The group was sold by SLV’s founder and current managing director Franko Neumetzler, who retains a minority stake. Other members of management also continue to hold shares.
After almost three decades at the helm, Neumetzler will leave the day-to-day running of the business by the end of the year but will remain an adviser to the company.
The other key members of its management team, Detlef Harms and Toni Stumpf, retain their positions.
HgCapital will develop SLV’s operations internationally and will work towards preparing the company for a stock market flotation in the medium term.
Neumetzler said with HgCapital’s backing management can continue to develop the company. “With HgCapital by its side, SLV will retain its independence, continue to implement its business model in an undiluted form and unlock new potential. In this way, we have been able to find an answer smoothly and in good time to the difficult successor problem, which many small and mid-size shareholder-managed companies face.
“In addition, by working with HgCapital we can systematically and resolutely take SLV to the next level of its economic development– with the clear perspective of preparing it for the capital market,” he added.
HgCapital’s Justin von Simson said this is the sixth investment led by HgCapital’s German team.
“Over the past few years, SLV has performed superbly and we are certain that it is ideally positioned to grow just as quickly and profitably as before in Germany as well as in its present and future international markets,” von Simson said. “We will be providing SLV’s management with comprehensive support via our extensive resources and expertise and are convinced that the company will be ready for the capital market in a few years’ time.”
HgCapital’s financial adviser was Sal. Oppenheim, which was led by the head of its M&A Financial Sponsor group, Wolfram Schmerl. The firm supported HgCapital in the negotiations and advised on deal tactics and valuation.
Schmerl said this transaction provides further proof of HgCapital’s ability to establish strong growth-orientated partnerships with successful family-owned companies, which was a key factor to win the deal.
“For Sal. Oppenheim this has been the third successful buy-side mandate for HgCapital in Germany following the acquisitions of Doc Morris and Hofmann-Menue-Group and demonstrates the trustworthy and excellent relationship between HgCapital and Sal. Oppenheim.”
The vendors were supported throughout the disposal of their shares by a team from law firm CMS Hasche Sigle.
The firm, led by Klaus Jäger, structured the bidding process for the group and the management team’s re-investment in the Luxembourg purchase vehicle.
CMS’ team included Dr Petra Schaffner and Dr Ralph Drouven as well as employment, corporate and tax specialists.
“The company was sold in a structured bidding process organised by Dresdner Kleinwort,” Jäger said. “After the final bids had been received, the transaction was closed within three weeks including negotiations with regard to the reinvestment and management positions of SLV’s management.
“Until two days before the transaction was closed with HgCapital, the whole transaction package was negotiated simultaneously by CMS Hasche Sigle with another bidder which considering the speed and scale of the project was quite a challenge,” he added.
HgCapital appointed Kurt Salmon Associates (KSA), a management consultant specialising in the retail and consumer goods markets, to manage a commercial due diligence review of SLV.
The review was co-ordinated by Dr. Wolf Wagner, the managing director of its German operations.
Wagner said HgCapital has engaged KSA in several transactions that have involved a consumer driven component.
“The target operates with a unique business model managing a complex global supply chain and selling operation in the very fragmented lighting market,” he added. “SLV’s very good reputation and further growth potential was confirmed in 250 customer interviews across several European countries. KSA’s global presence enabled us to cope with the two week timetable.
“Customers appreciate SLV’s good quality for comparable low prices as well as its best-in-class logistics with deliveries within 48 hours. SLV managed to position itself uniquely in the lower end of the value market which will help to further grow the business.”
Founded in 1979, SLV has subsidiaries and associates in Germany, France, Belgium, Switzerland, Hong Kong and Russia. Last year it made ebitda of some £17 million (€25 million).
Kurt Salmon Associates is a global management consulting firm focused exclusively on the retail and consumer products industries.
