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43332-1602227121-Oaklins - M&A Market Review Denmark and Europe - Q3 2020-F902a4
43332-1602227121-Oaklins - M&A Market Review Denmark and Europe - Q3 2020-F902a4
Denmark/Europe Q3 2020
MORTEN GERNER
ANALYST
OAKLINS DENMARK
+45 2627 6797
m.gerner@dk.oaklins.com
Introduction
Oaklins has in Denmark In every deal, we give nothing less STRUCTURE OF THE REPORT
than our very best to do justice to the
throughout the past 40 extraordinary effort our clients give to – Chapter 1
years closed more than 250 their businesses. We became front- Highlights
runners, not because of these numbers – Chapter 2
transactions (sell-side and but because of who we are and how we The M&A market in Denmark
buy-side) and is specialised work. – Chapter 3
in mergers and acquisitions The M&A market in Europe
DESCRIPTION OF THE REPORT – Chapter 4
of privately and family-owned Price development in Europe
businesses. The purpose of the report is to explain – Chapter 5
and map the movements in the Danish as Methodology
well as the European M&A market quarter – Chapter 6
Oaklins is the world’s largest and most by quarter. The report is based on data Selected Oaklins transactions
experienced M&A advisor in the mid- from Mergermarket and Infront Analytics
market, with 850 professionals globally and is analysed on the basis of well-
and dedicated industry teams in over established criteria for the development
45 countries worldwide. We take great of the report. The report aims to identify
pride in our solid track record counting trends in the market and to present the
5,500 closed transactions, including distribution of transactions across sectors
more than 250 transactions in Denmark. and categories of buyers.
“Oaklins truly delivered and worked hard, also when challenges occurred and it felt like an uphill
battle. It has been like having Terminators (the good Arnold from the sequel) at our side.”
“For us who founded the company and managed it during its 30 years of
existence, Oaklins was the perfect partner for our sale. The combination of
industry insight, professional craftsmanship and uncompromising dedication,
made it a valuable contribution from an owner's perspective.”
DANISH COMPANIES'
ACQUISITIONS ABROAD
Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3
2016 2016 2017 2017 2017 2017 2018 2018 2018 2018 2019 2019 2019 2019 2020 2020 2020
After nearly ten years of growth, the global M&A activity experienced a setback due to the uncertainty regarding the COVID-19
pandemic. A similar trend was evident in the Danish market. This impact was most greatly felt in Q2 2020, but the market is now
showing promising signs. The European M&A market is still lower than the level of Q3 2019 but showed an increase of 29%
compared to previous quarter (Q2 2020). The promising trend is even more prominent in the Danish M&A market, as transaction
volume is on par with the same quarter last year (Q3 2019), while being 23% higher than the previous quarter (Q2 2020).
A more detailed analysis of the Danish market shows a month-by-month increase in transactions since June 2020. September 2020
also recorded the highest amount of transactions since the Danish government implemented comprehensive restrictions on 11 March
2020, as part of a nation-wide lock-down to prevent the spread of COVID-19. The lock-down of several borders across Europe and
the increased economic uncertainty has resulted in several delayed M&A processes. Despite signs of recovery, a high degree of
uncertainty is still expected in the M&A market in the foreseeable future as the duration and economic impact of the crisis is yet to be
determined.
Since the outbreak of the pandemic in Q1 2020, there has been a shift in buyer types, as interest from financial buyers has re-
emerged as the year progressed. Financial buyers in Q1 and Q2 2020 accounted for 20% and 22%, respectively, compared to 29%
in Q3 2020. This high appetite may come as the financial investors have used the first months of COVID-19 to handle operations of
existing portfolio companies and now look for acquisitions in a market that is still impacted by uncertainty.
84 85
MONTHLY DANISH TRANSACTIONS
71 69
When comparing to the quarters of the
past year, Q3 2020 is at the highest level
in terms of total transactions. The quarter
also showed an increasing number of
transactions each month. 34 32
28 26 26 28
25 24 24 25
The impact of the global COVID-19 18 19
The Danish M&A market enjoyed a relatively strong start to the second half of 2020 “Oaklins has completely
with a Q3 activity level in line with 2018 and 2019. Total transaction numbers are on lived up to our expectations
par with the level of the previous two years' third quarters, despite the uncertainty regarding industry expertise,
implied by the COVID-19 pandemic.
cost and timing.”
The constituents of the overall level of activity are the following: A relatively high
LASSE PETERSEN
number of Danish targets with almost half derived from cross-border transactions.
– CIDAN MACHINERY
Meanwhile, Danish companies have a continuously high appetite for international
acquisitions; a trend that has remained stable during the COVID-19 pandemic. Finally,
sales of Danish-owned, foreign companies are following the solid trend steering
towards the highest full-year level since 2014.
Among the acquired Danish companies, especially the technology sector was active,
making up 30% of all transactions. During the COVID-19 pandemic, there has been an
increased interest from financial buyers. As of Q3, financial buyers make up 29% of all
buyers in 2020, up from 22% in the first half of 2020.
2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
1st quarter 2nd quarter 3rd quarter 4th quarter Correction
*Correction for transactions not yet registered: 10
2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
1st quarter 2nd quarter 3rd quarter 4th quarter Correction
BUYER TYPES
Financial
Buyers behind Danish company 29%
transactions were primarily strategic
players, accounting for 71% of all
acquisitions in 2020. The remaining 29%
of buyers are classified as financial.
Strategic
71%
DANISH COMPANIES ACQUIRED BY FOREIGN, ACTIVITY OF PRIVATE EQUITY FUNDS AND OTHER
STRATEGIC BUYERS IN Q2 2020 FINANCIAL INVESTORS IN DENMARK IN Q3 2020
2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
1st quarter 2nd quarter 3rd quarter 4th quarter
GEOGRAPHICAL DISTRIBUTION
OF FOREIGN COMPANIES' •
44%
ACQUISITIONS IN DENMARK
DANISH COMPANIES' 94
ACQUISITIONS ABROAD
82
24
Danish companies acquired 21* foreign
67 68 17
companies during Q3 2020. This is on 65 64
59 61
par with the record high levels of 2018 14 13 56
13 21
48 15 19
and 2019, which indicates a continuously 45 20 17 21
healthy appetite for international 6 20 21 13
14 21
acquisitions. This is a trend that has 25 23
14 15 14 20
remained fairly stable despite the severe 11 13 21
impact of the COVID-19 pandemic. 21 23
8 14 15 12
20 24 23 20
15 11 10 11 13 15
9
2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
1st quarter 2nd quarter 3rd quarter 4th quarter Correction
GEOGRAPHICAL DISTRIBUTION
OF DANISH COMPANIES'
30%
ACQUISITIONS ABROAD
DANISH COMPANIES'
39
DIVESTMENTS OF FOREIGN 37
35
COMPANIES 34
8
5 11
27 8
In Q3 2020, Danish companies sold 25 26 25
8 24
seven* foreign companies, which is 5 22
3
17 4 7
two companies more than the previous 12 7
14 7 16
quarter (Q2 2020) and two less than the 9
12
7 3 9
5
same quarter last year (Q3 2019). 3 4 6 7
5 4
7 8
7 6 3
10 11 3 12
9 9 9
6 5 6 5 4
2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
1st quarter 2nd quarter 3rd quarter 4th quarter Correction
The impact of the current COVID-19 pandemic is still evident in Q3 2020 for the
“Oaklins found the perfect
European M&A market. However, signs of recovery are showing with increasing
match for our company.
M&A activity. The transaction volume in Q3 2020 shows a promising development.
The potential is gigantic.”
Though the M&A activity level is lower than last year, Q3 of 2020 showed an
SIMON STAMPE
increasing number of sales of European companies, European acquisitions outside
Europe and divestments of European companies, when compared to the previous – BLOOMINGVILLE
quarter (Q2 2020). There appears to be an element of catch-up effect, with
transactions initially put on hold due to COVID-19, that have now been agreed in
the past quarter.
10,125 10,132
All transactions in Europe include 9,845
transactions with a European target, seller 9,081
8,270 8,366 2,616 2,628
or buyer. There has been a total of 1,990* 2,577
7,245 2,355
European transactions in Q3 2020. 6,738 6,725 2,161 2,172
5,975 5,685
2,025 2,417 2,476 2,461
1,606 1,842 2,144
The development shows an increase of 1,629 2,025 2,146
29% compared to the previous quarter 1,682 1,797 1,990
1,572
1,529 2,565 2,640 2,590
(Q2 2020), and a decrease of 19% 2,106 2,103
2,449
1,539
compared to the same quarter last year 1,834 1,660 1,781
1,487
(Q3 2019). 1,651 1,642 1,978 1,945 2,133 2,286 2,393 2,453 2,156
1,330 1,616
2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
1st quarter 2nd quarter 3rd quarter 4th quarter Corrrection
1,499
1,437
EUROPEAN COMPANIES' 1,416
(Q2 2020), and is broadly on par with the 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
same quarter last year (Q3 2019). 1st quarter 2nd quarter 3rd quarter 4th quarter Correction
The EV/EBITDA-multiple development in Europe shows a decrease in the index from 119 in 2019 to 118 as Q3 2020 comes to an
end. Looking at the past 3-5 years, the valuations of privately traded European companies are relatively stable with no or limited
indication of inflated prices. Compared to the stock market index, private companies have, on average, been traded at an increasing
discount. This is likely to give some resilience in relation to the recent public market share price fluctuations in response to the
COVID-19 situation, and particularly in the context of the past months' public market rebound.
Despite lower transaction volume, prices on private companies remain stable. It is however still too uncertain to conclude on the
severity of COVID-19's possible impact on pricing of private company transactions. With the current COVID-19 uncertainty, buyers
are increasingly thorough in their due diligence efforts, considering how a target will perform during these circumstances, and how it
would perform during a potential longer-lasting downturn.
PRICING OF PRIVATE COMPANIES REMAINS LESS VOLATILE THAN THE STOCK MARKET
The indexation of the EV/EBITDA-multiple (median) for transactions in Europe in 2020 is at index 118. This is slightly lower than
2019. However, it should be noted that the calculations are based on 231 preliminary observations for Q3 2020 compared to 635
observations for the full year 2019.
175
160
145
127
130 124 121 119
118 118
113
115 109 109
106
115 115
100 94
106
103
100 99
85
70
55
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
Stock market index Price index private companies
Number of observations
866 957 1,119 960 462 720 759 719 721 905 834 975 875 741 635 231
– The trend of the price development on the M&A market tends to follow the general movement in listed stock prices with
a delay of 3-6 months
– Transactions with a deal value of at least $5m are included
– EBITDA = earnings before interest, tax, depreciation and amortisation
– EV = Enterprise Value
– Indeks 100 = Year 2005
– The price level is affected by relatively large transactions
– The stock index Dow Jones Stoxx 600-index is a broad index comprising the largest European companies
AXEL JOHNSON INTERNATIONAL Headquartered in Stockholm, Sweden, design, manufacture and installation of
EXPANDS WITHIN INDUSTRIAL the Axel Johnson group was founded in internal transport systems for automated
AUTOMATION THROUGH THE 1873 and remains in family ownership, surface treatment processes and
ACQUISITION OF CALDAN now in the fourth and fifth generations. materials handling. Caldan is a market
CONVEYOR, CREATING A STRONG Axel Johnson International acquires leader in its niche in Europe and a strong
PARTNERSHIP IN DELIVERY and develops companies with profitable player in the Asian and North American
OF OVERHEAD AND FLOOR growth in strategically selected niche markets. The company has installed more
CONVEYOR SYSTEMS. markets, primarily technical components than 4,500 conveyor systems across a
and industrial process solutions. Axel wide range of industries.
The acquisition of Caldan is well aligned Johnson International companies employ
with Axel Johnson International’s long- 4,400 people in 30 countries. Annual The transaction is subject to clearance by
term strategy to provide complete sales exceed EUR 1,100 million. relevant, local competition authorities.
technical solutions for a variety of
industrial customers. Caldan will Headquartered outside Aarhus, Deal team
become an integral part of Axel Johnson Denmark, Caldan is a leading supplier of
International’s recently formed industrial overhead and floor conveyor systems. Oaklins was engaged by Axel Johnson
automation segment and part of the The company has 130 employees and International as strategic and buy-side
business group Industrial Solutions. more than 50 years of experience within M&A advisor.
“The Oaklins team was highly dedicated and has long experience in providing buy-side advice.
We couldn’t be happier with the guidance and support that they provided throughout the process.”
HANS GLEMSTEDT,
HEAD OF STRATEGY AND M&A – AXEL JOHNSON INTERNATIONAL
RÖKO, A SWEDISH INVESTMENT Röko now owns 85% of Lundberg Tech and systems. The offering is designed
FIRM, MAKES ITS FIRST DANISH and the management team, who are all to convey, cut and collect waste from
ACQUISITION – LUNDBERG TECH, continuing under the new ownership, production processes in industries such
A LEADING DANISH SUPPLIER OF owns 15%. as labelling, flexible packaging, food
WASTE HANDLING SYSTEMS TO A and pharma. Lundberg Tech is a global,
GLOBAL MARKET. Röko is a Swedish based investment profitable niche company headquartered
firm with €270 million in committed close to Copenhagen in Lille Skensved,
capital. The ambition is to be a true and with employees in five countries.
Röko has a strategy of building a group of long-term owner of European small- and
independent and strong businesses, with medium sized businesses. Röko has
proven capabilities evidenced through a local presence in Sweden, Norway Deal team
good financial performance and leading and Germany, and the team has vast
positions in their respective markets. experience from working with founder- Oaklins' team in Denmark was engaged
The acquired companies continue to and entrepreneur led companies across a by Röko as strategic and financial advisor.
work independently in a decentralised broad range of industries.
structure, with support from the Röko
team in developing the strategic Lundberg Tech develops and
direction. manufactures granulators, all-in-one-units
“We have had a fruitful collaboration with Oaklins, which has been instrumental in securing the
acquisition – our first transaction in Denmark.”
SKIOLD, A DENMARK- Agramunt, Spain, Rotecna specialises in The combination of SKIOLD and Rotecna
HEADQUARTERED the design, manufacture and marketing delivers clear strategic benefits to both
COMPANY, ACQUIRES SPAIN- of equipment and solutions for the pig companies, including a stronger global
HEADQUARTERED ROTECNA, farming industry. Enabled by its innovative footprint and enhanced platform to
CREATING A STRONG DNA, Rotecna has played a central role grow in new markets, a broader product
PARTNERSHIP IN DELIVERY OF in supporting the development of Spain’s portfolio of leading technologies and
COMPLETE PIG FARM SOLUTIONS. pork production industry, and has grown increased scale to support investments in
consistently over the past 10 years from R&D, including digital solutions. With this
SKIOLD, headquarted in Sæby, Denmark, c. EUR 10m in revenue in 2010 to nearly acquisition, SKIOLD group’s revenue is
has more than 140 years of experience EUR 50m in 2020. approaching EUR 200m.
providing seed-, feed-, and farm-
equipment and solutions. SKIOLD covers Since 2016, Rotecna has been partly Deal team
the complete value chain from field to owned by the Spanish private equity
livestock, including seed processing, investors Talde and Oquendo. Rotecna Oaklins was engaged to advise SKIOLD
grain handling, feed milling, and poultry-, will become a part of SKIOLD’s existing and its majority shareholder Solix Group,
cattle- and pig farming equipment. pig business unit, nearly doubling its size as strategic and financial advisor in
in terms of revenue. the transaction; a joint effort between
Founded in 1991 and headquartered in Oaklins’ teams in Denmark and Spain.
“By combining our business we will be able to serve our customers even better through
a strengthened product portfolio and increased scale to build an even more comprehensive
sales and service network globally.”
THE SHAREHOLDERS OF GRAZPER in its current form, facilitates automatic products, services and solutions to a
TECHNOLOGIES HAVE SOLD monitoring of cars, cyclists or pedestrians, diverse range of industries, including
THE COMPANY TO YOKOGAWA with the purpose of smoothing traffic oil, chemicals, natural gas, power, iron
ELECTRIC CORPORATION. flow or creating automated behavioral and steel, and pulp and paper. With its
customer analysis in supermarkets – using innovation business, the company also
Grazper Technologies was founded in cameras that stream video directly to an aims to radically improve productivity
2015 and has advanced into an artificial external location for manual or automatic across the pharmaceutical and food
intelligence (AI) software development analysis. industry value chains. Yokogawa has a
power-house based in Copenhagen, global network of 113 companies spanning
Denmark, with highly motivated engineers, Founded in 1915, Yokogawa is a leading 60 countries and generating US$3.6
software developers and computer provider of industrial automation and test billion in sales in 2018.
scientists. Grazper has developed a and measurement solutions. Combining
platform to build full stack proprietary real- superior technology with engineering Deal team
time 3D vision solutions using embedded services, project management, and
AI. The platform can support networks of maintenance, Yokogawa delivers field Oaklins’ team in Denmark acted as
installed cameras and embed intellectual proven operational efficiency, safety, strategic and financial advisors to the
property into edge devices for intelligent quality and reliability. The industrial sellers in this transaction.
machine vision applications. The solution, automation business provides vital
“Before presented by Oaklins, we didn’t know Yokogawa with their impressive track-record and
strategic ambition to enter the AI field. Becoming a center of excellence for their global operations
from our Copenhagen base is very appealing to us, and if it hadn’t been for Oaklins’ global access and
seamless execution, we wouldn’t have been in this extremely exciting situation.”
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