Pitch Best Small Cap Deal 2021: SKion Water – Paques 

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Involved firms and advisors   

Involved firms and advisors buy side:  
SKion Water (M&A in-house), Loyens & Loeff (Legal Advisory Corporate M&A and Tax Advisory) 

Involved firms and advisors target:  
n/a 

Involved firms and advisors sell side:  
Florin Finance (M&A advisory), Deloitte (Financial Due Diligence), Corp. (Legal Advisory Corporate M&A), Amstone (Tax advisory)    

Pitch  

Brief description deal / Deal outline  
The Pâques family was supported in the sale of its remaining 80 percent stake in Paques to minority shareholder SKion Water. Paques is the undisputed world’s leading company in the field of development and construction of cost-effective purification systems for (waste)water and gases, based on innovative biotechnology. With over 2,500 reference installations worldwide, Paques has helped companies and municipals to contribute to one of the major challenges of today: to reduce their water and carbon footprints and reclaim valuable resources. Paques employs some 430 FTEs worldwide. Besides the headquarters in The Netherlands, Paques has subsidiaries and/or production locations in China, Brazil, Argentina, Colombia, United States of America, India, Malaysia and Thailand. SKion Water GmbH – through its operational subsidiaries Ovivo, EnviroChemie, ELIQUO WATER GROUP, Paques, Ecopreneur, ADASA and Matten – is a technology and solution provider, as well as a plant manufacturer, in both municipal and industrial water and wastewater technology. SKion Water also invests in innovative water technology companies if the respective technology is a fit with the existing portfolio. SKion Water is a subsidiary of SKion GmbH, the investment company of German entrepreneur Mrs. Susanne Klatten.  

Why should this deal win the Award for Best Deal 2021?  
Sale of a global market leader in the bio-based industrial wastewater treatment market. Paques is a highly respected and recognised global market leader in the bio-based industrial wastewater treatment market and employs some 430 FTEs. The company's innovative and bio-based solutions help customers to lower their CO2 footprint by some 11.2 Mt a year, converting 25.8 million kg organic pollution a day to biogas, equalling the yearly natural gas consumption of 2.8 million households! Additionally – as a third-generation family business – Paques plays an important regional role in the province of Friesland, not only as employer but also as a national symbol of the Netherlands as the worldwide pioneer in innovative water management solutions.  
 
The company and its technology have been (inter)nationally nominated and awarded numerous times – amongst others – as business of the year, best environmental innovation, and most innovative wastewater treatment. Challenging market developments led to quick decision making Over the past few years, rapid growth has turned Paques into the global market leader in the bio-based industrial wastewater treatment market. This market is going through an important transition. Today’s customers increasingly demand complete solutions, turnkey project delivery, and on occasion even ‘own and operate’ contracts. Following this trend implies an important change in the business model of Paques: from technology development, where Paques has its roots, to contracting. The COVID-19 pandemic acted as a catalyst by supressing the order intake due to travel restrictions and temporary postponement of new investments.  
 
Quick decision making how to proceed was key in arranging attractive long-term continuity prospects for the family business at favourable terms. Highly complex transaction within a challenging timeframe The Pâques family appointed Florin Finance as trusted financial advisor as Leo Bos, partner at Florin Finance, was already involved in the initial sale of a 20% minority stake to SKion in 2012. Within a highly challenging timeframe, Florin Finance identified potential scenarios and alternatives (including the 80% sale), addressed pros and cons, helped the family to make a unanimous decision how to proceed, and at the same time involved SKion (as the minority shareholder) and other stakeholders in this decision-making process. Further complexities arose as the second and third generation founding family members where on a different level involved with the company and lived in different continents around the world. Additionally – making the deal even more complex and timeframe more challenging – one of the family members desired to continue the company's biopolymer activities, adding an additional element to the transaction: a corporate carve-out.  
 
Following a highly structured approach, SKion was offered the opportunity to acquire the remaining 80% shareholding from the Pâques family. The existing relationship and mutual trust, SKion’s experience in the sustainable (water) segment, its long-term strategy and financial strength, and the opportunity for the company to continue operations under the name Paques and on an autonomous manner, contributed to an attractive transaction for both parties. Ability to create a constructive setting under high pressure based on a pragmatic and hands-on approach, Florin Finance acted as the orchestrator that identified the status quo, managed a highly complex process, listened to, evaluated and managed expectations of each of the four family members. Nomination This deal is an excellent candidate as the sale enlightens the continuity of a successful third generation family business and a national symbol of the Netherlands as the frontrunner and market leader in innovative bio-based water management solutions. With the departure from a highly challenging timeframe and setting, a well-structured process led to the cross-border sale to the top-tier family office of Mrs. Susanne Klatten, heiress of the – amongst others – German BMW industrialist Mr. Herbert Werner Quandt.    

Deal rationale:  
Paques represents a valuable add-on to SKion Water's existing portfolio of water focused businesses. SKion has been enthusiastic about Paques from the moment they acquired their initial 20% shareholding in 2012. Over the past few years, rapid growth has turned Paques into an important player in the international market for industrial wastewater treatment. This market is going through an important transition. Today’s customers increasingly demand complete solutions, turnkey project delivery, and on occasion even ‘own and operate’ contracts. Following this trend implies an important change in the business model of Paques: from technology development, where Paques has its roots, to contracting. The COVID-19 pandemic acted as a catalyst by supressing the order intake due to travel restrictions and temporary postponing new investments.  

What is the impact of this deal for the company?  
SKion Water offers attractive long-term continuity prospects for the family business and for Paques employees. The acquisition by SKion Water ensures Paques is able to respond to the changing market circumstances. With the acquisition of Paques, SKion Water can leverage Paques’ technologies across the offerings of its group companies and thereby increase Paques’ market potential.  

What is the impact of this deal for the direct stakeholders?  
Ensuring the continuity of Paques not only as an important regional employer but also as a national symbol of the Netherlands as the pioneer in water management solutions.  

What is the impact of this deal on society?  
Ensuring the continuity of Paques as a provider of innovative sustainable wastewater management solutions that contributes to lowering industrial emissions worldwide.   

What was most complex about this deal?   
Within a highly challenging timeframe, alternatives and scenarios (including the 80% sale) had to be identified, all Pâques family members had to be guided through the pros and cons and make unanimous decisions, and at the same time involve SKion (as the minority shareholder) and other stakeholders in this decision-making process. An additional corporate carve-out being part of the deal made it even more complex and a already challenging timeframe even more challenging  

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