Industries – Industry

INDUSTRY

The growing importance of technology provides opportunities and risks for Swiss industrial companies. In addition to new possibilities in the context of automated production, the Internet of Things, for example, also provides new business areas. Furthermore, with the strong Swiss franc, the pressure for cost-effective production sites and high productivity remains. The M&A partnership Globalscope enables IFBC to support its clients in the worldwide search for suitable target companies and interested buyers.

YOUR CONTACT PERSON

Fabian Forrer, CFA
Partner
fabian.forrer@ifbc.ch

CURRENT TOPICS & CHALLENGES

IoT, digitisation and industry 4.0

Internet of Things (IoT), digitisation and Industry 4.0 are long-term growth factors in many industrial sectors. On the one hand, efficiency gains can be achieved through an increasing automation of the production and distribution networks can be optimised through digitisation. On the other hand, new application possibilities for products are emerging, such as the interconnection of household appliances, and products can be increasingly tailored to specific customer needs.

Transformation of the automotive industry

The automotive industry is undergoing a comprehensive transformation. The electrification of the global automobility is inevitably progressing. As technological development advances, the acceptance of autonomous driving will also increase, and our mobility behaviour will change fundamentally. Once the COVID-19 pandemic will have been overcome, alternative, more ecological mobility concepts such as car sharing will gain momentum again.

Upcoming changes for the food industry

It is not only the growing world population, for which experts estimate a required increase of 50% of the global food supply by 2050 that poses major challenges to the food industry. Consumers and regulators are demanding a responsible, resource-efficient and sustainable production to reduce global greenhouse gas emissions as well as a sustainable waste regulation.
Furthermore, healthy and personalized food is becoming a crucial part of our social lifestyle.

NOTABLE RECENT TRANSACTIONS

ASSA ABLOY takes over agta record

The Swedish company ASSA ABLOY, the world’s leading supplier of access systems, increased its stake in the Swiss company agta record to 93% in August 2020. The acquisition strengthens ASSA ABLOY’s presence in Switzerland and in 16 more countries worldwide with direct presences of agta record.

ams acquires majority stake in OSRAM

In July 2020, the Austrian-based and at the SIX Swiss Exchange quoted sensor manufacturer ams acquired a majority stake of 71% of the outstanding shares of OSRAM. The German manufacturer of lighting systems constitutes an opportunity for ams to further expand its leading position in photonics.

Sulzer expands health care portfolio with Haselmeier

In August 2020, the Swiss industrial group Sulzer acquired Haselmeier, the German specialist for drug delivery systems, at an enterprise value of EUR 100 million. The acquisition is intended to exploit growth opportunities in the fast-growing drug delivery market by integrating Haselmeier into Sulzer’s applicator systems division.

OUR PROJECTS

Other clients
Redesign of the enterprise risk management

IFBC was mandated to redesign Zehnder's enterprise risk management. As part of the project, the key risk management processes were revised and documented in a risk manual on group level. Furthermore, an Excel-based tool was created in which risks can be assessed and visualized.

Zehnder is a leading manufacturer of indoor climate solutions in Switzerland.

Determination of the Impairment WACC and review of the existing impairment model

IFBC was mandated by Rieter to conduct a review of the existing model for the annual goodwill impairment testing and to elaborate corresponding recommendations for further development. Simultaneously, a cost of capital concept was developed for Rieter. This includes the calculation principles for the individual cost of capital parameters as well as the handling of different currencies and country risks as a basis for the implementation of the goodwill impairment tests.

Rieter is a globally leading supplier of systems for manufacturing yarn from staple fibers in spinning mills.

Valuation of selected group companies

IFBC was engaged by the Diethelm Keller Group to perform independent valuations of selected group companies. Together with the management and considering analysts' expectations for the corresponding peer companies, business plans were developed for the respective companies, which were used as a basis for the discounted cash flow valuations. Based on sensitivity analyses with reference to the main value drivers, appropriate value ranges were derived for the companies to be valued.

Diethelm Keller Group is a privately held organization whose principal shareholders are the descendants of the founders. In addition to the participation as major shareholder in DKSH, a leading company in the field of market expansion services with a focus on Asia, the group consists in particular of four operating units in different business areas with over 2’500 employees in 20 countries.

Valuation of employee stock options in accordance with IFRS 2

Huba Control AG was acquired by Wise Road Capital, a global private equity firm, as part of a carve-out from Siemens. In this context, key employees were granted employee options. IFBC was engaged to value these employee options in accordance with IFRS 2 and to summarize the valuation results in a report for the attention of the auditors.

Founded in 1945, Huba Control AG is specialized in the development and production of components which measure pressure and flow such as pressure switches and transmitters.

M&A TRENDS AND MARKET ANALYSIS

The following graphs analyse the industrial sector over the past five years. The graphs show the development of the average semi-annual transaction multiples as well as a comparison between the trading multiples of listed companies in individual sub-sectors and per region as of the end of June 2020. The analysis is based on the Bloomberg database. In terms of size, a distinction is made between companies/transactions with a market capitalization of below (low-mid market) or above (large companies) USD 150 million.

Time series of EV/EBITDA multiples of listed companies

Low-Mid Market
Large Companies

  • The trading multiples shown are based on the enterprise value (EV) at the reporting date and the forecast EBITDA for the following 12 months.
  • Over the last five years, the average trading multiple in the lower-mid-market (market capitalisation < USD 150 million) included an average discount of about 32% compared to the average trading multiple of large companies (> USD 150 million).
  • The increase in the first half of 2020 is likely to be due to the currently low forecasted EBITDA level.

EV/EBITDA multiples of listed companies split by region as of 30.06.2020

Low-Mid Market
Large Companies

  • Larger North American industrial companies show the highest median trading multiple (9.9x). The lowest multiple is observed in the Eastern Europe region.
  • Companies in the lower-mid-market show a discount to the large companies on average. The extent of discount varies from region to region.

EV/EBITDA multiples of listed companies split by subindustry as of 30.06.2020

Low-Mid Market
Large Companies

  • The Materials sub-sector has the lowest multiple with 7.2x among companies with a market capitalisation of more than USD 150 million.
  • In contrast to the other sub-sectors, smaller companies in the Aerospace & Defense sector are traded at a relatively small discount to larger companies as of mid-2020.

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