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GCA ALTIUM SUCCESSFULLY SOLD THREE SWISS COMPANIES AT THE HEIGHT OF COVID-19
Note: 1) On the closing day (20 March 2020), S&P 500 index was down 32% from its peak in February
Sale of Zahnarztzentrum.ch to MIGROS’ Medbase
(15 May 2020)
✓ Long-lasting relationship with the founders and very strong track record in the healthcare, healthcare technology and dentistry sector
✓ Very limited process to ensure high transaction security to both potential buyers and the sellers and achieve a highly attractive valuation
✓ Process was almost fully digital with only key physical meetings during Due Diligence due to COVID-19
✓ Close contact to the buyer parties and provided ad-hoc analyses on impacts of COVID-19 re-strictions on the business and financial forecasts
✓ Communication of timely and transparent performance updates to all buyer parties
✓ All process steps were prepared precisely (e.g. dry-runs and alignment calls for VidCall-based management presentations, management reserved timeslots for Q&A every day) and quick and efficient execution afterwards, resulting in only 5 weeks of due diligence
✓ Focused on giving potential buyers comfort on business plan, presenting COVID-19 as a “successful stress test”, and transaction security with a significant reinvestment by a highly committed management team
✓ Highly efficient and tailored process, approaching only potential investors with very long investment horizons, and strictly followed initial timeline without any deviations to keep all parties focused on the deal
✓ Clearly communicated strategic plan of company to shift from hardware sales to SaaS business, develop new software and grow inorganically, to establish a shared vision amongst management and potential investors, hardware sensor business and sold as SaaS
✓ Closed deal on one of the historically worst days on the stock market1), raising CHF 55m from committed and carefully selected investors
Sale of Swissbit to Ardian
(11 May 2020)
Fundraising for Screening Eagle Technologies
(20 March 2020)
3
FULLY DIGITAL DEALMAKING GIVES GCA ALTIUM'S M&A PROCESS A COMPETITIVE EDGE
Preparation Preparing management Educating buyers
Our global setup and personal relationships to the relevant buyer
universe enable us to identify buyers worldwide that are in a position to
transact, to carefully select the right parties to include in a process and to generate buy-in from an early stage
Building on previous process experience, we have been able to
prepare information to pre-empt buyers' most pressing questions, increasing
transaction speed and security
Holding crucial management presentations purely online requires
meticulous preparation, from lighting to smoothly changing control of the slides
between speakers. Presentation coaches and GCA Altium-guided rehearsals succeeded in creating fluid and impactful presentations
In times when teams are working remotely and information does not flow
naturally, it is important to institute formally structured communication processes and to
closely manage project stakeholders
Having pre-selected a small number of highly involved buyers
earlier enabled us to dedicate significant resources to providing hands-on support for buyers providing highest transaction
security at best valuation, addressing their information needs directly
Despite COVID-19 restrictions, we managed to successfully close three landmark transactions in Switzerland by
planning ahead and circulating important physical documents by messenger
wherever possible
4
LANDMARK TRANSACTIONS IN SWITZERLAND
Leading online retailer for consumer electronics
in Switzerland
Sell-side advice to the founding shareholders
Scout24 group is the largest Swiss network of
online classifieds
Buy-side advice to KKR
Ricardo is the leading Swiss online marketplace
Sell-side advice to the owner, Naspers
AutoForm is the leading provider of software
solutions for design and sheet metal forming
Sell-side advice to the founder
SoftwareOne is a leading global provider of software portfolio
management solutions
Sell-side advice to the founder
Fashion Friends is a Swiss online shopping club
Sell-side advice to Tamedia
Probikeshop is the leading online bike retailer in France
Sell-side advice to Migros
Goldbach markets and places advertising in
private electronic media
Sell-side advice leading to public takeover offer
Breitling is a global luxury brand renowned for high-
performance watches in aviation
Sell-side advice to the owner family
Movu is Switzerland’s #1 digital platform for home-
moving services
Sell-side advice to owners and venture investors,
e.g. Ringier
AWK is the largest independent Swiss IT consulting companies
Sell-side advice to AWK
Watchfinder is a leading UK-based multichannel retailer of pre-owned
luxury watches
Sell-side advice to Watchfinder
bexio is the leading cloud-based business and accounting software
provider for SMEs in Switzerland
Sell-side advice to bexio
Sportradar is the global leader in sports data
and analytics
Buy-side advice to TCV
loanboox is a digital platform for financing
Series B financing advice to loanboox
Xovis manufactures tracking sensors,
measurement tools and software solutions
Sell-side advice to EMERAM and management
3+ is a leading Swiss private
television station
Buy-side advice to CH Media
ardentis is the leading group of dental clinics in
Western Switzerland
Sell-side advice to ardentis
DSwiss is the leading provider of highly secure
digital services
Sell-side advice to DSwiss
Screening Eagle is a cloud-based technology platform for intelligent
inspection of assets and infrastructure
Sell-side advice to Screening Eagle
Swissbit is a leading manufacturer of industrial-grade memory and secure, embedded
IoT-solutions
Sell-side advice to founders & management
zahnarztzentrum.ch is the leading Swiss dental
clinic chain
Sell-side advice to the founder family
Swiss Tools manufactures high-precision modular
tooling systems
Sell-side advice to Cross Equity
Ulysse Nardin is a Swiss luxury watch brand
founded in 1846
Sell-side advice to the owner
5
OUR VIEW ON THE CURRENT M&A MARKET …
Note: 1) Number of deals with Switzerland-based target as sell-side or buy-side advisor from 01-Feb 2020 to 24-May 2020(N = 34 deals, 14 of which disclosed a sell-side advisor and 8 of which disclosed a buy-side advisor)Sources: Mergermarket; BCG; Deloitte; Loyens Loeff; PwC
Leading advisor in Switzerland … … even in challenging times
24
13
1914
29
18
30
13 13
19 19 1723
9 8 9
Mar-19Jan-19 Feb-19 Apr-19 May-20May-19 Oct-19Jul-19Jun-19 Aug-19 Mar-20Sep-19 Nov-19 Dec-19 Jan-20 Feb-20 Apr-20
8 MTD
Number of M&A transactions in Switzerland per month
# Advisor Deal volume1)
(# of deals)
1 3
2 2
3 1
4 1
5 1
6 1
7 1
8 1
9 1
10 1
Tremendous impact ondeal count
Travel bans and instituted border restrictions halt in-person negotiations and slow down original document transports. Work-from-home rulings especially affect timing on the regulatory side, e.g. antitrust approvals
Due diligence shifts to supply and demand security, e.g. analyzing supplier networks for sufficient diversification or identifying revenue clusters, which are increasingly considered red-flag findings in times of uncertainty
Unforeseen and unfavorably communicated sales shortfalls in too aggressively planned business plans result in unfavorable purchase price adjustments, forcing owners and investors to postpone or even cancel deals
Unthoughtful comments pertaining to transaction security can easily be misinterpreted on the buy-side, unnecessarily complicating processes and causing bidders to drop out
Need for hedging of investment contracts by the buy-side (e.g. with MAC clauses) often conflict with showing faith in a company and its management and may raise doubts among the management that a potential buyer is the right one
6
24
13
1914
29
18
30
13 13
19 19 1723
9 8 9
Mar-19 Apr-19Jan-19 Jan-20Dec-19Feb-19 Aug-19Jul-19May-19 Jun-19 Sep-19 Jun-20Oct-19 Nov-19 Nov-20Feb-20 Mar-20 Apr-20 May-20 Jul-20 Aug-20 Sep-20 Oct-20 Dec-20
8 MTD
… AND HOW WE EXPECT THE SWISS M&A MARKET TO DEVELOP
Source: Bloomberg
Market for crisis-proof and financially distressed assets might rebound after the summer break in September based on our expectations
Number of M&A transactions might rebound after the
summer break in September
Overall scarcity of COVID resistant assets will put markets’ focus on more resilient sectors, such as: E-commerce, Healthcare, Financial &
Insurance and Software & Services. These sectors will benefit in mid and long-term
view from their positive perception
Valuations for COVID-19 resistant sectors remain highly attractive and show upward trends looking forward, as first companies already gave (better than expected) guidance on their current year
trading and full-year outlooks
Financial investors remain keen on investing into stable and crisis-proof assets (e.g. mission-critical software companies with a high degreeof recurring revenues and strong margins) as large reserves (c. USD 1.5tn globally) of «dry
powder» still need to be invested
Less affected companies are expected to havea good M&A window starting after the summer
brake in September, where financially distressed companies (competitors and/or add-on targets)
can be acquired below usual prices
1
3
2
4
Number of M&A transactions in Switzerland per month
7
50%
60%
70%
80%
90%
100%
110%
120%
130%
140%
50%
60%
70%
80%
90%
100%
110%
120%
130%
140%
1-Jan 8-Jan 15-Jan 22-Jan 29-Jan 5-Feb 12-Feb 19-Feb 26-Feb 4-Mar 11-Mar 18-Mar 25-Mar 1-Apr 8-Apr 15-Apr 22-Apr 29-Apr 6-May 13-May 20-May
UPDATE ON STOCK PRICE PERFORMANCE
Note: Performance based on closing levels as of 02-Jan-2020; 1) Comprises constituents of S&P 1200 Global - Software & Services Industry Group; 2) USD 2tn “Coronavirus, Aid, Relief, and Economic Security” Act;Source: Capital IQ as of 22-May-2020
SMI and S&P 500 performance YTD vs. selected e-commerce, healthcare, financial/insurance and software & services players
WHO declares COVID-19 international emergency
First COVID-19 cases in Europe
US passes CARES Act3)
“Amazon to hire 75k more workers to cope
with demand”3)WHO officially declares COVID-19
a pandemic
CH orders closureof stores, bars, pubs
First step of eased restrictions in CH
IT imposes lockdown
LowUptick
from lowPerformance since Jan-2020
SMI (9.4%)18.7%(23.7%)
E-commerce (26.1%) 29.0%74.5%
Financial & Insurance (30.6%)8.4%(36.0%)
(31.3%)S&P 500 (9.5%)31.8%
(0.9%)29.2%(23.3%)Healthcare
Software & Services1) (4.3%)33.5%(28.3%)
8
6.0x
8.0x
10.0x
12.0x
14.0x
16.0x
18.0x
20.0x
22.0x
6.0x
8.0x
10.0x
12.0x
14.0x
16.0x
18.0x
20.0x
22.0x
1-Jan 8-Jan 15-Jan 22-Jan 29-Jan 5-Feb 12-Feb 19-Feb 26-Feb 4-Mar 11-Mar 18-Mar 25-Mar 1-Apr 8-Apr 15-Apr 22-Apr 29-Apr 6-May 13-May 20-May
UPDATE ON VALUATION LEVELS
Note: 1) P/Forward diluted EPS used as EV/EBITDA not meaningful for banks; 2) Comprises constituents of S&P 1200 Global - Software & Services Industry Group; 3) USD 2tn “Coronavirus, Aid, Relief, and Economic Security” Act; 4) Plots only Financial/insurance sector; Source: Capital IQ as of 22-May-2020
Valuation levels of selected e-commerce, healthcare, financial/insurance and software & services players
WHO declares COVID-19 international emergency
First COVID-19 cases in Europe
US passes CARES Act3)
“Amazon to hire 75k more workers to cope
with demand”3)WHO officially declares COVID-19
a pandemic
LowUptick
from lowPerformance since Jan-2020
2.3%27.7%14.5xHealthcare
Software & services2) 1.8%45.8%12.1x
E-commerce 10.2x 18.6%82.0%
Financial & Insurance1) (4.2%)60.2%7.4x
NTM EV/EBITDA
P/Forwarddiluted EPS4)
15.6x
18.1x
12.3x
17.4x
18.5x18.5x
11.8x
17.7x
CH orders closureof stores, bars, pubs
First step of eased restrictions in CH
IT imposes lockdown
9
GET IN TOUCH
Alexander GrünwaldCo-Head Europe
Thomas EgliManaging Director
• Head of Digital, Media & Internet Europe
• Prior to joining GCA, Thomas worked for Deutsche Bank in Frankfurt and London on cross-border M&A transactions
• Graduated from the University of St. Gallen
• Member of GCA’s Board and Co-Head of Europe
• Prior to joining GCA, Alex managed Marchfifteen, Austria's leading media and technology fund
• Graduated from WU Vienna and Boston University
Sigurd SolheimManaging Director
• Sigurd joined GCA as part of the acquisition of Stella EOC, where he was a founding partner
• Prior to setting up SEOC, Sigurd worked for ABG Sundal Collier in Oslo
• Graduated from Norwegian Business School (BI) and Audencia
Daniel FritzManaging Director
• Member of GCA Altium's Healthcare, Industrial and ESG practices
• Prior to joining GCA Altium, Daniel worked for Merrill Lynch in Zurich
• Graduated from the University of St. Gallenand MBA from Chicago Booth
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