March 14, 2023
US-European M&A Deals Succeed Through Cross-Border Partnerships
David Strempel, Chairman of Translink Corporate Finance Italy and Vice-Chairman of Translink Corporate Finance International, on the power of cross-border reach and expertise
Cross-border M&A deals are strongly influenced by timing, relationships and identifying compelling opportunities. This is the story of what culminated in December 2020, when Italian family-owned company, Pedrollo acquired US-based Superior Pump.
While already recognised as a world-renowned brand within the electric pump sector, exporting more than 80% of its product outside of Italy, the United States represents less than 1% of Pedrollo’s global sales. The US market had been flagged as difficult to penetrate, especially as a foreign company.
Translink Italy approached the Pedrollo Group some years prior, to explore the possibility of an equity investment by one of its Asian clients. However, Pedrollo was not ready to consider such an opening. Instead, Translink learned that Pedrollo was interested in expanding its presence in key markets such as China, India, and the United States. To achieve these goals, the Pedrollo Group required local access and knowhow into these respective markets. Translink’s global footprint and in-depth knowledge of markets made them the perfect partner for this initiative.
Translink took a highly methodical approach, identifying potential acquisition targets in all 3 markets of interest to Pedrollo to then narrow its focus on the US market. Through extensive research, they were able to compile and make contact with over 100 potential acquisition candidates within just two months. Translink possesses not only the expertise and local knowledge needed to navigate complex markets but also a wealth of intelligence on key and niche players in every sector worldwide.
Through a targeted process, Translink Italy and Dinan & Company, Translink’s US partner, successfully engaged with Superior Pump, the brand name for Michel Sales Company based in Minnesota. At the time of Translink’s approach, Superior Pump’s equity structure no longer aligned with the next generation of family management running the company. As the exclusive M&A advisor to the Pedrollo Group, the cross-border team was able to identify a transaction structure that rewarded the family equity holders exiting the business while involving Superior’s CEO and family member within the future equity structure together with Pedrollo. Translink played an integral role in navigating this and other hurdles of this cross-border transaction, finding effective solutions that enabled both parties to reach an amicable agreement. The timing and process were key differentiators in a complex and challenging acquisition process that began in 2018 and concluded at the end of 2020.
Pedrollo now boasts a powerful commercial presence in the US, thanks to the acquisition of Superior Pump, which also brought essential American experience and management talent to the table.
A key factor in the deal’s success was Translink’s proactive approach. Companies with a strategic objective of growing through acquisitions cannot afford to be opportunistic. Waiting for a suitable target to become available for sale risks missing out on important opportunities, facing stiff competition, and possibly even a bidding war.
For foreign buyers, particularly those in Europe seeking access to the US market, Translink has particular expertise in identifying off-market opportunities. Translink can offer clients invaluable insights and guidance on potential acquisition targets, allowing them to make informed decisions that drive business growth and success. Translink remains committed to nurturing its relationship with Pedrollo and looks forward to playing a critical role in its growth plans going forward.
David Strempel – Chairman of Translink Italy commented: “We have been active since the Superior acquisition in accessing further acquisition opportunities for the Pedrollo Group. Typical of our long-term commitment to clients. This led to our role in advising on the acquisition of Saci Pumps in Spain at the beginning of January 2023. An acquisition made all the more appealing given Superior’s presence in the United States – home to the world’s largest pool pump market. This demonstrates, I believe, Translink’s unique capabilities in helping mid-to large sized companies like Pedrollo grow their businesses globally and our ability to stay engaged over the course of years as opportunities are explored and developed.”