Verder International: ‘ESG is increasingly becoming a part of the evaluation’
M&A sometimes seems like a pragmatic assessment of numbers, but there is much more behind it. Cultural and ESG standards also come into play when assessing an acquisition candidate.
Eric Heskens, International M&A Director at Verder International talks about the company’s M&A strategy. It is an international quest– one for which he uses ESG-related information and tools such as Dealsuite.
Plenty of room for consolidation
After a number of years in the world of banking, Eric Heskens now finds himself on the other side of the table at Verder International. ‘We are an international family business with growth ambitions within the sectors in which we operate: industrial pumps and laboratory equipment for quality control. What started out as a pump distributor in 1959 has now grown to become a leading manufacturer. Each year, we generate about EUR 450 million in turnover, with over 2,000 employees across more than 50 sales offices and over 20 production locations.
Heskens describes his role at Verder as refreshing. ‘As a banker, I facilitated the entrepreneurship of my clients, but now I’m part of that entrepreneurship. And there is plenty to do. Especially since there is still a lot of room for consolidation in both sectors. Our growth strategy is based on two pillars: autonomous growth and acquisition-based growth. Innovation plays a crucial role in the first pillar, which is why we established our Innovation Lab. For the acquisition side of things, we set up an in-house M&A team during the pandemic. Our ultimate goal is to double our turnover every five years without diluting our financial performance. Acquisitions will account for 50% of this growth.’
Searching for complementary assets
The M&A team at Verder International works for the whole Verder Group and takes care of the entire process, from defining the strategy and making contact with potential acquisition candidates, to closing and, if necessary, beyond. Of course, an acquired party eventually becomes part of the relevant division; they integrate the company into their existing organisation. Usually without losing their own identity or brand name.
The primary goal of the Verder Group is to expand in terms of its breadth. ‘We don’t just buy something we already have,’ explains Heskens. This means that potential acquisition candidates must add value to the existing activities at Verder. ‘It is important for us to see whether a company is a good fit in terms of market and strategy. Of course, we identify targets with the divisions. To a large extent, it is them that determine what complements our existing activities. Sometimes the technological angle is a key factor, but the geography or the type of end customers can also be an added value.’ Heskens and his team prefer to speak directly with the owner or management team of the acquisition prospect to see if the DNA is a match with Verder’s. ‘A successful future together relies on us knowing whether the culture and the staff will align well with ours.’
Verder International is an established name in the sectors in which it operates. At the same time, it is a family business that knows how to continue to be successful and continue to grow. ‘We are growing steadily, partly because of our excellent distribution network spanning more than 20 countries. But autonomous growth is challenging in our sectors. Customers are extremely loyal to the solutions they already have. This applies both to pumps and to laboratory equipment. That’s why acquisitions are necessary – they enable us to make quicker and greater strides.’
Taking the broad spectrum of ESG topics into account
When evaluating M&A targets, Verder International looks at more than just figures and activities. ‘In our evaluations, we are looking more and more at the broad spectrum of ESG topics. There are a number of obvious aspects that we pay close attention to, such as working conditions, data and cyber security, and export policy. And we are willing to withdraw from a process if these aspects do not meet – or are unable to meet – our standards.’
Since the introduction of the UN’s Sustainable Development Goals, Verder has been looking at where the most impact can be made, and has been evaluating targets relating to those aspects. This allows Heskens and his team to better assess whether a company is a good fit for Verder in terms of culture, standards, values and ambition. ‘Verder has a professional working environment but we are all really connected to each other and we try to achieve our ESG goals together, such as making all of our buildings energy neutral. After an acquisition, the implementation of our Code of Business is high on the list of priorities – and with good reason. We expect potential acquisition candidates to embrace these types of initiatives.’
New insights with Dealsuite
In the last few months, Dealsuite has enriched Verder International’s search for new acquisition candidates. ‘We gave serious consideration to whether it could contribute to anything. We work in a niche market: sellers know where to find us and we know who would be a good fit for us.’ But the experience has been very good so far. ‘With Dealsuite, I really see things that I otherwise would not have seen. And Dealsuite adds information and insights to our acquisition activities. This increases our potential deal flow, which continues to be our goal.’
Get in touch with Eric from Verder International through Dealsuite here.
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