For private equity, investors and supervisory directors

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Valuation issues

As a private equity party, investor or member of the Supervisory Board, you are faced with all the stages of development at the companies which you are involved in.

The first crucial choice to be made is deciding whether or not to buy a company. Subsequently, most companies develop into strong and healthy businesses, in part due to your added value. For any number of reasons, however, things can also turn out differently.

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At times like these, you need additional insight to help you provide an answer to the following questions:

1. Interesting, but do we want to invest in this?You have identified an interesting investment opportunity. If the company fits whitin your focus, you want a fast and objective overall insight in order to be able to act adequately.

2. How does the company really perform? You need an accurate understanding of how the company now improve it’s performance.

3. How do we get profitability and cash flow back on track? For investments that are failing to meet targets, you want to know how to improve profitability and cash flow, and how much time and money is involved.

4. How do we find the right (interim) managers? You want to give the company a boost with new or additional (interim) managers.

5. Sell now or optimise first? Or make an add-on acquisition?You wonder whether it would be wiser to sell the company, or a part of it, or to optimise it first (and how), perhaps even by means of a suitable add-on acquisition.

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Valuablerecommendations

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* Kruger is EACTP gecertificeerd

Effe

ctive

thinking Effective action

Effective calculations

Kruger* has three decades’ worth of experience in providing high-impact advice to companies looking to gain insight, become more effective and/or set out a new direction to deal with complex issues.

With years of hands-on experience in the Dutch mid-market and a history of analysing a wide variety of companies, Kruger often looks at companies and their (im)possibilities from a slightly different perspective than others.

Kruger’s relationships with companies and stakeholders are built on trust and open communication.

This results in honest, practical, no-nonsense advice.

Kruger is active in:Business ConsultancyCorporate FinanceInterim Management and Executive Search

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You have identified an interesting investment opportunityIf a certain company seems to have sufficient potential and suits your focus, it is essential that you act adequately and sensibly. Gaining a quick, objective and comprehensive overview could turn-out to be critical, especially when there are several interested parties.

Interesting, but do we want to invest in this opportunity?

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Pre-due diligence helpsWith a pre-due diligence, investment decisions are given a better justification early on in the process:

Based on the findings, you may conclude that the company has insufficient potential, allowing you to avoid investing more time and money than necessary (for a full due diligence).If the findings do give cause for further investigation of the investment opportunity, the pre-due diligence contributes to the focus of further investigation, thus limiting future costs.

What does this mean?Pre-due diligence is extremely effective and cost efficient, and includes the following elements:

A substantive, business-oriented validation of the business case in question.If desired, this can be translated into realistic operating liquidity and balance sheet forecasts.An objective test of the professionalism and quality of the organisation and its management.

The outcome of a pre-due diligence provides conclusions and recommendations, both decision-making process and optimise the company’s performance, management and financing structure.

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You have invested in a company and you suspect there is much room for improvementYou want an accurate, objective understanding of how your company is performing. Many opportunities seem to remain untapped. Real insight is lacking. If you continue as is, you have little confidence that you will achieve the future you had in mind.

What is the real performance of the company?

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A business analysis provides insight and directionAn objective, external analysis of the current position of various business activities may help. This analysis includes effective measures and forward-looking plans, as well as their effect on operations, liquidity and financing.

What do we look at?The analysis focuses on aspects such as:

Market and market position, product and process innovation. Competition and benchmark.Customer focus, vision and strategy.Organisation, management and entrepreneurship, culture (atmosphere, independence, individual development).Effectiveness.Professionalism of management information.Current status of and forecasts for operating budget, balance sheet and liquidity.Sector-specific issues, such as work in progress, production results, or contribution of individual activities/branches.

Conclusions and practical recommendationsThe analyses and practical recommendations can be used immediately to improve your returns by implementing the identified opportunities.

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Sometimes, you may be confronted with investments that fail to achieve their objectives or even raise financial concernsUnforeseen market changes, operational problems, poor management information, downright bad luck or a combination of factors: any of these reasons may cause a company to fail to develop as it should. Real insight is lacking. Continuing as is, is not an option.

How do we getprofitability and cash flow back on track?

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Finding the link between the problem and the solutionIn such cases, Kruger can analyse underperforming companies and, if nescessary, restructure them.

Underperformance analysisIn addition to certain project-specific matters, analysing challenging, complex situations consists of:

Testing the professionalism and quality of the organisation and its management.Objective turnover, margin and cost predictions, translated into a realistic operating budget and clear liquidity and balance sheet forecasts.Identifying opportunities and specific, practical solutions that can help optimise results.Conclusions and recommendations to facilitate the decision-making process.

Our thorough analysis and successful approach mesh seamlessly with Kruger’s years of experience with corporate restructuring in all conceivable business sectors. Every year, we support over 100 companies facing significant challenges, some of which jeopardising their continuity.

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Example of twospecific questions

Scan of Project-oriented organisationsThe objective is to obtain high-quality, comprehensive insight into work in progress (WIP), its quality, and future developments. This is achieved by optimising insight into the extent of each project’s negative or positive contribution to profits and the underlying causes thereof.

The next step is increasing the efficiency of your project administration, focusing on better control and predictive management information.

costscoverageresultinvoiced

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Overhead scanThis creates a clear picture of the overhead structure:

To what extent does the structure suits the company’s strategy and objectives?Room for optimisation: opportunities for improvement and achievable short- and long-term cost reductions.To what extent is the level of indirect costs appropriate for the company?Which one-off costs may be involved in an optimisation process?

In addition to extensive knowhow and many years of experience brought to work, the scan is based on a benchmark of companies that are of a similar nature and/or in a comparable sector. Since indirect costs and direct costs interact, the overhead scan often delivers pragmatic recommendations to optimise direct costs as well.

Indirect personnel costs / revenue

companylargemediumsmallavg. best practices

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The right expertise at the right timeCompanies do not always have the management they need to realise the required growth and profit optimisation, or to successfully complete a turnaround process. Sometimes, circumstances may require a lot of attention and the right expertise or experience may be missing. Tailoring our approach to the company’s need will help the organisation improve, secure continuity or take the next step.

How do we find the right (interim) managers?

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Kruger Interim ManagementIs capable of finding a suitable interim manager:

With relevant sector knowledge, at least 15 years of experience and a high degree of executive expertise.Selected from a group of interim professionals in the field of restructuring, general, financial and operational management.Combining years of experience in these fields with guidance throughout the process has made us a successful partner.

Kruger Executive SearchTargets medium-sized and mid-market companies

Focus particularly on: industry, wholesale & retail, transport & logistics and project-driven companies.Is specialised in management positions in the field of general, financial, operational and supply chain management and specialist finance positions, such as business, operational, plant or project controller.Our team has many years of experience and a large network of relevant candidates.We work on the basis of successful placement and satisfaction.

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One of the outcomes of a business analysis may be that a company, or a part of it, will be sold.

Questions: what options are there? What is a realistic price? Would it be better to take this step now or to optimise the company first?

Sell, optimise, or acquire?

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Strong focus on context, in-depth expertise In recent years, Kruger Corporate Finance has silently acquired a prominent place in the M&A landscape thanks to its specific expertise, including:

Sale of underperforming companies. These sales often require a different approach and typically have different time constraints than profitable companies. Other parties may jump in and valuation methods may differ. In the most difficult cases, knowhow and insolvency experience along with an extensive network are key.Sale of profitable companies with complicated organisational structures, deal structures or situations.Valuation issues and determining realistic takeover prices, also as part of a pre-due diligence analysis or company analysis.Financing or refinancing new and existing participating interest/investments in the event of changing business conditions, or to take advantage of future opportunities such as mergers, investments and acquisitions.Search and realisation of platform investments and add-ons.

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Why Kruger?

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What you can expect from Kruger:Kruger stands for 100% independent advisory and does not invest.More than 30 years of experience in providing high-impact support to medium-sized companies, helping them create value (again) in complex situations.Proven track record, largest consultancy agency in the Dutch restructuring mid-market.Expert team consisting of approx. 25 professionals; sufficient capacity for timely, objective, practical, no-nonsense advice.Keywords: corporate interest, objective, professional, confidential, committed, pragmatic, ‘about & with people’.Continuous communication, especially in the face of rapid developments.Direct access to an extensive network of external specialists, including accountants, lawyers, notaries, tax specialists and real estate experts, for major & minor questions.Kruger Corporate Finance offers support with mergers & acquisitions, financing & refinancing, valuations, etc.Kruger Interim Management has a select group of interim managers at its disposal who have been strictly chosen for their implementation skills & expertise.Kruger Executive Search provides a tailor-made solution for recruiting and selecting board members, managers and finance professionals.

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Why Kruger?

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How Kruger works:One of our partners is always closely involved in the process, bearing final responsibility. Our professionals bring decades of experience and the skills required to keep an eye on the bigger picture in crisis situations making the right economic decisions, without losing sight of the psychological and emotional factors that may be involved.Our analysis stands out from the crowd thanks to our thorough financial analysis. We present operating budgets along with liquidity and balance sheet forecasts, providing a full picture. These forecasts are a key component of our reports.If the available management information does not provide enough insight, we work together to provide real insight. For example: contribution margin per customer, cost price per product, better allocation of indirect costs. These cross-sections create new insights for future policy.Kruger always takes into account several scenarios, providing a quantitative explanation for all possible choices (invest, reorganise, cut costs, etc.).All our reports are practical and contain specific recommendations. You can count on us to be down to earth and to provide a thorough explanation in person.Quality is of paramount importance. For example, 11 of our professionals are EACTP-certified. The European Association of Certified Turnaround Professionals only accepts members who have demonstrated more than sufficient knowledge of and hands-on experience in turnaround situations.

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Kruger has worked for

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CustomersKruger clients per sector

Wholesale 19%

Energy 1%

Business services 11%

Metal/ mechanical engineering 5%

Transport/ Logistics 6%

Retail 8%

Hotel, Catering &Leisure 6%

Automotive 2%Graphic 2%

Food (production) 2%

Healthcare 5%Non-profit 2%

Real Estate 1%

Agri 4%

ICT 3%

Industry 10%

Construction(related) 13%

< € 20 mln 67,3%

> € 300 mln 3%

€ 100 - € 300 mln 4,7%

€ 50 - € 100 mln 7%

€ 20 - € 50 mln 18%

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Interim Management and Executive SearchAssignment by position in 2018

Share of restructuring clients / assignments2011 / 2018 - approx. 950 clients

interim management

man

agem

ent

posi

tions

finan

cepr

ofes

sion

als

executive search

40%

60%

60%

40%

2018

restructuring

corporate financestrategy formingbusiness model optimisation managementmanagement informationorganisational structurereturn on assetsfinancing

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Corporate FinanceDistribution of assignments by activity and business situation in 2018

regularcomplex/distressedtotal

77

24

14

12

9

7

6

5

46

31

12

12

7

12

8

2

3

2

3

3

5

1

7

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De mensen van KrugerBusiness Consultancy

Jantine Hak

Olivier Somers

Robert Smits

Erwin Sturkenboom

Kees Lieve

Daan Andriesse

Cornee de Kluyver

Gert Westerbroek

Ton Moonen

Vincent Gerard

Jan Benedictus

Guido Naafs

Lisa Kuiken

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Corporate Finance

Richelle Ros

Wouter van Tienhoven

Ron Groenewegen

Frank van der Hagen

Frank Leijendekker

Tom Reijnen

Interim Management en Executive Search

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+31 (0)10 21 21 922+31 (0)10 21 22 409office@kruger.eu kruger.eu

Postbus 86773009 AR RotterdamSteupelstraat 503065 JE Rotterdam

t.f.e.w.

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