Deutsche Beteiligungs AG (DBAG) recently announced that it is investing alongside its advised DBAG Fund VI in Polytech Health & Aesthetics GmbH (Polytech), a provider of high-quality silicone implants. DBAG and DBAG Fund VI will acquire a majority interest in Polytech in a management buyout (MBO); DBAG will hold approximately 18% in the company and DBAG Fund VI about 76%. Polytech’s management will acquire the remaining shares.
The vendor is company founder Wilfried Hüser. The parties to the contract, which was signed on Tuesday, agreed not to disclose the purchase price. DBAG will invest up to EUR 12 million from its balance sheet for its interest. The transaction is contingent on approval by the cartel authorities, and the agreement is expected to be completed In November.
Following the investments in telecommunication and software provider Telio in December 2015 and Frimo, a tooling and plant provider, in August 2016, Polytech is the third management buyout that DBAG structured alongside DBAG Fund VI in its current 2015/2016 financial year. Polytech is the tenth investment entered into by DBAG Fund VI, which, subsequent to this transaction, is now invested in excess of 75%.
Polytech (www.polytechhealth.com) is a leader in the development and production of silicone implants in Europe. Polytech, the sole German manufacturer of such products, specialises in breast implants used in reconstructive and aesthetic plastic surgery. The implants are manufactured exclusively at the company’s domicile in Dieburg (near Frankfurt, Germany) under clean-room conditions, where its staff of 170 work in development, production, quality control and distribution.
Interview – Andreas Schmitz – Alvarez & Marsal:
Please tell me about your involvement in the deal?
Alvarez & Marsal provided buy-side financial and tax due diligence support on this transaction. The team was led by Juergen Zapf and Andreas Schmitz out of our Frankfurt office.
Why is this a good deal for all involved?
The owner was looking for an investor that has experience in developing small and mid-size companies. Polytech has grown nearly 30% per year over the last three years and for the current year has forecast revenue of more than EUR 30 million, about half of which are generated in Germany and Western Europe. The track record of growth and ability to expand Polytech by further developing ‘Made in Germany’ products to grow internationally made Polytech attractive for DBAG.
What challenges arose? How did you navigate them?
As a relatively small owner-managed company, the level of formal financial information was less that one might normally expect in a due diligence process needed for a private equity sponsor to invest. However, our approach to due diligence in using senior diligence professionals with many years of experience enabled us to work closely with target management and adapt their existing financial and non-financial information to get our client what they needed to invest.