Could you briefly introduce yourself?
My name is Joep van Enk, I am 28 years old and I live in Deventer. I did my bachelor Business Administration and my master International Financial Management in Groningen. In between my bachelor and my master, I did an internship at ABN AMRO Corporate Clients and I combined writing my master thesis with a thesis internship at EY Transaction Services. When I finished my study, I went backpacking for a few months and then I started working at Marktlink. Currently I have been working at Marktlink for 3 years. The Deventer office is my home base, but depending on the different projects and deal teams I’m active from the other Marktlink locations as well.
Why did you choose for a career in M&A?
I come from an entrepreneurial family. My father founded a catering industry company and I was expected to work at his company. However, during my study I found out that there were other kind of jobs that had my interest. When I did my internship at ABN, I explored more of M&A. This was something I dug in deeper by doing my thesis internship at EY Transaction Services. It appeared I enjoyed working in this sector a lot!
Why did you choose to work for Marktlink instead of at a Big Four company?
During my internship, I noticed that I was only a small part in the whole process. By focusing on just this specific area of the process, you become a specialist in only that part of the deal. Sometimes I worked on a part of a project and half a year later, I read in the newspaper that the deal did or did not go through. The output of my work was not directly noticeable and that was something that I missed.
During my internship at EY TAS, I came in touch with Marktlink. They were quite small and were not recruiting actively in Groningen, but we kept in touch and after a few months of traveling I started working at Marktlink. Here, I participated in the acquisition process from start to finish. From day one, I was part of the team and had a seat at the table with the decisionmakers. This makes you feel really involved, since you know you are working for the owners of the companies themselves. You are not just a pawn in the transaction game, you are constantly the one in contact with the owner, giving you the sense of being an important part of the deal.
Our sweet spot is in between 5 and 25 million euro.
When you only sell a division of a company, it is a strategic point on the agenda of a company. But when you are selling the life’s work of the owner a lot of emotions are involved, so it is important to not only get a good price, but also find the perfect buyer for the company. This was something that appealed to me and why I chose to work at Marktlink.
Can you tell more about Marktlink?
Marktlink is a fast-growing company, which grew from 35 to nearly 100 employees in the past three years. We advise on the purchase and sale of SMEs (Small Medium Enterprises), usually by helping the founder to sell his company to a strategic buyer or Private Equity party. At the other side, we buy SME companies for strategic buyer and Private Equity. We advise on deals between 2 and 200 million euros, but our sweet spot is in between 5 and 25 million euros.
We currently operate from the Netherlands, Belgium and Germany and we will be expanding towards the Nordics, starting with Denmark. We work in project teams that work on 4-6 deals a year and this working method has proven itself, landing us on the number one spot in the M&A League tables for two years running. These deal teams have a fixed composition, so we have a great team spirit. We have 23 deal teams, consisting of a project leader (manager/partner), consultant and depending on the project, another consultant or Junior consultant. Junior consultants are flexible and work on multiple projects, so they get in touch with different people within Marktlink and different working styles.
We start our sell-side projects by looking at what would be interesting for buyers and then we look at potential buyers. Usually we approach about 40 to 50 companies, which we filter until we have a right amount of seriously interested potential buyers left. We try to start a competitive bidding procedure, to gain the highest possible payoff for our client. We team up with the client to explore which type of buyer is the best for the company, often this proves to be different from what the client was thinking of at first. Because of our experience, we give good advice on this matter and we think further where the client stops thinking. This way we can create substantial value for the client.
We work on the basis of exclusivity, meaning that Marktlink advises entrepreneurs during the entire process, from that first introductory cup of coffee to the popping of the champagne at the notary’s office. To fully complete these transaction services, we also have our own lawyers at Marktlink. They are fully focussed on M&A, so we experience that working with our own inhouse lawyers works more smoothly and efficiently than with external lawyers. The lines of communication are short and they always operate with the deal in mind, which is very important in the last phase of the process.
Over the years we gained a large network with clients, which grows every day. This extensive network helps us (and you) to make matches between buyers and sellers and to build up a relevant professional network. We experienced that when companies founded in the Netherlands keep growing, they want to expand to Germany and/or Belgium. This is the most comfortable first step into globalisation. We found that to facilitate this, local knowledge is essential, and so we recruited local people who are well connected and have lots of experience in the working field. They helped us expand our network into those countries, to the benefit of our clients and for Marktlink to expand into Europe.
Most of Marktlink’s deals involve Private Equity, why is this the case?
The average age of our clients is 45-50 years, people that have owned their company for about 20 years. They experience that when you reach about 50 employees, you will be working as a manager and not as an entrepreneur. You are no longer doing what you loved doing when you started and there is too much going on to be up to date about everything.
Because of the historically low interest rates, investors started looking for returns elsewhere. Because of that, the presence of Private Equity increased significantly in the past year. With this increase, Private Equity also entered in the 5-20 million euro value range.
Private Equity regularly appears to be the perfect partner for an owner to sell his company to. Private Equity takes care of the management part, so the previous owner can take a step back from all the management work and be active in commercial activities. This way they are still of great value for the firm, but they carry a lighter burden.
We often set up a pre-exit, where the owner keeps participating in the company for a few years. The Private Equity party constructs a leverage effect by funding a major part of the transaction with debt, so the returns on the equity part can be very high. The owner is invited to keep participating in the company and have an equity stake, so when he makes sure the company keeps performing he can profit accordingly.
When entrepreneurs have fully left their companies in their early 50s, they regularly come back to us. They have a ‘large bag of money’ left from their previous transaction and want to buy another company, since they consider themselves too young to retire.
Just having analytical skills is not enough.
Currently the M&A market is at a record-breaking level, do you think this will continue in 2020?
From the results in the first quarter of the year it seems that records will be broken once again. This is caused partly by the fact that deals were delayed by the new anti-money laundering measures that the banks had to take in the last month of 2019. In this first quarter, these deals will probably close. The new deal flow was also very promising, which was also the case at other M&A offices.
How is the impact of Corona noticeable at Marktlink?
After the announcement of the Prime Minister there was a shockwave after which everyone focused on their own organisations. In the second week, we saw that most companies had adapted to the situation and continued the best they could. Our current deals in progress had reached an advanced stage in the process and are expected to be completed after some extra checks from the bank (e.g. current trading and adaptability of the company). The deals in the start-up phase are often postponed unless the impact of the virus is limited. The current uncertainty in the market also creates opportunities. The price expectation of sellers will probably fall, which is favourable for strategic buyers and for investors who specialise in distressed M&A and turnarounds. And of course, there are also enough companies that benefit from this situation or are well prepared. For example, we have a client who, unlike his competitors, keeps high stocks in order to always be able to deliver. Where others no longer receive supplies from countries in lockdown, he can continue to deliver. So there is always a way and you need to adapt fast to the new situation.
For what kind of students is Marktlink the perfect firm?
Since our employees have a great deal of direct contact with decision makers, having analytical skills is not enough to convince potential buyers to get or keep them in the process. So, the combination of financial and commercial skills is really important in this type of work! In the end, many decisions are made based on someone’s feelings and we have to respond to that.
In the application process, you have to show your social capabilities in the interviews. Your core competences will be tested, to see what drives you as a person. This has to fit in your story of course. Finally, you have to solve and present a case, which will be a more commercial focused case for financial students, and vice versa.
Currently we are actively recruiting students in Amsterdam, Rotterdam and Groningen, with success!
As a last question, what would your advice be for the students of Risk?
Enjoy your student life, but don’t forget to explore what you would like to do after your studies. Extracurricular activities like Internships could open your eyes to which sector and what type of company fits you best. So I would advise you to make sure you have done some internships before you apply for a real job. This will get you at the right company and will help you to perform at your full potential!