North Technology group takes over MBrands International
A proud family business agrees to join forces with an international player.
MBrands BV (Mystic and Magic Marine) and North Technology Group (North Kiteboarding) united under one umbrella creating a new dynamic enterprise called North Actionsports Group. MBrands International is the owner of the worldwide brand registration rights for Mystic, Magic Marine and Maui Magic. MBrands International was advised by Marein Smits at Wintertaling advocaten en notarissen.
Interview with Marein Smits at Wintertaling advocaten en notarissen.
When assisting MBrands International, what final goals did you have in mind and how did you ensure you met them?
There were three paramount concerns when we got the call to assist in finalising the transaction with North Technology Group. The transaction had been progressing for some time and the financial people and in-house lawyers had already done excellent ground-work to make the deal happen. The first concern was: let the deal happen; the second was to explain the enormous English style drafting contractual information wave that came tumbling over the Dutch principals and the third, most important, issue was that the owner wished to feel comfortable with all the guarantees that were required.
Step one for the lawyers was to speak with the principals and to understand their rationale for doing the deal. The business had hatched and grown into an international household brand through hard work and a great feel for the worldwide kitesurfing and sailing communities. Growth was based on an entrepreneurial approach, strongly relying on the business acumen within the family and the trust bond between the leadership and all of the employees. There had been strenuous times in the sports leisure market and very impressive recovery. When the buyer presented itself, the momentum for a sale was not there. It took the buyer a great deal of convincing to bring the seller aboard (although in fact the buyer was invited on board of the seller’s boat).
We first made sure the mechanics of this transaction and the way the documentation works were clear to the seller. Then we sat together to focus on the most important issues to be resolved before the seller’s leader would approve. Of course, we all wished the deal to happen and not to let the lawyers become the deal breakers!
It turned out that the main concern was personal freedom, including freedom from worrying about the future impact on one’s personal assets. This could be resolved by introducing a well-negotiated Dutch law instrument. After some explaining between our team and the English lawyers, this was finalised and the deal could eventually be signed and closed.
We had an excellent dinner to celebrate and everybody involved was smiling broadly.
The biggest challenge was to avoid that the good intentions of the deal would be lost in the legal translation.
Why is this a good deal for all involved?
For the buyer, this deal adds to its scope by taking on the knowledge and skills at the target and will greatly contribute to its growth with the global brands Magic Marine and Mystic. For the seller, this is an excellent way to steer the company they built into a larger mothership. Their passion, sea and wind, is completely served. For the younger members of the pack, both family and managers who have been with the company for a long time, this is an excellent opportunity to play an important part and to experience further growth.
The people involved in the company are the single most important concern of the seller: be good to the people or otherwise, they will not trust you as a buyer
What challenges arose? How did you navigate them?
The biggest challenge was to avoid that the good intentions of the deal would be lost in the legal translation. The seller’s leader was in shock when he had first seen the English law style documentation that was proposed by the buyer. One of his qualities in developing the business had always been to fully read and understand each and every contractual arrangement relating to the business. His wife told me that he spent hours and hours, one entire night, perusing the English legal document. He then threw it away and said: the deal is off, I will not sign anything like this. Our task was to explain in minute detail the contents of the documentation, to reduce any items that were not strictly necessary and to negotiate the points that the seller rightly objected to.
We did that by keeping our focus on two things: speak plain language (verbally and in writing) and only address what is essential to the seller. This requires a full understanding of the deal and the mechanics of this type of transaction and also a thorough understanding of the needs of our client.
What different aspects must you consider when liaising with a family orientated company?
These most important aspects come to mind:
- the people involved in the company are the single most important concern of the seller: be good to the people or otherwise, they will not trust you as a buyer;
- there is a life after the transaction and the transaction should be respectful of that life.