Mutares in crisis mode: Gold-rush mood at the restructuring specialist?!

deal flow is picking up again after the major capital increase in the fall filled the coffers to the brim. The skyrocketing prices in all sectors, including and especially energy sources, and the Ukraine war with its massive impact on supply chains and the availability of raw materials and supplies as well as labor and grain is sending additional shock waves through the European economies. Hardly any company is not feeling the restrictions and suffering and all the more companies are facing an uncertain future. In terms of current and future situation, company succession or “simply” as a division of a group that wants to focus on other areas.

For Mutares these are “gold digger times”. Malicious tongues might speak of crisis profiteers, a friendlier formulation would be “restarter enablers”. The truth lies somewhere in between and also offers interesting perspectives for investors…

Mutares acquires marginal activities of groups, companies with weak earnings or those for which a sale is intended in the course of corporate succession. The focus is on European companies with sales of €50 million to €500 million, which already have an established business model and show high development potential.

The share price has still suffered the aftermath of a large rights issue in recent months, but Mutares had good reasons to raise so much additional capital now of all times.

Mutares is a specialist in the restructuring of ailing companies. It either buys companies out of insolvency or when they are about to become insolvent, or it buys peripheral activities of large groups that want to dispose of them but do not want to close them down. Mutares takes over these companies for small money and sometimes even gets a dowry on top to subsequently restructure them and turn them into industry leaders through targeted add-on acquisitions and significantly increase their value. In this “harvesting phase”, the repositioned subsidiaries are then put on display and sold at the highest possible profit.

There is usually about five years between purchase and sale, and Mutares has on average increased its invested capital sevenfold in the past. This sounds quite lucrative, but the business model involves not only extraordinary opportunities but also considerable risks, and investors should carefully consider how they personally assess the risk-reward ratio.

The Mutares business

To do this, of course, you have to understand the way Mutares makes its money. Mutares is not an investment company. It takes over new subsidiaries and puts them into separate subsidiary limited companies. This reduces the risk for the parent company if the restructuring goes wrong and ends in losses. In this case, the invested capital may be lost, but no further capital can be injected.

As a holding company, Mutares provides consulting services for its subsidiaries. For this purpose, Mutares sends its own management consultants to the company to simplify and restructure the processes and make the company fit again. Mutares charges consulting fees for these services, which flow independently of the success of the restructuring. The more subsidiaries Mutares has and the more sales they generate, the higher the fees.

nd the commissions that accrue to Mutares.

In addition to the fees, Mutares receives profit distributions from its subsidiaries, at least from those that are already or again profitable. And sometimes lends money to the subsidiaries at interest rates attractive to Mutares. The dividends, fees and interest income together feed the basic dividend, which Mutares has set at one euro and intends to increase regularly.

Mutares then has transactions as a third revenue stream. On the one hand, “bargain purchases

” are taken when the seller of a company gives Mutares a restructuring premium along the way. Maliciously, one could also say that the seller buys himself out, because in return Mutares assumes the obligation to negotiate and enforce structural changes such as layoffs or plant closures with the employees and unions, if necessary.

And at the end of the joint path, Mutares then receives sales proceeds when a subsidiary is divested. This second revenue stream is less predictable and more susceptible to fluctuation, so the performance dividend fed from this can also fluctuate from year to year.


The corona year 2020 also left its mark on Mutares, which was nevertheless able to expand its activities. In 2021, the number of transactions has increased again and Mutares is now aiming for an average of one purchase or sale per month.

At the same time, the current situation of Corona burdens and expiration of Corona aid, cheap money, threatening interest rate increases and more and more companies with succession problems offers almost paradisiacal conditions for Mutares. Doesn’t sound like a problem, but Mutares simply has too little money to take advantage of the many opportunities.

Until now, Mutares has often been able to acquire companies with little or no capital of its own due to the still manageable size of its acquisition targets. In the meantime, however, Mutares is moving to a level where sellers expect a significant equity investment of their own, due to its great success in recent years. Therefore, Mutares needs additional equity, as the alternative would be to miss out on the many lucrative opportunities that arise and grow purely organically.

Furthermore, Mutares’ business model entails that each new purchase weighs on earnings, as it initially generates negative margins (between 5% and 20%) and thus operating losses. This reverses only after some time, when the restructuring bears fruit.

Capital increase and uplisting

The Executive Board recognizes “enormous opportunities” in the current economic situation, especially on the buy side, and therefore wants to increase its headcount even further. To this end, (faster) expansion into neighboring countries is also planned.

To this end, Mutares has increased the company’s share capital against cash contributions by issuing just over 5 million shares at a price of €19.50 per share. In doing so, the company got rid of all shares, even though the Executive Board and major shareholders had declared in advance that they would only participate in the capital increase to a certain extent; Mutares CIO Laumann spoke of a “real subscription rate of 99%”, i.e. without the underwriting by the syndicate banks. The aim was to increase the free float of Mutares. For together with the capital increase, an uplisti

The shares were listed in a higher segment of the Frankfurt Stock Exchange, the Prime Standard.

This is accompanied by increased publication and reporting obligations and the higher stock exchange segment makes the Mutares share investable (more) for institutional investors, especially from the Anglo-Saxon region and especially there Mutares wants to present itself more strongly to investors in the future.

Through the capital increase, the company received gross proceeds of approximately €100 million and Mutares intends to use the net proceeds from the capital increase for platform acquisitions of new portfolio companies, add-on acquisitions to strengthen existing portfolio companies as part of its buy-and-build strategy and investments in existing portfolio companies.

Revenue target raised from three to €5 billion

There is talk in the market of potential deals worth more than €7 billion (target company revenue) that Mutares is said to have on the table right now. For comparison, Mutares has recently increased its mid-term planning and now aims to achieve sales of €5 billion in 2023 instead of €3 billion (again, this is based on the sales of the subsidiaries).

This revenue mark is not entirely unimportant, as Mutares is targeting net income at holding level of 1.8% to 2.2% of group revenue in the medium to long term. At the midpoint, this would thus amount to a surplus of around €100 million at the revenue floor of €5 billion targeted for 2023. To put this in perspective, net income was €20.8 million in 2019 and €27.1 million in 2020.

Platform model

Mutares either acquires the new companies as a new platform investment or affiliates them to such an existing one. The focus here is on the three segments Automotive & Mobility, Engineering & Technology and Goods & Services.

There have been a number of transaction announcements in recent weeks.

On 9/29/21 Mutares announced the closing of the acquisition of Innomotive Systems Hainichen GmbH. The acquisition strengthens the Automotive & Mobility segment and has numerous synergies with the portfolio company KICO GmbH. The company, which has production sites in Germany and China, employs a total of around 450 people and generates sales of €120 million. As a leading supplier of aluminum hinges for automotive applications, Innomotive Systems Hainichen manufactures sophisticated and high-precision door hinges in steel or aluminum as well as complex hinges for hoods, liftgates and tailgates.

On 04.10.21, Mutares announced the sale of its subsidiary Norsilk to Protac, a French company of Groupe Rose. Norsilk had been acquired by Finland’s Metsä Group in 2015 and, after a successful restructuring process, was integrated into Donges Group in 2019, part of the Engineering & Technology segment.

On 11.10.21, Mutares announced the successful completion of the acquisition of Rasche Umformtechnik GmbH & Co. KG. The company manufactures steel forgings for the automotive, aerospace and agricultural industries, among others, and generates sales of approximately €30 million. As an add-on investment for PrimoTECS, which belongs to the Automotive & Mobility segment, Rasche will provide additional access to smaller series sizes with manual forging presses and will expand the

Further drive the growth of the Group. In the course of the aggressive growth strategy and the implemented buy-and-build approach, PrimoTECS now grows to a consolidated turnover of around 150 million euros and can further expand its customer network and product portfolio with the help of its 180 employees.

On 22.02.22 Mutares successfully completed the acquisition of Toshiba Transmission & Distribution Europe S.p.A. from Toshiba Group. The engineering-procurement-construction (EPC) service provider for power transmission and distribution is an add-on investment for the Balcke-Dürr Group. The company, which has been renamed Balcke-Dürr Energy Solutions, and the Toshiba Group will continue to work together as technology partners in the handling of existing projects as well as in new business opportunities. Balcke-Dürr Energy Solutions is a renowned provider of turnkey projects in the energy sector, operating mainly in Europe and the Mediterranean countries. It delivers turnkey projects such as high- and medium-voltage switchgear, battery storage systems, smart grids solutions and renewable energy installations, and has completed projects worth over €350 million in recent years. The add-on acquisition enables Balcke-Dürr to enter the renewable energy business, which is in line with Balcke-Dürr’s strategy to develop into a sustainable solution provider.

On 28.02.22 Mutares successfully sold its subsidiary BEXity to Raben Group; the deal had already been advised for the end of 2021. Raben Group is one of the largest logistics companies in Europe, headquartered in the Netherlands. BEXity is a leading logistics company in Austria and was acquired by Österreichische Bundesbahnen-Holding Aktiengesellschaft (ÖBB) in 2019. The company’s offering includes cross-border transport logistics in the general cargo and charter sectors, as well as warehousing services. BEXity has a nationwide network in Austria with around 650 employees and generated revenues of approximately €180 million in 2020. Within only two years, BEXity’s business, which was loss-making at the time of the acquisition, was transformed with the help of the Mutares team and led into sustainable profitability. The most important measures for the successful turnaround included the reorganization of the company, the repositioning on the market as the new BEXity brand and as a quality leader, the focus on profitable customer segments and process optimization. In addition, the then subsidiary in the Czech Republic was already sold in April 2020 in order to fully focus on the Austrian sites.

On 03.03.22 Mutares signed an irrevocable offer to acquire Vallourec Bearing Tubes (“VBT”) from Vallourec. The business will strengthen the Engineering & Technology segment as a new platform investment. The transaction is expected to close in the second quarter of 2022, following consultation with the works councils and subject to approval by the antitrust authorities. Vallourec Bearing Tubes is headquartered in Montbard, Burgundy, in France, and employs more than 200 people, generating sales of approximately €50 million. The company is a European leader in the manufacture of bea

n seamless precision steel tubes manufactured to the most demanding standards. VBT offers a comprehensive product range and customized dimensions according to customer requirements. As the second largest player in the European bearing tubes market, the company supplies its products to various industries such as engineering, equipment manufacturing and oil and gas. With the acquisition of Vallourec Bearing Tubes, Mutares underpins its strong position in the French market and secures a promising asset which, as a platform, synergistically complements the existing portfolio, especially with regard to PrimoTECS.

On 03.03.22 Mutares also signed an agreement to acquire the Sheffield business of Allegheny Technologies Incorporated (ATI). This acquisition will strengthen the Engineering & Technology segment as a new platform investment. The transaction is expected to close by the end of the first quarter of 2022, subject to customary regulatory approvals and other conditions. A change of name of the company to Special Melted Products Limited is planned. Headquartered in Sheffield, UK, the company employs approximately 190 people and expects 2022 sales of approximately €80 million.ATI Sheffield uses vacuum induction melting, secondary remelting and rotary precision forging to produce a range of robust, quality products in low-alloy steels, stainless steels and nickel-based superalloys. Thanks to its extensive in-house capabilities in metallurgy and the forging process,…

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