American corporations and private equity firms are increasingly casting wide geographic nets in their searches for targets to buy and back, and Europe is proving a particularly fertile breeding ground.
Consider Reima Oy, a children’s wear brand founded in 1944 in Vantaa, Finland. The company has long been known in Northern Europe for high-quality outdoor clothing, which it sells under brands including Reima, Lassie and Tutta. But the company wanted to expand into other regions of the world. Enter the Riverside Co., which bought the clothing maker from Finnish PE firm Vaaka Partners and the management team in 2011.
Since becoming a portfolio company of Riverside, Reima Oy has opened four stores in China, with many more to open soon, and increased sales growth by 40 percent, says Pam Hendrickson, chief operating officer of the PE firm, which is headquartered in Cleveland and New York.
Hendrickson, who also serves as the chairman of ACG Global, spoke at the inaugural EuroGrowth 2013 conference. Held at the Sheraton Park Lane Hotel Piccadilly in London on Nov. 12-13, the gathering drew 200 participants from all over the world.
Technology, media and telecommunications (TMT) was one sector identified at the conference as flourishing in Europe. One recent deal discussed was the announcement made by Microsoft Corp. (Nasdaq: MSFT) that it would buy Espoo, Finland-based Nokia Corp.’s devices and services business in a transaction expected to close in 2014.
It’s not the first time Microsoft has turned to Europe for targets. Another well-known example is the Redmond, Wash.-based software giant’s acquisition of Internet communications provider Skype Global SA, based in Luxembourg, for $8.5 billion in cash from an investor group led by PE firm Silver Lake in 2011.
“We’ve found great technical talent in Europe,” said Marc Brown, Microsoft’s global head of M&A and strategic investments, speaking on a panel.
For San Francisco-based PE firm Francisco Partners, opportunities have come from taking private several public tech companies in Europe, reports Matt Spetzler, a principal with the firm who works out of the London office. One example is Kewill, a provider of transportation and logistics software based in Manchester, U.K., that Francisco took private in 2012.
Unlike tech entrepreneurs in the U.S., the founders of tech companies in Europe don’t necessarily have their sights set on going public, says Neville Davis, an executive who has led many technology companies in the U.K. and currently serves on the boards of IT companies Fourth, SecureData and Trustmarque. M&A is seen as an attractive exit, which bodes well for future deals.