When Gilde Equity Management acquired Dutch pastry company Bakkersland Banket as part of a buy-and-build deal to create Banketgroep in 2007, the firm knew it had to act fast to stop the manufacturer from crumbling. However, even the best laid plans cannot account for unexpected economic headwinds.
At the time of acquisition, many of Bakkersland’s products made no profit due to reduced demand, an overabundance of suppliers and pricing pressures. A merger with caramel waffle manufacturer Van der Breggan had made the new group a market leader for one of the Netherland’s most iconic snack foods, but much improvement was still needed.
Gilde pulled no punches in its attempts to reinvigorate the ailing bakery; restructuring the businesses into three product divisions and discontinuing the least successful product lines. The latter cut €30 million off top-line sales, but restored profitability.
With these measures in place, one could be forgiven for assuming Banketgroep was on track. However, within months raw material prices had surged by 40 percent, raising annualised costs by about €10 million and spelling potential disaster for a company with just €5 million EBIT.
“Ten to 15 years before that time, raw materials prices had only been declining, so there were no sophisticated processes in place to look at, manage and put changing purchase prices through to end customers,” Daniel Winkelman, partner at Gilde, tells Private Equity International.
The external pricing shock demanded an instant response. Within 12 months of the acquisition, Gilde had saved €2 million in annual costs by closing the central head office, the in-house logistical centre and a loss-making factory.
In the years that followed, Banketgroep saw three new CEOs come and go as the group reacted to different pressures. One early CEO was employed for their operational expertise, while in the later stages of ownership the firm introduced a manager strong at boosting top-line sales.
“That’s not something I’m proud of, but [it’s] something that needed to happen,” Winkelman adds. “I’m proud to say that every management team that was there and maybe didn’t make it to the end line we still have a good relationship [with] and they really contributed to the eventual success.”
The group sales team also underwent an overhaul, with several key account managers hired from the Gilde network. The team placed greater emphasis on the internationalisation of successful products and helped to deliver over 10 percent volume compound annual growth rate in key categories.
Over two years the firm also achieved a further €5 million in annualised savings by installing high-volume, automated production lines to meet growing demand. In the last three years of Gilde’s ownership, Banketgroep introduced a chocolate-coated caramel waffle that generated run-rate sales of almost €10 million within 12 months of launch.
Nine years after the initial deal and with EBITDA of €23.6 million, Banketgroep’s impressive growth attracted the attention of French biscuit maker Poult. For an investment that had faced serious adversity and lived to tell the tale, a 7.5x money multiple and 30 percent internal rate of return for Gilde’s investors must have been the icing on the cake.
WINNERS
AMERICAS
Large-cap: The Carlyle Group – Vogue International
Upper mid-market: Cerberus Capital Management – Bowlmor AMF
Lower mid-market: Francisco Partners – Paymetric
Small-cap: The Riverside Company – YourMembership
EMEA
Large-cap: Partners Group and Capvis – VAT Group
Upper mid-market: EQT – Faerch Plast
Lower mid-market: Gilde Equity Management – Banketgroep
Small-cap: YFM Equity Partners – GO Outdoors
ASIA-PACIFIC
Upper mid-market: ShawKwei & Partners – YongLe Tape
Lower mid-market: Advantage Partners – Hisense Broadband Multimedia Technologies*
Small-cap: Mekong Capital – Mobile World
*Hisense is not included in the write-ups due to confidentiality issues
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