enomyc wants to grow further. The M&A business plays a central role in this. Only recently, a new, internationally active team was introduced for this purpose. Robert Neufeld is on board as Head of Distressed M&A and Co-Head Corporate M&A. In addition to operational sector expertise, he brings extensive transaction experience.
How does he assess the further development of the market in the coming months? What makes a transaction successful and what is particularly important in the midmarket? Find out more in this interview.
Mr. Neufeld, how did you get into the M&A business?
First, I have a classical corporate finance background with an MBA degree from the Frankfurt School of Finance and Management. After holding operational management positions as a division manager and managing director in the automotive supply industry, I joined enomyc in 2019 and since then have been instrumental in developing the distressed M&A area. In addition to my expertise in the transaction environment, operational implementation experience is one of my core competencies.
What advantages does this have for your clients?
Basically, the mix of operational management experience, industry know-how and transaction expertise is an advantage in complex issues such as the sale of companies. Over the years, you develop a pretty good understanding of the real interests of the people involved in the process, which are not always openly communicated. In a situation like this, whatever your professional skills, you will also always need to be something of a psychologist.
What fascinates you personally about the transaction business?
Corporate transactions are always triggered by events. Depending on whether you are mandated on the buy or sell side, the sale of a company can be driven, among other things, by the motivation of succession planning, the restructuring of non-core divisions (carve-out) or the sale from a special situation (distressed M&A).
The sale from a special situation is a special form. In addition to exogenous influencing factors in the immediate market environment of the company, financial and performance-related elements can also lead to the decision of the entrepreneur to attract an external investor for the company in the shortest possible time. From this starting position, the transaction process often develops a high dynamic, which I personally find very exciting. In a structured process, a competitive situation is created on the investor side, which leads to a maximization of the takeover bid under high time pressure.
The German market has almost come to a standstill in 2020 and 2021. How do you see the current situation now and how it will continue in the near future?
The distressed M&A market was still relatively good in 2020. Not historically, however, since there have certainly better years. But the first corona year was not such a bad one from the perspective of the crisis-induced transaction market. It was different in 2021, when the market was flooded with liquidity via various government rescue packages. Since the middle of this year, however, we have been experiencing a significant revival again.
Which sectors are affected by this?
All old economy sectors, which are finding themselves in a completely new market environment due to the use of new technologies, are under enormous pressure and could be facing a wave of consolidation. This will be exacerbated by current developments in the energy market, inflation and changes in financing costs. This applies to pure B2B business models, but also to the market with end consumer products. We observe this uncertainty regarding future developments in our current consulting mandates. What currently appears to be in the foreground is selling your company at an appropriate purchase price, and this before a possible stronger market disruption makes its appearance.
Do you have the impression that complexity is generally on the increase?
Corporate transactions are associated with a certain degree of complexity as a general rule, because various specialist disciplines are involved in the course of the project. Current macroeconomic developments may lead to an increase in complexity if determinants that were previously assumed to be certain are now only included in corporate planning with less resilience.
Whatever happens, I believe the intensity of consulting will increase. Entrepreneurs who now want to sell in the short term are usually not prepared for the sale. For the consultant, this then means picking up the entrepreneur exactly where he or she is at the moment and gently explaining to him or her how such a process works. In the end, it's a matter of selling a life's work - and unlike the situation in a large company, where specialized departments deal with nothing else day in, day out, a great deal of empathy and tact is needed, especially in the SME sector. In corporate transactions, where something as sensitive as the life's work of an entrepreneur is at stake, this is the be-all and end-all. If your counterpart notices that you are not at eye level in terms of expertise and content, you will quickly lose trust.
What contribution do you make to ensure that such a process is successful in the end?
Preparatory work in the project is a decisive factor. Compiling the necessary documents, analyzing the data and describing the target company from the perspective of potential investors increases accuracy and saves downstream work in the subsequent process. The aim is to present the company in such a way that potential investors are interested in it. As early as the preparation of the transaction concept, you need to consider: For whom could the company be interesting? If we have a target within an industry, say drive technology in the automotive sector, then it makes no sense to address investors who are active in the apparel industry.
That means that your knowledge of the industry and your network are also required above all...
Yes, and it is of course an advantage to have access to a broad range of experience and a certain knowledge of the market. Here at enomyc we are very broadly positioned, as we have supported various companies across industries and sectors over the last 20 years. Our other advantage is the distinctive network, which we have developed over many years.
You are Head of Distressed M&A and Co-Head Corporate M&A at enomyc. What are your goals, where do you want to go with your colleague Ian Kayanakis as Head of Corporate M&A with the two divisions?
We have restructured internally over the past two years and are very well positioned in terms of personnel with many experienced colleagues who have successfully implemented a large number of transactions in recent years. We have mastered our craft. enomyc is perceived in the market as a reliable partner and specialist in the transaction environment.
On this basis, we now want to further expand our market position, especially in the distressed M&A area. In this context we are looking for targeted partners with whom we can work closely in the coming years. We also intend to broaden our position in the transaction business with medium-sized companies.
Thank you very much for the interview, Mr. Neufeld.