“There’s a vision there” is a phrase frequently heard from managers in the HANNOVER Finanz Group when an entrepreneur presents good ideas for successful company growth. Such was the case in 1990 for what is now technotrans AG, when Heinz Harling enquired with HANNOVER Finanz. At that time he was managing director of technotrans with a staff of around 70, and was planning a management buy-out (MBO) of the company, which had been founded in 1970. Before his approach to the HANNOVER Finanz Group, he had already been turned down by various banks.
Today, technotrans AG is an international system supplier in the field of fluids technology. Over 600 people work for the company worldwide. The main products are peripherals for offset printing machines and special systems for CD manufacture. The company is an international market leader for many of its product lines.
In the course of a management buy-out in 1990, the management team took over the company together with HANNOVER Finanz and a further investor. The takeover took place using the vehicle of an acquiring company in which the necessary equity capital and shareholders’ loans were vested. No bank loans were therefore taken up on that level.
Within the framework of the acquisition, the management was able to secure a relatively large share of 26 percent, a portion of which was of course refinanced by a bank.
Since 1990, technotrans has increased its sales and profits around ten-fold. In the field of peripherals for offset printing presses, the company is now the global market leader by a wide margin, achieving a market share of 41 percent in 1997.
Apart from small amounts which were required for interest payments by the management, the profits were retained by the company to increase its equity capital, and thus formed the basis of further growth.
In March 1998, technotrans AG was admitted very successfully to the New Market segment of the German stock exchange. The HANNOVER Finanz Group continued to hold shares in technotrans AG even after the IPO.
From 1985 to 1989, the company’s sales grew from DM 7 million to DM 18 million. A team of five managers played a decisive part in that development. In 1989 the founder took the decision to retire and arranged for the management team to succeed him.
The following aspects were to be taken into account:
- Securing an adequate retirement income from the sale
- Preserving the independence of the company
- A significant share in the business for the management group
- Long-term support from financially strong, entrepreneurially-minded partners
Heinz Harling: “With the assistance of the HANNOVER Finanz Group and an institutional co-investor, the company’s position relative to suppliers, customers and banks was significantly strengthened. Since our partners refrained from intervening in the day-to-day business, the independence of technotrans was fully preserved. While the large share of 26 percent for the management team was of course extremely attractive, we were still rather sceptical at the start as to how we could secure this participation with our relatively modest financial means.
Nevertheless, the know-how provided by HANNOVER Finanz convinced us very quickly. Their partnership and support gave us the freedom we needed to concentrate on the real work – with good results. Besides its leading position in the field of peripherals for offset printing machines, technotrans is now already number three in the world among the manufacturers of special machines for the production of CDs.”