Rather than tout the size and volume of their last major deal, investment bankers in the M&A Small Caps Switzerland team prefer to talk about how they use UBS’s global network to help Swiss companies that need or want to find new business partners.
The staff of ten, who cover Switzerland from their office in Zurich, are seeing a recovery in deals this year. Although part of the gain is attributable to a return to normal levels of corporate activity, the Small Caps unit believes that it is also benefiting from a clear competitive advantage compared to the corporate finance departments of local banks and advisory boutiques. Simply put, the teamcan combine its extensive local knowledge with UBS’s global M&A business, tools and expertise, giving Swiss clients an added dimension in terms of international reach. In practice, it means that when the team gets a new mandate, it can use the Investment Bank’s global network and database to systematically look for the most suitable partners inside and outside Switzerland, and take advantage of its product specialists and industry sector experts.
With more than 30 completed deals credited to the unit since 2000, the team works closely with client advisors in Wealth Management & Business Banking, as they have extensive and frequent contact with many of the country’s business leaders. The Small Caps M&A team picks up the cues, keeping its pipeline focused on middle-sized companies and deals that range from approximately CHF 10 million to CHF 100 million in transaction value, with anything larger generally handled by the Investment Bank.
The Small Caps team only takes on exclusive mandates and focuses on giving M&A advice to companies that have been put up for sale or are family owned and need to set up a succession plan. An example of the latter is the sale of privately held Emil Flachsmann AG in June to Frutarom Industries Ltd, a multinational flavor and natural extract house with headquarters in Israel. The Swiss company, which manufactures high-quality plant extracts and flavors, was being managed by the second generation of the Flachsmann family who were looking to make a decision about the company’s future and wanted to evaluate different options and scenarios in an effort to find the best partner able to further develop the business. The family mandated the UBS Small Caps team to look for investors and potential partners around the world and to advise on the sale process. Shortly afterwards, the team came up with a number of solutions that included the possibility of selling the business to a larger company in the industry or allowing Flachsmann management itself to buy the company with the assistance of a financial investor. Seeing the different options allowed the family to evenly weigh which would ensure the future of the business. The process helped to confirm the family’s belief that a sale to a strategic buyer would be ideal and the UBS team then helped the family to successfully conclude the sale to Frutarom.
Another notable transaction this year was the sale of specialty precision bearing manufacturer Wälzlager Industriewerke Bulle AG (WIB) to Canada’s RotoPrecision Inc. WIB, owned by Japan’s NSK Ltd., one of the world’s largest bearing manufacturers, made specialty precision bearings that did not fully fit into NSK’s core business. That prompted NSK to contact UBS, more precisely the Small Caps team, who took on the task of negotiating the sale to RotoPrecision, a sensitive and complicated task that involved coordinating meetings and negotiations across three different time zones. In the end, the sale, which was concluded at the end of March, not only resulted in the fulfillment of the solution NSK had believed was best for the Swiss business from the outset, but also helped establish a fruitful relationship between NSK and the Investment Bank.
According to the team, these deals also show how effective M&A is as a crossselling product. Not only does it generate fees, but more importantly, it also intensifies contacts with senior executives, business owners, and a diverse range of organizations interested in other products and services UBS can offer.
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