Working in mergers & acquisitions consulting with Marktlink

30 April 2020 Consultancy.eu

Joep van den Enk joined Marktlink three years ago after completing his master’s degree, and works as a consultant specialised in mergers & acquisitions. He reflects on life in the world of corporate finance and on how it is to work for the Dutch dealmaker.

Why did you choose for a career in M&A?

I come from an entrepreneurial family. My father founded a catering industry company and I was expected to work at his company. However, during my study I found out that there were other kind of jobs that had my interest. When I did my internship at ABN, I explored more of M&A. This was something I dug in deeper by doing my thesis internship at EY Transaction Services. It appeared I enjoyed working in this sector a lot! 

Why did you choose to work for Marktlink instead of at a Big Four company?

During my internship, I noticed that I was only a small part in the whole process. By focusing on just this specific area of the process, you become a specialist in only that part of the deal. Sometimes I worked on a part of a project and half a year later, I read in the newspaper that the deal did or did not go through. The output of my work was not directly noticeable and that was something that I missed. 

Joep van den Enk, M&A Consultant bij Marktlink

During my internship at EY TAS, I came in touch with Marktlink. They were quite small and weren’t recruiting actively in Groningen, but we had good contact and after a few months of traveling I started working at Marktlink. Here, I was involved at the acquisition process from start to finish. From day one, I was part of the team and had a seat at the table with the decisionmakers. 

This makes you feel really involved, since you feel like you are working for the owner of the company themselves. You are not just a pawn in the transaction game, you are constantly the one in contact with the owner, making you feel like you are an important part of the deal. 

When you only sell a division of a company, it is a strategic point on the agenda of a company. But when you are selling the life’s work of the owner and a lot of emotions are involved, so it is important to not only get a good price, but also find the perfect buyer for the company. This was something that appealed to me and why I chose to work at Marktlink.

Can you tell more about Marktlink?

Marktlink is a fast-growing company, which grew from 35 to nearly 100 employees in the 3 previous years. We advise on the purchase and sale of SMEs (Small Medium Enterprises), usually by helping the founder to sell their company to a strategic party or private equity. At the other side, we buy SME companies for strategic parties and private equity. We advise on deals between 2 and 200 million euro, but our sweet spot is in between 5 and 25 million euro. 

We currently operate from the Netherlands, Belgium, Germany and we are expanding towards the Nordics, starting with Denmark. We work in project teams that work on 4-6 deals a year. These deal teams have a fixed composition, so we have a great team spirit. We have 23 deal teams, consisting of a project leader (manager/partner), consultant and depending on the project, another consultant or junior consultant. Junior consultants are flexible and work on multiple projects, so they get in touch with different people of Marktlink and different working styles.

We start our sale-projects by looking at what would be interesting for buyers and then we look at potential buyers. Usually we approach about 40 to 50 companies, which we filter until we have a right amount of seriously interested potential buyers left. We try to start a competitive bidding procedure, to gain the highest possible payoff for our client.

We are partnered with the client and together with them think about which buyer is the best for their company, often this appears to be someone else than the client was thinking of at first. Because of our experience, we give good advice on this matter and we think further where the client stops thinking. This way we can create substantial value for the client. 

We work on a basis of exclusivity, meaning, Marktlink advises entrepreneurs during the entire process. From that first introductory cup of coffee to the popping of the champagne at the notary’s office. To fully complete these transaction services, we also have our own lawyers at Marktlink. They are fully focussed on M&A, so we experience that working with our own inhouse lawyers works more smoothly and efficient than with external lawyers. The lines of communication are short and they always operate with the deal in mind, that is really important when you’re in the last phase of the process. 

Over the years we gained a large network with clients, which grows every day. This extensive network helps us (and yourself) to make matches between buyers and sellers and built up a relevant professional network. We experienced that when companies founded in the Netherlands keep growing, they want to expand to Germany and/or Belgium. This is the most comfortable first step into globalisation.

We experienced that to facilitate this, local knowledge is essential. Because of that, we recruited local people who are well connected and have lots of experience in the working field. They helped us expand our network into those countries, so we can help our clients even further and we can expand Marktlink into Europe. 

Most of Marktlink’s deals involve private equity, why is this the case?

The average age of our clients is 45-50 years, people that have owned their company for about 20 years. They experience that when you have about 50 employees, you are working as a manager and not as an entrepreneur. You’re not doing the work that you loved doing when you started. Also, there is too much going on to be up to date about everything.

Because of the historically low interest rates, investors started looking for returns elsewhere. Because of that, the presence of private equity increased significantly the previous year. With this increase, private equity also became present in the 5-20 million euro value range.

Private equity regularly appears to be the perfect partner for an owner to sell their company to. Private equity takes care of the management part, so the previous owner can take a step back on all the management work and be active in the commercial matters. This way they are still of great value for the firm, but they carry a smaller burden. Also, private equity has great experience management wise. 

We often construct a pre-exit, where the owner keeps participating in the company for a few years. The private equity party constructs a leverage effect by funding a major part of the transaction with debt, so the returns on the equity part can be very high. The owner is invited to keep participating in the company and have an equity stake, so when you make sure the company keeps performing you can profit accordingly. 

When entrepreneurs are fully out of their company in their early 50’s, they regularly come back to us. They have a large bag of money left from their previous company and want to buy a company themselves, since they consider themselves too young to retire. This way, entrepreneurs keep coming back to Marktlink.

How is the impact of Corona noticeable at Marktlink?

After the announcement of the Prime Minister [Mark Rutte] there was a shockwave after which everyone was focused on their own organisation. In the second week, we saw that the most companies adapted to the situation and returned to ‘business as usual’.

For our current deals, it means that the deals that are already quite advanced in progress are expected to be completed after some extra checks from the bank (e.g. current trading and adaptability of the company). The deals in the start-up phase are often postponed unless the impact of the virus is limited.

The current uncertainty in the market also creates opportunities. The price expectation of sellers will probably fall, which is favourable for strategic buyers and for investors who are specialised in distressed M&A and turnarounds. And of course, there are also enough companies that benefit from this situation or are well prepared. For example, we have a client who, unlike his competitors, keeps high stocks in order to always be able to deliver. Where others no longer receive supplies from countries in lockdown, he can continue to deliver. So there is always a way and you need to adapt fast to the new situation.

For what kind of students is Marktlink the perfect firm?

Since our employees have lots of direct contact with decision makers, having analytical skills is not enough to convince potential buyers to get or keep them in the process. So, the combination of financial and commercial skills is really important in this type of work! In the end, many decisions are made based on someone’s feeling and we have to respond on that.

In the application process, you have to show your social capabilities in the interviews. Your core competences will be tested, to see what drives you as a person. This has to fit in your story of course. Finally, you have to solve and present a case, which will be a more commercial focused case for financial students, and vice versa. 

This article was previously posted in Risk Magazine, a Dutch platform for young professionals.