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WHEN EQUISTONE acquired a majority stake in the French engineering consultancy Vulcain in 2019, it was a business that was already making an impact.
Under its co-CEOs, Alban Guilloteau and Frédéric Grard, the firm – which had been founded in 1998 – had made several acquisitions to shift a previous focus on oil & gas onto the energy, healthcare and transportation sectors. It was cash-generative and had established a strong track record of recurring revenues with its clients.
But both CEOs harboured larger ambitions. Their plan was to transform Vulcain from a French-focused enterprise into a European leader. And that required the right partner.
The fit with Equistone was ideal. The co-CEOs already knew Equistone partner Stanislas Gaillard personally and had gained a positive view of Equistone’s scale, network and reputation.
Reciprocally, the Equistone team had developed an equally positive investment thesis for backing Vulcain because of its growth plan, its sector strategy, and the quality and experience of the management team.
A key point was that Vulcain was a multi-specialist consulting business on three specific verticals, each one of which had positive long-term drivers,” says Equistone senior partner Grégoire Châtillon. “In each of these sectors, there were positive pricing trends, and we could see an outsourcing trend towards engineering consulting firms in order to increase flexibility and use specialised resources.”
The Equistone team also liked the strategic choices that Alban Guilloteau and Frédéric Grard had already made. “The management had taken a clear and strong choice to stay away from cyclical sectors,” says Grégoire. “For example, they had decided to stay away from the automotive space before we became investors.”
Another demonstration of the clarity of strategic thinking has been the move away from upstream oil and into energy sectors such as renewables, hydrogen, electricity transportation, natural liquefied gas infrastructure, and carbon capture solutions.
And then there was the management team. It’s rare for a business to have co-CEOs but in Vulcain’s case it was an attractive proposition. “It was reassuring to have two high-calibre and complementary managers who had known each other for quite a long time and clearly worked well together,” says Grégoire.
The landscape of the engineering consulting sector is marked by many small companies that reach a limit to their growth and fail to reach their full potential. With the co-CEO’s proven track record, Vulcain was a platform to acquire and grow those companies. And as a pan-European firm, Equistone could open doors for Vulcain to move into other European markets.
The acquisition strategy was to maintain the focus on the three key vertical sectors and to extend beyond France. Under Equistone’s ownership, Vulcain has completed acquisitions in France, UK, Benelux, Switzerland, Denmark and Finland, Germany, Canada and Southern Europe. The company now generates more than 35% of its business beyond France.
As co-CEO Frédéric Grard observes, Vulcain’s domestic track record made sourcing acquisitions in France “reasonably easy,” but international deals were more complex, and Equistone’s network of M&A boutiques was important.
Gaining a local footprint was critical for business development. For example, a number of acquisitions were made in the UK to provide services for the nuclear power station under construction at Hinkley Point.
The pace was relentless but always considered. “Vulcain’s team looked at about 120 acquisitions and completed 20,” says Equistone partner Florent Rostaing. Equistone helped source deals through its network, and advised on some of the larger deals on aspects of due diligence or negotiations of terms and incentives.
Operating at this intense pace of buying people-based businesses, some transactions did not always go as well as planned. “What mattered was their ability to turn around a situation where things were not as expected,” says Florent. “They were very strong on that. There was always some margin of manoeuvre and a potential for recovery.”
After five years of Equistone’s ownership, Vulcain’s revenue increased by almost 130 percent – from €161m to €370m – and its workforce expanded to some 4,000 employees.
In keeping with the harmonious relationship that had existed from the start, Equistone’s exit was conducted in a spirit of partnership. (M&A boutique, D&A Strategic Corporate Finance, supported Vulcain on its acquisitions and also managed the exit process “in a very fair and dedicated way,” says Gregoire).
“We had been in place for almost five years and the management team had over-delivered on the business plan,” says Florent. “There was a fresh page to be written.”
In March 2024, Vulcain was bought by a consortium led by Ardian. The transaction resulted in a strong financial return and enabled Vulcain’s many employee and manager shareholders to reap the rewards of their efforts as well as providing a fresh opportunity to incentivise a new generation of managers.
“Vulcain’s trajectory illustrates what constitutes Equistone’s DNA,” says Grégoire. “We are positively supporting high-quality management teams and supporting their development strategy in France and internationally to become leading players in their sector.”
“Vulcain has a great management team – one of the greatest we have worked with. They knew how to use Equistone in the right way to grow their business.”
And as further testament to this unique rapport, Equistone partner Stanislas Gaillard has since joined Vulcain, as its CFO. ☐
A full version of this article appeared in PLATFORM 11, Summer 2024