Oaklins Netherlands advises VAF Instruments on sale to Aalberts Industries

01 August 2018 Consultancy.eu

Netherlands-based Aalberts Industries has acquired VAF Instruments, a manufacturer of high-tech sensors and measurement systems. Around 85 employees of VAF Instruments will join Aalberts Industries, strengthening the firm’s fluid control activities.

With revenues of over €2.7 billion, Aalberts Industries is one of the globe’s larger manufacturer of so-called ‘mission-critical systems’ for industrial groups – technologies and software that support key processes of companies in, among others, the energy, oil & gas, industry, real estate and automotive sectors.

The company’s latest acquisition – earlier deals include that of Ventrex Automotive, Eloxal-Werk-Burg, the French division of Thomson Genlis and Conbraco Industries – of VAF Instruments adds approximately €20 million to its revenue base. Founded in 1983, in Dordrecht, VAF Instruments supplies products to the power plant, industrial and marine sectors. In particular in the latter industry the company boasts a strong track record – for its product range VAF is a leading supplier to the top-100 shipyards and the vast majority of ship owners worldwide. 

“VAF brings knowledge of high-tech sensors, measurement systems and performance management software engineering to the Aalberts portfolio,” said a spokesperson of Aalberts Industries, adding “the global customer base will strongly improve our position in the marine and power generation end markets.” In addition, the acquirer expects to leverage VAF’s technical expertise to bolster its footprint in other segments. “VAF’s portfolio can be valuable in other applications.”

Oaklins Netherlands advises VAF Instruments on sale to Aalberts Industries

The two parties were brought together by an external M&A consultancy. Following a strategic review last year, VAF’s shareholders concluded that finding a strategic partner would benefit the firm’s growth endeavours. The company hired experts from the Dutch arm of Oaklins, a market M&A advisor with around 700 professionals globally, to lead the process. "We believed that Oaklins would do the best job at positioning our company in the right way to the right group of international buyers,” explained Leo Blankenstein, CEO of VAF Instruments. 

Months down the line, Fokko Poldervaart, a partner at Oaklins, said he is proud to have advised the shareholders of VAF Instruments on the successful deal. He commented; “In a market characterised by increasing levels of (environmental) regulation, a strong drive for fuel cost efficiency and tight budgets, we have been able to clearly demonstrate the exceptional position and potential of VAF Instruments. With a positive long-term outlook for VAF Instruments, both in new build and in retrofit categories, we are convinced the joining of forces will prove a positive story to Aalberts Industries.”

Blankenstein added; “Oaklins’ team proved its value to us throughout the process. They helped identify and structure the right deal with finally the right strategic partner for us, ticking of all the boxes from our wish list.” 

As part of the integration, the management team of VAF will continue to manage the company, while teaming up with Aalberts to drive synergies in growth, operations and innovation. Terms of the transaction have not been disclosed. 

Other recent deals closed in the Netherlands include that of MAK Aandrijvingen, acquired by Swedish industrial conglomerate Axel Johnson International; software solutions firm Goyello, acquired by Indian IT player Aspire Systems, and; telecom & IT service providers Tritel and Fieber, purchased by Benelux private equity firm Vortex Capital Partners. 

According to an analysis by KPMG, the number of deals in the Netherlands currently stands at its highest point in a decade.

Firms struggling with turning M&A deals into equity value

18 April 2019 Consultancy.eu

At a time when merger & acquisition activity is on a high, new research highlights that a majority of deals closed aren’t in fact contributing to equity improvements. 

To come to their conclusion, researchers at Willis Towers Watson and Cass Business School analysed the performance of all deals closed in the first quarter of this year with a deal value of above $100 million. For all those deals, 180 in total, the share price of the acquirer was tracked, and benchmarked against an index (MSCI World Index) which monitors equity performance across 20+ developed countries. 

The analysis found that across all regions globally, deals on average had a negative result on the equity value of the acquiring party. Buyers in North America and Asia-Pacific in particular struggled with value creation from their acquisitions. In the US and Canada, companies that were involved in a takeover or merger had a negative performance of 10.1 percentage points compared to the North American index. Asia Pacific buyers lagged 5.0 percentage points behind their regional index. 

Globally, the average stood at 5.4 percentage points behind the index. “The international M&A market as a whole is showing disappointing results, on the back of a volatile transaction climate and global political uncertainty, from trade wars to increasing protectionism,” said Gabe Langerak, a Dutchman who leads Willis Towers Watson’s Mergers & Acquisitions practice for Western Europe.Firms struggling with turning M&A deals into equity valueEurope however bucks the trend and is the only region where large mergers & acquisitions in the first quarter of 2019 had a positive impact on the stock prices (2.8%). Langerak: “The relatively stable – or less unstable – political and economic situation seems to turn out beneficial, and as a result European companies have outperformed their international peers.” It is not just a short term catch – the continent has been performing better for years, with the three-year average at 5.1% above the index. 

Striking, according to the researchers, is that international deals are outperforming national deals. For example, cross-border transactions score 0.9% higher than the index, while cross-regional deals even surpass the index by 3.1%. 

While the ‘financial’ performance of M&A deals is by no means impressive, there are however little signs of deal activity to slow in 2019. “Growing cash reserves, technological disruption and the stagnating growth of emerging markets are still pushing companies towards the M&A market,” explained Langerak. A recent report by Bain & Company found that global merger and acquisition activity spiked last year, growing from $2.9 trillion in 2017 to $3.4 trillion in 2018

The role of private equity, which accounts for a large share of deal activity, is another force lifting M&A activity. Investors are cash rich, and face pressures to spend the money in order to help their backers (mostly institutional investors and family offices) reap better than market average returns. According to one estimate, private equity now sits on $1.7 trillion of funds that is available but can’t be invested (‘dry powder’), with investors struggling with higher multiple and a limited supply of top, well priced targets. “As potential candidates now seem more expensive than during previous M&A peaks, such as in 1999 and 2008, it is more difficult than ever to close successful deals.” 

Langerak concludes with a tip for deal makers; “For M&A experts that want to make a move, it is key to focus on selecting the right acquisition candidates. Proper preparation, integration and the right people are essential to gain the right insights before taking a leap.”