Baker Tilly Berk advises Dutch industrial group on sale to Axel Johnson

08 May 2018 Consultancy.eu

Swedish industrial conglomerate Axel Johnson International has continued its M&A spree in 2018 with the acquisition of Netherlands-based MAK Aandrijvingen. The move is the third Dutch scoop for the Swedes, following the additions of Spruit Transmissies in 2014 and AHD Aandrijftechniek in November last year. The deal with MAK Aandrijvingen was advised by Baker Tilly Berk Corporate Finance.

Headquartered in Stockholm, Axel Johnson International is a group of more than 3,300 people across 100 companies in 25 countries, with combined annual sales of €790 million. The privately owned company operates in four main segments: Fluid Handling Solutions, Industrial Solutions, Lifting Solutions and Transport Solutions. 

As part of the firm’s growth ambition, Axel Johnson International has in recent years pursued an aggressive buy-and-build strategy. 2017 was already an active year for the company’s inhouse M&A team, with the purchases of Pritchard Tyrite (UK), IOW Group (Central Eastern Europe), W. Giertsen Services (Norway), Town & County Engineering Services (UK) and AHD Aandrijftechniek (Netherlands), among others, yet 2018 is on its way to be the busiest deal year in Axel Johnson International’s history. 

The deal spree kicked off with TMT. Malinen and AxFlow (in France and Germany), and continued with the bolt-ons of Rotera Kullager, Cinti, Egil Verne and the Dock Equipment product range from Pommier. The latest transaction, that of MAK Aandrijvingen, is the eighth this year and first in the Benelux. The move adds 36 employees and €15 million to its revenue base in the Netherlands. In comparison, the previous bolt-on of Alkmaar-based AHD Aandrijftechniek added 25 employees and €6 million.

Axel Johnson International acquires Netherlands-based MAK Aandrijvingen

MAK, located in Lelystad, provides power transmission solutions including chains, belts, motors and reducers to OEM customers. The company’s roots date back to 1926. “As a value-adding distributor for leading OEM’s, MAK has developed a strong niche position,” said Ola Sjölin, Managing Director Industrial Solutions at Axel Johnson International. “MAK will be a great addition to our existing business in the Dutch market and forms an important driver of our ambition to continue our growth within the mechanical power transmission segment.” 

Gerard Klinkhamer, Managing Director of MAK, said that joining the Swedish conglomerate and its Dutch footprint will provide the company with “a very good opportunity to continue to grow” its business. MAK will continue to operate as an independent company within the Industrial Solutions business group of its parent – “I am looking forward to collaborating in key areas with other companies in the group.”

MAK was advised by the Corporate Finance department of Baker Tilly Berk, the Dutch member firm of Baker Tilly, with over 30,000 employees one of the largest global accounting and consulting firms of the globe. Baker Tilly Berk Corporate Finance supported Klinkhamer and MAK’s shareholders with transaction advisory (led by partner Lorijn van Leersum) and legal support services (led by Marcel Ploegsma and Senta Hartsink-Groosman). Buy-side advisors have not been disclosed by Axel Johnson International.

The acquisition comes amidst a booming M&A-market in the Netherlands. According to a recent analysis from KPMG, the number of mergers and acquisitions in the Netherlands stands at its highest point in a decade, although deal volume of 2017 and 2016 remained far off the record-breaking 2015 – the year when oil giant Shell absorbed counterpart BG Group for a staggering €64 billion. Meanwhile, in Axel Johnson International’s home base the Nordics, the outlook for M&A in the mid-market segment is forecast to be bright for the current year.

Last year, Baker Tilly Berk advised on the divestment of EFETnet by energy association EFET to EFETnet’s long stand managing director, among others.

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.”