Two Munich-based Equistone colleagues, Stefan Maser and Tanja Berg joined the deal team in order to pursue the opportunity. Stefan already had deep experience in the machine building sector and a cross-border presence would be an advantage in the process ahead.
Equistone did not offer the highest valuation, and yet, by early 2019, Equistone had won the deal and the team presented themselves as the company’s new owners, backers and supporters.
“Key to winning the deal was speed and trust,” says David. “The relationship we built with the CEO… the relationship we already had with Capvis… and the relationship we had with the M&A adviser.”
This also meant the team was able to get up the curve fast in terms of understanding the company’s position.The Equistone team had identified several potential risks. The first was the cyclicality of RENA’s end-markets, in particular green energy and semi-conductors. They judged the business sufficiently diversified that the risk of all its customers’ markets declining at once was very small. In addition, during the process, RENA won a new customer in the glass and sapphire end-market – a new vertical. “This was a game-changer for us, because it further diversified the business, and also demonstrated management’s ability to enter new markets.
The next concern: four years earlier the business had gone into insolvency.
“A lot of potential investors did not really dig into the business as they couldn’t get past the insolvency.” But Equistone knew that the business had completely changed under Capvis. In addition, the insolvency came about after the previous owner made a non-core acquisition, which floundered, and for which RENA was liable. Meanwhile solar, RENA’s only end-market at the time, was slumping. Equistone undertook customer interviews and found customers remained well disposed towards the RENA brand.