Automotive Injection Moulding

Negative purchase price transaction: German based technologically world class producer but with history of losses is now sold by corporate group with a cash-donation

Company Overview: The Company produces manually or fully automatic mechanical and electromechanical plastic assemblies to complete units with the latest assembly and manufacturing technology. The unit is the only unit producing automotive components and is part of a larger German Group. The company employs 250 people and has 30+ injection moulding machines and 2 flat-bed painting systems in use, including clean room practice where applicable. The company is certified with the International Standard for Automotive Quality Management standard. Key customers include Audi, Lamborghini, Peugeot, Porsche, Hella, Renault, etc.
Products & Services: The Company has long experience in:
  • Mold making
  • Precision Injection Molding
  • Surface Finishing: Painting, Printing, Laser Inscriptions
  • Assembly of Modules
Key Investment Highlights:
  • Peer/competitors typically achieve 10% EBITDA margin on sale. This company has been orphan in a large company group with no management attention to turnaround. 
  • In previous times the company generated up to EUR 40 Mn revenue with customers in Europe and US. Due to some strategic issues its sales have dropped and are now at EUR 20 Mn.
  • Its products are technologically sophisticated injection moulded and painted parts which only few competitors in Germany can manufacture. 
  • It has a diversified customer base with roughly 20 representing 80% of the sales. The customers are among the top brands in Germany and Europe.
  • Improvement measure can include a price increase with customers, reduction of labor force and a possible shift of production to a lower cost production country.
Proposal: Since this is a non-focus business of the group and they are unable to do due justice, they want to part ways with this facility and support the acquirer for an initial mutually agreed period. Potential buyer needs to prove strong automotive knowledge and experience in turnaround/business development. The seller is prepared to provide additional cash funding for new owners to cover losses of up to 2 years.
The company transaction is debt free and without real estate. The real estate can be sold in another process. A 10-year rental agreement should be possible for interested parties. At or after 2 years of acquisition the new owner needs to have reached break-even or fund any future losses himself.