Royal Kaak: “We offer start-ups the perfect opportunity to scale up sustainably”

What makes a supplier to the bakery industry one of the most interesting parties for start-ups and scale-ups looking to grow faster and sustainably? Even if, at first glance, these start-ups and scale-ups do not seem to have much to do with the bakery industry? In this article, Koos Frowein, Chief Financial Officer of Royal Kaak, reveals the secret ingredient to the company’s successful positioning.

First, finding calm waters – then, full steam ahead

Royal Kaak may not be well known outside of the food industry, but within the industry it is one of the biggest international players in bakery technology. Koos Frowein is Royal Kaak’s CFO and is responsible for M&A within the company. “I started here on an interim basis when the company was in a difficult financial position. Since then, I have made a permanent part of the team – much to my pleasure – and I get to help realise the huge growth potential the company has.”

Royal Kaak is now financially healthy and stable, so Mr Frowein sees this as the time to grow further. “But in a sustainable way. In practice, our company has long ceased to be just a machine manufacturer – it truly is a project organisation. This makes M&A a key ingredient in the strategy. The challenge now is to grow both quantitatively and qualitatively. This allows us to continue to serve our customers, and to do so sustainably.”

Isn’t everyone already operating sustainably?

“Sustainability” is a term that is sometimes used somewhat generically. But what does a sustainable (M&A) policy mean for Royal Kaak? “Of course, for us, sustainability is fundamentally very practical. Our customers demand energy-efficient – or even energy-neutral – machinery and technology. But there are also ideals behind it: we want to leave behind a more beautiful Earth than the one we were given.”

And Mr Frowein believes that sustainability is actually in Royal Kaak’s DNA. “We have been around for 175 years, and the business has been passed on through six generations. We have always had the long term firmly in our sights, and we have never just aimed for a quick dividend.”

For Royal Kaak, sustainability also goes beyond mere compliance with laws and regulations. Given current energy prices, for example, the company’s customers urgently need the most efficient technology so that they can keep their bread somewhat affordable. “Talking about a bread maker or a dough kneader may not sound that exciting,” Mr Frowein argues. “But if you supply a bakery line combined with a system that generates its own energy, then suddenly it becomes very interesting – and a challenge that we can also use to capture the attention of the younger generation.”

Neither fish nor fowl – but with room for manoeuvre

According to Mr Frowein, one of the other things that makes Royal Kaak unique is that the company is ready for its next growth phase in terms of its scope. “We are not a huge stock market fund that always has to be a frontrunner to pay dividends to shareholders as much and as fast as possible. But we are big enough to make a real impact with innovations, and we have enough financial muscle to do so. At the same time, we don’t have to put on a show.”

This manoeuvrability also gives space to the companies that Royal Kaak eventually acquires. They often continue to operate as independent entities and are not absorbed into the wider company. This is good for the acquiring party, but Mr Frowein says it also allows Royal Kaak to keep a clear overview. “And despite taking over parties that are rather diverse.”

For example, following this approach, Royal Kaak has recently started a company that can 3D-print metal, and not long ago acquired a company that provides silo and weighing technology, as well as a traditional toolmaker. “We are looking for companies that have a particular specialism. A specialism that aligns with our ambition to deliver a complete bakery line, from silo to lorry.”

Royal Kaak is looking to expand – both within the Netherlands and internationally. The company has reached out to M&A experts for this exact purpose, but Mr Frowein also monitors the Dealsuite platform closely. “Even if just to know what is going on in the market.”

No direct deals have been closed from a search on Dealsuite thus far, but as far as Mr Frowein is concerned that does not make it any less valuable as a medium. “It is for a variety of industries, and that can really work to our advantage. We are looking for parties that can complement our current activities, so we have a very broad search radius. As an M&A executive, the offerings make me especially aware of what is on offer. As soon as the email arrives from Dealsuite, it catches my eye. It makes me wonder what can add value and what can’t. So, Dealsuite is almost like TikTok and Tinder for CFOs! I want to take a look every time I get an email, I want to stay informed and I just keep asking myself whether a particular venture could be of value to Royal Kaak and its customers.”

175 years of experience also means the ideal opportunity for start-ups to scale sustainably

Mr Frowein believes that a company that has been operating for 175 years may be the sustainable scaling up option for start-ups and scale-ups. “That really is our approach. Our equipment can be found all over the world, and all that technology needs to be more sustainable. And innovations are needed for that. Start-ups offer the technology and Royal Kaak offers a huge network of customers who need their solutions. The companies we acquire can operate autonomously within our Group, while Royal Kaak facilitates contact with the market and the salesforce.”

Royal Kaak’s ambition lies primarily in an open buy-and-build model and offers start-ups the chance to really scale up by allowing them to expand their reach in one fell swoop.

Want to talk some more about the opportunities that Royal Kaak has to offer companies with ambitions for growth? Then get in touch with Koos Frowein here.

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