. These smaller companies will be interesting acquisition targets for larger players.
In Poland, in many sectors, e.g. in the telco, medical, cosmetic or even food industries, we still have a significant fragmentation. There are many companies, the scale of which is relatively small and the competition in a given sector is huge. Organic growth is harder at present, which is why, in my opinion, in 2021 strong and dynamic companies will more often decide to acquire and consolidate sectors.
Combining companies into a new structure is quite a challenge. What should the leader of such a process be like?
Another thing is the question of scale and resources, both human and financial. Buyers should have a minimum scale (displacement) in order to have the option of obtaining debt financing or equity with the participation of an investor, such as Avallon MBO, who will help to finance and coordinate the entire process of acquisition and then subsequent integration of the acquired company.
Additionally, the scale means the availability of good management staff. It is crucial in acquisitions and consolidations that the management team includes a group of properly motivated people who are highly efficient managers who are able to carry out such acquisitions without losing control over the already existing operations in their company. It is also imperative that managers have the ambition and courage to go through such a process. This human element is often more important to me than the financial issues themselves.
The third point is a clear vision and strategy about why and what we want to consolidate. It is extremely important, before starting the consolidation process, to prepare a business plan, work out potential synergies, discuss important details, e.g. whether the consolidation will be vertical or horizontal, whether your company will take over a competitor or a supplier, for example. It is important whether, as a result of consolidation, you will gain access to additional know-how and attractive products, or whether you will risk cannibalization of some of the solutions that you currently sell to clients.