Apax partners ad Xerium S.A.
APAX PARTNERS AND XERIUM S.A.
1. What tactics/actions did Apax take to enable it to acquire BTRP in an auction without over-paying? How did Apax add value to Xerium?
Apax took a well-designed strategy to bid for Xerium. First, they understood it was not a competitive auction. Secondly, they took advantage of the momentum and circumstances of the seller that was under distress. Finally, they spent huge resources to analyze and calculate the value of Xerium to Apax.
First, they analyzed the competitors in the auction. The team observed it was a very opaque industry with only few companies public, limiting the access to information. Luckily, Apax had a competitive advantage (Wangner’s expertise) in the industry which allows Apax to know the sector inside and out. In addition to this, it seemed to be a very stable business with no high upside potential so the market was not heated about this sell. Furthermore, Apax analyzed the other bidders. They wanted to know if competitors where really interested in Xerium and what was the value for the competitors.
Second, Apax understood why the company was being sold. The seller needed to sell this side business because Invensys was in distressed. Xerium was an easy way to cash in and an appealing asset to sell since it was a stable cash generator. Apax also realized they had big bargaining power because they were the only strong and strategic bidders and probably the natural acquirer because of the synergies with Wangner-Finckh.
Finally, in order to come up for the value of Xerium to Apax, they did an exhaustive and expensive due diligence in order to find synergies, potential cost inefficiencies and revenue streams. The complexity of the business and the cost of accessing to information also discouraged competitors. Even though they over-due-diligence and over-spend competitors after this process, they knew more about the company than the seller. This and the fact that seller was hurrying to sell the
1. What tactics/actions did Apax take to enable it to acquire BTRP in an auction without over-paying? How did Apax add value to Xerium?
Apax took a well-designed strategy to bid for Xerium. First, they understood it was not a competitive auction. Secondly, they took advantage of the momentum and circumstances of the seller that was under distress. Finally, they spent huge resources to analyze and calculate the value of Xerium to Apax.
First, they analyzed the competitors in the auction. The team observed it was a very opaque industry with only few companies public, limiting the access to information. Luckily, Apax had a competitive advantage (Wangner’s expertise) in the industry which allows Apax to know the sector inside and out. In addition to this, it seemed to be a very stable business with no high upside potential so the market was not heated about this sell. Furthermore, Apax analyzed the other bidders. They wanted to know if competitors where really interested in Xerium and what was the value for the competitors.
Second, Apax understood why the company was being sold. The seller needed to sell this side business because Invensys was in distressed. Xerium was an easy way to cash in and an appealing asset to sell since it was a stable cash generator. Apax also realized they had big bargaining power because they were the only strong and strategic bidders and probably the natural acquirer because of the synergies with Wangner-Finckh.
Finally, in order to come up for the value of Xerium to Apax, they did an exhaustive and expensive due diligence in order to find synergies, potential cost inefficiencies and revenue streams. The complexity of the business and the cost of accessing to information also discouraged competitors. Even though they over-due-diligence and over-spend competitors after this process, they knew more about the company than the seller. This and the fact that seller was hurrying to sell the