Private equity group Vortex acquires Dutch telecom & IT services firms

20 March 2018

Benelux private equity firm Vortex Capital Partners has acquired Tritel and Fieber, two telecom & IT service providers located in the Netherlands. The Amsterdam-based investor has merged the two companies, in a move that creates one of the larger B2B service providers for the SME segment in the Netherlands. 

Tritel and Fieber are both telecom & IT service providers who deliver voice-over-IP (VoIP), internet access, mobile telecom, cloud solutions and other IT products to a wide range of Dutch businesses and entrepreneurs, mainly focused on mid-market companies and small businesses. Both companies – Tritel is based in Alkmaar and Fieber in Amstelveen – have seen rapid growth in recent years, on the back of the digitisation boom which is hitting businesses. 

The use of internet services has for instance become a sheer necessity for the services and operations of companies, and both Tritel and Fieber focus on the delivery of high-speed internet services through glass fibre networks. Further, in an era when many organisations find themselves embracing digital transformation, topics such as cloud-based working and managed voice are becoming increasingly important levers for the way organisations organise themselves and operate.
Private equity group Vortex acquires Dutch telecom & IT services firms“By combining these two companies, a Dutch front-runner in the industry is created. Both leadership teams have done a good job by focusing on scalability and top line growth,” said Evert Jan de Groot, Partner at Vortex Capital Partners. The deal was funded out of the firm’s ‘Growth Stage Buy-out Fund II’, which was launched in December last year and has a total size of €35 million, available for targets in the Benelux ranging from €5 million to €25 million. 

The acquisition of the two Dutch companies comes one month after Vortex acquired, a German website for second-hand car sales. The added platform has been combined with CarsOnTheWeb, a B2B online auctioneer for used cars which the investor acquired a year ago. Together the two automotive platforms have crafted the ambitious plan to sell more than 100,000 vehicles in the coming years.

The combination of Tritel and Fieber will according to De Groot build on their complementary offerings to enjoy several synergies.Tritel, founded in 2007, has gained considerable size by focusing on providing services to mid and lower-tier markets. Fieber meanwhile has developed a strong sales and implementation model to the lower tiers of the SME market. Together the two companies now serve more than 5,000 customers throughout the Netherlands, from offices based in Alkmaar, Amstelveen, Den Haag, Den Bosch and Joure.

“The ambition is to grow Fieber and Tritel into the leading provider of telecom and IT services to businesses in the mid-market and SME segment, and position their offerings as the top alternative to the incumbents players. We see the potential to grow fast over the next few years,” remarked De Groot.

Throughout the deal-making process, the shareholders of Tritel were advised by AenF Partners, a boutique Dutch M&A firm based in the Netherlands. Other M&A advisors involved have not been disclosed.

Firms struggling with turning M&A deals into equity value

18 April 2019

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.”