Pitch Best Small Cap Deal 2020: NewPort Capital – Unlimited Spare Parts
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| Name of the deal | NewPort Capital & Unlimited Spare Parts International acquire Delba |
| Date | 29 september 2020 |
| Published value | € 5 – 50 million |
| Buyer(s) | NewPort Capital & Unlimited Spare Parts International |
| Target | Unitrack, Wensing, Ten Hove and Delba |
| Seller | Founders/owners of various companies |
Involved firms and advisors
Involved firms and advisors buy side:
JSA Tax (Tax Advisory), BDO (Financial Due Diligence), deBreij (LegalAdvisory Corporate M&A), Sincerius (Financial Due Diligence), NewPort Capital (PE Management)
Involved firms and advisors sell side:
Marktlink Fusies & Overnames (M&A Advisory and Legal Advisory Corporate M&A), Florin Finance, Aeternus, AKD Benelux Lawyers, Janssenbroekhuyzen
Pitch
Brief description deal / Deal outline
NewPort Capital created Unlimited Spare Parts International B.V. to pursue a buy-and-build strategy and acquired four companies over the past 12 month period. The following companies were acquired:
- October 2019 – Unitrack B.V. c.s. was acquired from the founder. The company specializes in the reversed engineering of spare and near-consumable parts for food packaging machines
- December 2019 – Wensing B.V. c.s. was acquired from the second generation family-shareholder. The company specializes in the servicing and trade of industrial blades and knives for food processing and food packaging machines
- April 2020 – Ten Hove Foodknives c.s. was acquired from the founder. The company specializes in the servicing and trade of industrial blades and knives for food processing machines
- September 2020 – Delba SG B.V. and Tegeno Sp. z o.o from the second generation family-shareholders. The company specializes in the engineering and manufacturing of metal parts for packaging machines. Delba also operates a high-end production facility in Poland.
Unlimited Spare Parts is currently in the process of fully integrating the four companies. This includes introducing new C-level management, sculpting the organizational structure in a form that is capable of handling a pan-European business, merging the IT and ERP systems of all constituents into one system and realizing synergies in overhead functions and rationalizing the sales team.
Why should this deal win the Award for Best Small Cap Deal 2020?
Buying Delba was the latest step of a successful buy-and-build process and we are currently finalizing our fifth investment with expected closing late November/early December 2020.
Unlimited Spare Parts operates in the food value chain, which is a very stable end-market. On top of that, Unlimited supplies very crucial, OEM-specific wear and tear spare parts which are key to food production line uptimes. The combination of (i) the products’ importance for business continuity, (ii) the recurring character of the revenues and (iii) high-value add for clients in terms of service and time to market makes this business a highly interesting investment case with matching levels of profitability. On top of that, this market is very large and dominated by OEMs (machine builders) which typically are unable to service their machines (in terms of spare parts) with the same service level over the machine lifetime.
In the European market, there are quite a lot of companies which are engaged in supplying niche spare parts for food processing and food packaging machines. These companies have a modest geographical footprint and only supply a limited number of parts. End-clients – such as large food processing companies like Vion, Haribo, Aviko, and Bonduelle – focus on limiting their number of suppliers and welcome parties like Unlimited Spare Parts which can service a wide variety of OEM-specific spare parts from all major brands at comparable quality to OEM parts but against lower total cost of ownership. Unlimited is able to offer a multi-OEM-compatible product offering which is not possible for specific OEMs.
With Unlimited we have been able to find, acquire and merge four companies which fit within our strategy (number 5 will be added within 3 weeks) within a 12 month period. We started with a EUR 1.8 million EBITDA company a year ago and grew to approx. EUR 8.0 million EBITDA today.
Buying companies is one thing, but building a beautiful company with one company culture, a shared vision and goal is another thing. With Unlimited Spare Parts we invest heavily in creating one integrated company. Currently we're in the process of setting the basics right. The largest project is implementing Microsoft Dynamics Business Central in the entire company. Further, we have implemented a functional management structure which is currently being rolled out through the entire company. During the first half of 2021 we will invest in a B2B E-commerce website which will enable Unlimited Spare Parts to sell its products also in geographical areas where we do not have our own sales people on the ground: we will bring this very traditional company into the digital era!
A good team which is willing to change and walk the extra mile is crucial for buy-and-build strategies. We have chosen to move forward with a couple of very motivated managers who used to be the second line management in the business of the former owners. We have supplemented this team with some new talent (CFO and currently in the process of finding a new CEO who will replace the current interim CEO). The entire management team and also some other key staff have invested in the management participation plan, meaning they have invested a large sum of private savings, indicating that they fully support the buy-and-build growth strategy.
Our goal is becoming the leading, full service (OEM-specific) spare parts supplier for food and food packaging players in North Western Europe with an EBITDA level of over EUR 20 million. We are almost half-way within one year, so that is what makes Unlimited Spare Parts deserve a nomination!
Deal rationale:
See above.
What is the impact of this deal for the company?
Strong growth with lots of new possibilities for the people working in the company. Up until now we have created quite some additional jobs.
What is the impact of this deal for the direct stakeholders?
From personnel and management we get the feedback that during last year more innovation was initiated than during the last 20 years. People feel that the change is positive and want to be part of this change. That is why 8 key (sales) managers have invested quite some personal savings in the company.
Suppliers also benefit from the fact that we are growing. Cross-selling the total assortment among all clients means buying more from the current suppliers.
Our clients also benefit from a wider assortment of spare parts, creating a one-stop-shop solution.
What is the impact of this deal on society?
– Job creation
– Lower carbon footprint by insourcing production from overseas to our own production facility in Poland
– By improving quality, we increase spare parts lifetime and therefore reduce waist
What was most complex about this deal?
Four deals in one year with all their deal specifics and company cultures. The last acquisition is based in Kielce Poland, which caused quite some challenges with banks and legal documentation. Further, merging these companies into one company culture has been a big challenge.
