Success – Kirei acquires Demir Industrial Cleaning
AKCEAN acted as financial advisor to KIREI in the strategic acquisition of DEMIR INDUSTRIAL CLEANING, a Belgian company specializing in industrial cleaning. This is the second time AKCEAN has supported the KIREI Group in its external growth operations, following the acquisition of Global Maintenance Industries in 2023. Kirei – The buyer Based in Mont-Saint-Guibert (Belgium), the KIREI Group, which comprises Clean Power, Eden Services and Global Maintenance Industries, is active in professional surface cleaning. The group employs over 300 people and has sales of around €30 million in 2023. Demir Industrial Cleaning – The target Located in Flemish Brabant, DEMIR INDUSTRIAL CLEANING specializes in professional cleaning. The company employs over 45 people, with a strong presence in Brussels and Flanders, particularly in the distribution sector. The company has been in business for over 35 years, with sales of almost €3 million. “A key step in strengthening our presence in Brussels and Flanders” Olivier Priem, Managing Director of KIREI says: “This acquisition enables us to strengthen our position in Brussels and Flanders, as well as in the distribution sector. Present on the Belgian market since 1987, DEMIR INDUSTRIAL CLEANING is a well-known company in the industrial cleaning sector, with significant synergies with our Group. We are delighted to have been accompanied once again by AKCEAN as M&A advisor in our acquisitions, and we thank all our advisors.”
Taxation of business transfers in Luxembourg, Belgium and France
Are you a partner or shareholder in a company and wondering about the possible tax implications of selling your business? AKCEAN can support you throughout the entire transfer process, so that you can approach it with peace of mind. We anticipate tax issues and work with tax specialists who analyze the specifics of each transaction and its tax implications. Type of ownership The way in which a company’s shares are held, whether directly or indirectly via a holding company, gives rise to different tax treatment at the time of sale. Tax, when applicable, is determined on the capital gain corresponding to the difference between the sale price and the amount of the initial investment (acquisition or subscription price). Completion costs, i.e. the fees paid to the various advisors involved in the transaction, can generally be deducted from this capital gain. Taxable capital gain = realization price – cumulated acquisition or contribution price – realization costs The following are some of the tax provisions that apply in Luxembourg, Belgium and France to the sale of securities issued by a normally taxable capital company. Companies benefiting from a total exemption, transparency or translucent tax regime are not covered (e.g. civil companies, general partnerships and limited partnerships). This information is provided for information purposes only, is not exhaustive, and does not constitute advice or recommendations of a legal nature for which AKCEAN, its directors or employees may be held liable. In order to determine the rules applicable to your particular situation, the services of a qualified professional (lawyer or tax advisor) are strongly recommended. LUXEMBOURG Transfer of shareholding by an individual shareholder For Luxembourg tax residents, taxation on the sale of securities (shares, stocks, etc.) depends essentially on the length of time the securities have been held and the level of participation in the company’s capital: The shareholding has been held for more than 6 months and represents more than 10% of the company’s capital (at any time during the 5 years prior to the year of sale): the applicable tax rate is half of the overall rate (i.e., a maximum rate of 22.89% from €220,788), plus a 1.4% contribution to long-term care insurance. The maximum tax rate is therefore 24.29%. A ten-year allowance of €50,000 (doubled for spouses and partners taxed collectively) may be applied. However, this allowance is reduced by the amount of allowances granted over the previous 10 years for the sale of other companies or real estate. The shareholding has been held for more than 6 months and represents less than 10% of the company’s capital: the capital gain is tax-exempt. The shareholding has been held for less than 6 months: the capital gain constitutes a speculative profit, taxable from €500 and subject to the ordinary overall rate (maximum rate of 45.78% from €220,788) plus the 1.4% contribution to the long-term care insurance scheme, i.e. maximum taxation of 47.18%. Disposal of an interest held by a holding company: application of the parent-subsidiary regime The parent-subsidiary regime is the transposition of a European directive on the tax regime applicable to parent companies and their subsidiaries. It applies to most Luxembourg holding companies holding interests in companies normally subject to income tax in Luxembourg, the European Union (in a corporate form included in the list annexed to the Parent-Subsidiary Directive) or in countries with comparable taxation systems. Capital gains realized on the sale of eligible holdings held by a Luxembourg holding company are exempt if the following conditions are met: Level of holding: at least 10% of the subsidiary’s share capital OR Acquisition price of at least €6,000,000. Minimum holding period: 12 months. If these conditions do not apply, the capital gain is taxed in accordance with standard local income tax conditions, including the contribution to the Employment Fund and the local business tax (24.94% in Luxembourg City for the standard corporate tax regime). It should be noted that, prior to their disposal, the value of eligible holdings is eligible for wealth tax exemption, which is not the case for the cash flow generated by the disposal proceeds (unless reinvested in tax-exempt holdings). Management of the cash flow from the sale proceeds will depend on the manager’s objectives and personal tax level. This involves a trade-off between professional income paid by the structure, subject to non-liberal withholding tax on salaries and social security contributions, and dividends subject to the 15% non-liberal withholding tax. This income will then be taxed at the income tax rate if the taxpayer is required to file a tax return. For dividends paid by a Luxembourg or EU company, the half-base is applicable (50% allowance on the taxable dividend) and the 15% withholding tax will be deducted from the balance of tax payable.) The maximum tax rate on dividends is therefore 23.59% (i.e. half the overall maximum rate of 47.18%, including the contribution to long-term care insurance). Also noteworthy is the exemption of €1,500 from the first tranche of income from movable property (or €3,000 for a married or partnered couple filing jointly) BELGIUM Transfer of a shareholding by an individual shareholdere and tax exemption Capital gains realized by an individual shareholder are taxable when they result from abnormal or speculative transactions. By way of exception, transactions relating to the normal management of private assets consisting of real estate, portfolio securities and movable property are tax-exempt in Belgium. It is important to verify the condition of normal management of private assets, in view of the increasing number of controls in this area. In the case of earn-outs or mechanisms involving future capital gains, the tax authorities may consider the earn-out or subsequent capital gains as professional income, subject to personal income tax. Belgian holding company – Exemption from corporate income tax on capital gains on shares The parent-subsidiary regime allows for the exemption of capital gains when the transferred company is subject to a normal tax regime and the following conditions are met: Level of holding: at least 10% of the subsidiary’s share capital OR Purchase
M&A Trends – May 2024
Every month, we highlight M&A deals that help us decipher sector trends. Here are the transactions we have selected for May: Strabag Property & Facility Services, a German real estate services group, enters the Luxembourg market with the acquisition of the Elco Group, a specialist in multi-technical building services in Luxembourg. Founded in 1945, the Elco Group has sales of €59 million and over 450 employees. Alfeor, a French industrial fund, takes over 60% of the capital of Ateliers de la Meuse, a Belgian industrial company specializing in the manufacture of large-scale mechanical-welded parts. The company, which had sales of around €10 million before being declared bankrupt last November, was owned by the Walloon region, which retains 40% of the capital. Alfeor aims to create an equipment group for the nuclear industry, by leveraging the company’s know-how in the manufacture of nuclear waste storage drums. Epsa, a French consulting group, acquires MoneyOak, a Belgian consulting firm specializing in tax incentives for innovation, with sales of over €10 million. The Epsa group, 20% owned by Tikehau Capital, Bpifrance and Crédit Mutuel, completes its tenth external growth operation since 2022, taking its sales to €460 million. Bpifrance and Mubadala, Abu Dhabi’s sovereign wealth fund, invest around €100 million in Socotec, the French construction certification specialist, for a minority stake that would value the company at €3.2 billion. Socotec has sales of €1.3 billion and has made over 60 acquisitions with its reference shareholder, the Belgian investment company Cobepa. Bridgepoint, a British investment fund, acquires LumApps, a French publisher offering a SaaS collaborative working platform, for €598 million. Founded in 2015, LumApps is targeting €80 million in sales by 2024 and has 350 employees. Bridgepoint aims to develop the company in Europe, the USA and Japan. Sources: S&P Capital IQ Pro, Capital Finance, Paperjam, L’Echo, Les Echos #M&A #Mergers & Acquisitions #Market trends #Corporate strategy #Luxembourg #Belgium #France
M&A Trends – April 2024
Every month, we spotlight M&A transactions to help us decipher sector trends. Here are the transactions we have selected for April: SES, the Luxembourg-based space giant, announces the acquisition of US competitor Intelsat for €2.8 billion. This acquisition consolidates SES’s position in the satellite market, taking its portfolio to 126 satellites in various orbits. The new entity targets an adjusted EBITDA of €1.8 billion by December 2024. Batisanté acquires a significant stake in CForClean, a Luxembourg-based cleaning specialist with over 330 employees. This transaction enables Batisanté, a French specialist in the protection of buildings and their occupants, to strengthen its presence in the Luxembourg cleaning market. Hootsuite, the Canadian leader in social media intelligence with sales of $300 million, announces the acquisition of Talkwalker, a Luxembourg-based company specializing in social network monitoring. Founded in 2009, Talkwalker had sales of €35.5 million by 2021, the date of its last filed financial statements. Dutch bus manufacturerVDL(sales €5.8 billion) and German trailer manufacturer Schmitz Cargobull(sales €2.6 billion) each take over a division of Van Hool. VDL takes over the bus division, while Schmitz Cargobull takes over the commercial vehicle division. The bankruptcy of Belgian bus manufacturer Van Hool on April 8 threatened 1,500 jobs. bpost, the Belgian postal services operator, acquires Staci, a French logistics group with sales of €770 million. The acquisition values Staci at €1.3 billion, representing a multiple of 12x EBITDA. This acquisition is part of bpost’s transformation strategy initiated in 2017 with the acquisition of US-based Radial. Private equity fund Ardian, Staci’s outgoing majority shareholder, has managed to double the company’s valuation since taking a stake in 2019. CVC Capital Partners, one of the world’s largest private equity funds, has successfully completed its IPO. By listing on the Amsterdam stock exchange on April 26, the company achieved the largest IPO in the history of European private equity, with a market capitalization of over €17 billion. Sources: S&P Capital IQ Pro, Capital Finance, Paperjam, L’Echo, Les Echos #M&A #Mergers & Acquisitions #Market trends #Corporate strategy #Luxembourg #Belgium #France
Valuation multiples – Q1 2024
When it comes to valuing a company, the comparables method is often used, especially for established businesses. It consists in determining the value of the company in relation to that of other similar businesses, in particular by considering their profitability. The publicly available financial data of listed companies is used to compile sector statistics on valuation multiples, such as those presented in the document below. In SME valuation, these multiples serve as a benchmark, but must be interpreted with caution. They are generally adjusted downwards to take account of differences in size, increased operational risk and the lower liquidity of SME shares compared with listed companies. The best comparison is to know the multiple at which a similar company recently sold.
M&A Trends – March 2024
Each month, we present you with a selection of M&A transactions that allow you to decipher industry trends. Here are the transactions we have selected for March: Cinven, a British investment fund, acquired a majority stake in Alter Domus, valuing the company at €4.9 billion. Founded in Luxembourg in 2023 as a spin-off from PwC, Alter Domus is one of the world’s leading providers of investment fund administration services, with 5,000 employees and over €2,300 billion in assets under administration. The Permira fund, present in the capital since 2017, and the founders will retain a stake in the company. Accenture has completed the acquisition of Arhs Group, a Luxembourg-based consulting firm specializing in the digitalization of the public sector in Europe, with annual sales in excess of €300 million. With this transaction, the American consulting firm strengthens its position in Europe. ArcelorMittal acquires a 27.5% stake in Vallourec (sales €5.1 billion), a company listed on Euronext Paris. For €955 million, the Luxembourg-based steel group has bought out the stake held by the American fund Apollo and become the new reference shareholder in Vallourec, a French manufacturer specializing in steel tubular products. The transaction was carried out at close to market value, with a multiple of 3.9x EBITDA, and paves the way for a full acquisition in the next few years. CMA CGM finalized the acquisition of Altice Media (€362 million sales), the parent company of the French TV channels BFM and RMC, for €1.6 billion. This acquisition is in line with the diversification strategy of the French shipowner, which had already acquired Bolloré Logistics last February. The acquisition strengthens the group’s Media Division, which includes the newspapers La Provence and La Tribune. Siparex, a French fund, takes a minority stake in Rumeur Publique, a Paris-based communications agency with sales close to €15 million. Siparex’s investment of between €3 and 5 million gives it a stake of almost 30%, and values the company at around 8 times its EBITDA. Lakeland Dairies, an Irish dairy cooperative (€1.9 billion in sales) acquires Group De Brandt, a Belgian butter manufacturer and distributor, with sales of €324 million in 2023. Blackstone invested $750 million in US biotech Moderna, with sales of $6.8 billion, for its messenger RNA flu vaccine. The Life Sciences division of the US investment fund will participate in the commercialization of the first flu vaccine of this type, scheduled for 2024. Moderna, which is developing 28 messenger RNA vaccines, plans to spend $4.5 billion on R&D this year. Sources: S&P Capital IQ Pro, Capital Finance, Paperjam, L’Echo, Les Echos #M&A #Mergers & Acquisitions #Market Trends #Corporate Strategy #Luxembourg #Belgium #France #United States
Selling a business: anticipate to sell better
Selling a business is a process that requires meticulous preparation and careful thought, sometimes over several years. It is essential for the seller to prepare in advance, by asking the right questions and taking the necessary steps to maximize the company’s value and attract the ideal buyer. AKCEAN is with you every step of the way, ensuring a smooth and optimized transition. Our pre-sale diagnostic services are designed to identify the best strategies for positioning your business for future sale. Why anticipate the sale of your business? Proactively preparing for the sale of a business has multiple benefits, helping to increase the value of the company and make it more attractive to a wider range of potential buyers: Strengthening competitive positioning: An in-depth analysis of the business model, market and customer base helps to identify and improve the company’s weaknesses. Improving internal organization: Structuring teams and refining internal processes is crucial to demonstrating efficient management and an autonomous company, independent of the seller’s personality. Organizing company documentation: Ensuring order and clarity in the company’s legal, tax and financial documentation is essential to reassure the buyer. Improved financial reporting: Detailed and regular financial reporting increases the buyer’s confidence by providing a clear view of the company’s performance. Anticipation of tax consequences: Analysis of tax consequences is crucial to minimize the tax impact of the sale, which may require the creation of a pre-sale holding company. Preparing for the post-sale period: Anticipating future projects and planning the management of the cash generated by the sale ensures a smooth transition to the post-sale period. Choosing the right moment: Anticipation helps determine the ideal time for the sale, taking into account market factors, the company’s financial health and personal circumstances. Pre-sale diagnosis: an essential phase We recommend setting up a disposal schedule to prepare the company for sale, including a pre-sale diagnosis. This diagnosis provides an exhaustive analysis of the company’s health, identifying its strengths and weaknesses, enabling the necessary improvements to be implemented before the sale. The stages of the pre-sale diagnosis include : Data collection: Gathering of all relevant information and documents. Analysis: In-depth study of data to identify strengths and weaknesses. Report: Drafting of a detailed report including specific recommendations. Action plan: Drawing up a plan to resolve the problems identified and maximize the company’s value. Typical diagnostic content includes : Financial analysis Proof of assets and liabilities Human resources analysis Contract review Market and competitive analysis Tax situation Risk management Customers and suppliers Intellectual property Business processes Corporate strategy and growth plans It’s important to distinguish between a pre-sale diagnosis and an acquisition audit. The pre-sale diagnosis is carried out on the seller’s initiative, and aims to optimize value before the sale, while the acquisition audit is carried out on the buyer’s initiative, to verify the company’s key elements. The successful transfer of a company relies on meticulous preparation and strategic anticipation. By focusing on increasing value, optimizing processes, putting documentation in order and effectively managing financial and tax aspects, the transferor can not only make the most of his company, but also attract quality buyers. The pre-sale diagnosis is a key tool in this process, offering a comprehensive assessment to rectify weaknesses and enhance the company’s strengths. Last update: March 2024
M&A Trends – February 2024
Each month, we present you with a selection of M&A transactions that allow you to decipher industry trends. Here are the transactions we have selected for February: Maison Moderne, the Luxembourg media group that publishes the business magazine Paperjam , continues to invest in Bingo.lu, a real estate ad site launching in 2020 to rival atHome, the market leader in Luxembourg. In June 2023, Maison Moderne acquired 35% of the company via a contribution in kind (advertising space and visibility), and now holds 55% of the capital. Parus S.A., which manages Bingo.lu, recorded a loss of €588k in 2022. Villeroy & Boch has finalized the acquisition of Ideal Standard, a Brussels-based manufacturer of sanitaryware. Villeroy & Boch, a German ceramics manufacturer, becomes one of Europe’s leading manufacturers of bathroom products, doubling the sales of its Bathroom & Wellness division to €1.4 billion. Ideal Standard achieved sales of €737 million and an estimated EBITDA of €73.7 million in 2022. The agreement, signed in September 2023, values Ideal Standard at €600 million, or 8.1x EBITDA, and was finalized after receipt of the necessary approvals from the competition authorities. CMA CGM finalized the acquisition of Bolloré Logistics (€7.1 billion in sales) for €4.9 billion. This operation is part of French shipowner CMA CGM’s logistics expansion strategy, which began with the acquisition of Ceva Logistics in 2019 and was followed by the acquisitions of Ingram Micro, Colis Privé and Gefco. The group thus moves up to fifth place worldwide in logistics, closing in on Kuehne Nagel, DHL (Deutsche Post), DSV-Panalpina and DB Schenker. The transaction, signed in May 2023, was finalized after receiving the opinion of the competition authorities in some twenty countries. Beaumanoir has announced that it is in exclusive negotiations to acquire the European assets of Boardriders, known to the general public for its Quiksilver, Billabong, Roxy and DC Shoes clothing brands. Beaumanoir, a French family-owned group with sales of €2.2 billion, has stepped up its external growth strategy in recent years with the acquisition of La Halle, Caroll and Sarenza. Unseenlabs, a French company specializing in satellite-based maritime surveillance, has raised €85 million (€55 million in a capital increase and €30 million in a bank loan) in an operation led by the Isalt and Supernova funds to develop its international activities. The company, which currently manages 11 microsatellites in low-Earth orbit, plans to double this number by 2025. Amundi announced a binding agreement to acquire Alpha Associates, an independent Swiss asset manager specializing in private assets, for €350 million. Alpha Associates manages €8.5 billion in private debt, infrastructure and private equity assets. With this acquisition, Amundi, Europe’s leading asset manager, strengthens its expertise in the alternative sector, bringing the assets under management of its non-listed division to €76 billion. Capital One, an American bank backed by Warren Buffet, has signed the acquisition of credit card issuer Discover Financial Services ($20.6 billion in sales), the world’s4th largest credit card network behind Visa, Mastercard and American Express, for $35 billion. This transaction, carried out entirely via an exchange of shares, creates the sixth-largest US bank in terms of assets and the largest credit card issuer in the US in terms of loan volume. #M&A #Market trends #Corporate strategy
Teaser and Info Memo: how to present the company to buyers?
When selling a business, the Teaser and Info Memo are essential presentation documents. The Teaser is a concise document that gives potential buyers the opportunity to quickly assess their interest and sign a confidentiality agreement (NDA). This then enables them to receive the Info Memo, a detailed presentation file on which they can base their offer. AKCEAN writes these documents in a factual manner, highlighting the company’s strengths and potential. The Teaser and Info Memo are drafted from the company’s documentation to describe and justify its activities, organization, positioning, financial performance and outlook, thus meeting the information needs of buyers. The Teaser: a concise document to arouse interest The Teaser, a single-page document, anonymously presents the company’s main activities and financial information, as well as the proposed transaction. This document is the first to be shared with a potential buyer after initial contact. This document may include the following information about the company: Geographical area Years in business Description of activities and business model Number of employees Company strengths and outlook Key performance indicators: number of customers/products or services, sales, EBITDA Transaction scope and reasons for disposal. The aim of the Teaser is to arouse the interest of the potential buyer, prompting him to ask for more information. If interest is confirmed, the buyer signs a confidentiality agreement (NDA), undertaking to keep the data shared confidential and to use it solely for the purposes of the planned transaction. To preserve confidentiality, the company is given a code name in the Teaser, ensuring its anonymity until the NDA is signed. Once the NDA has been signed, the prospective buyer receives the Info Memo, a presentation offering a more exhaustive description of the company and the transaction. The Info Memo: a detailed, factual presentation of the company The Info Memo is a detailed presentation of the company and the proposed transaction. It is generally consulted by the prospective buyer before opening discussions with the seller. The information included in the Info Memo, discussed during meetings between the seller and the buyer, must be sufficiently detailed to enable the latter toobjectively analyze the company, make the acquisition decision and draft a letter of intent. The drafting of the Info Memo is of particular importance, and requires a faithful and objective presentation of the company. For this reason, it is usually prepared by the seller’s M&A advisor. The accuracy and completeness of the information provided are decisive in establishing the mutual trust between buyer and seller that is essential to the success of any transaction. That said, the need for transparency does not limit the document’s ability to highlight the company’s assets and potential. The Info Memo plays a key role not only in providing information, but also in highlighting the elements that make the company attractive. Subsequently, the buyer will verify the information presented in the Info Memo. A factual document, backed up by the company’s documentation, will facilitate the due diligence process. The buyer can also forward the Info Memo to his or her bank, to facilitate the process of obtaining financing. What should the Info Memo contain? The purpose of the Info Memo is to provide a comprehensive presentation of a company’s operations and performance to a potential buyer. The number of pages in the document may vary according to the size of the company and the information to be detailed. It is essential that the Info Memo adopts a coherent structure, highlighting the company’s major assets, such as its know-how, its team, its capacity to innovate, its market share, and other distinctive elements. Here’s an example of an effective Info Memo structure: Key messages Description of the company and the transaction Financial data: sales, EBITDA, cash flow Company strengths Company History & development Business model Shareholders and legal structure Recent events and strategy Products & Services List of products and services Positioning Key data: contribution to sales and profitability of each product or service line Resources Employee organization chart Complete profile of key employees Locations and offices Production tools Operations Procurement / Suppliers Production Distribution Research & Development (R&D) Internal processes Marketing & Sales Organization Customers Customer typology & geography Customer concentration Order types Customer loyalty Market Market characteristics and size Market growth Direct players and competitors Positioning Market share Financial data over the last three years Sales (volume and price effects) Profitability by product or service and type of customer Income statement analysis (fixed and variable costs) EBITDA normalizations Balance sheet analysis (inventories, fixed assets, receivables, off-balance sheet items) Net debt & adjustments Working capital requirement (WCR) / Seasonality Capital expenditure (Capex) History and projections (income statement, balance sheet, cash flow) Latest available figures and current year budget Development plan Strategic analysis (strengths, weaknesses, opportunities, threats) Current objectives Strategic plan & Outlook If the acquirer wishes to establish a price and defend it, it may be wise to include valuation elements such as recent transactions, sector multiples and a financial model. Finally, it is essential to include an analysis of growth prospects and possible areas for improvement. This approach enables the buyer to better project the company’s potential. Last update: February 2024
M&A trends – January 2024
Each month, we bring you a selection of M&A deals to help you decipher industry trends. Here are the highlights for January: Munhowen, one of Luxembourg’s leading beverage distributors, merges with rival family firm Boissons Heintz. By 2023, Munhowen and Boissons Heintz, two century-old companies, had achieved sales of €89 million and €39 million respectively. The operation consolidates Munhowen’s leading position on the Luxembourg market, with the new group’s ambition to become a regional champion in the Greater Region. Adepa, a Luxembourg-based investment fund services company, signs the acquisition of Fidupar, offering equivalent services and with sales of €3.8 million. The acquisition consolidates the company’s position in the Luxembourg financial services sector. Demathieu Bard, a construction group based near Metz, has acquired the Swiss company Steiner Construction. Group sales are expected to exceed €2 billion, with 4,000 employees. King Jouet, a toy distributor present in France, Switzerland, Belgium and Luxembourg, returns to the control of the Gueydon family. The family’s stake in the company increases from 49% to 70%. In 2022, the toy retailer achieved sales of €410 million. Welcome To The Jungle, a French start-up specializing in recruitment, has acquired its British competitor Otta, with a view to growth in the United Kingdom and the United States. Otta, with a user base of 2 million, is the UK’s leading recruitment platform for the tech and start-up sectors. Wifirst, a French operator of WiFi infrastructures for professionals, acquires Hotsplots, a major WiFi player in Germany (17,500 hotspots) whose customers include the German public railway company. This strategic acquisition, backed by its investors (CAPZA, AMUNDI, Bpifrance, Socadif), propels Wifirst’s international expansion, strengthening its position as European leader. US investment giantBlackRock has completed the acquisition of asset manager Global Infrastructure Partners for €12.5 billion. GIP’s portfolio includes notable infrastructure assets such as international airports, including Edinburgh, as well as a significant 39% stake in the Suez group. #M&A #Market trends #Corporate strategy
