Consortium invests €10 million in car sharing service Snappcar

26 June 2017 Consultancy.uk

Along with AutoBinck and founders, Europcar has invested €10 million in Snappcar, an app which allows its users to share their car with other network members. The financial injection should help Snappcar in achieving its goal of reducing the number of cars in European cities by 5 million within the next five years. For the Europcar Group, Snappcar is a welcome addition to its expanding portfolio of mobility solutions.

Snappcar, a Dutch company which was founded in 2011 in the city of Utrecht, provides car owners with the possibility of renting out their car during the large amounts of time it‘s standing still. Recently it was announced that a consortium – consisting of French car rental company Europcar, Dutch automobile dealer AutoBinck and Danish startup studio Founders – has made a €10 million investment in Snappcar. In return, Europcar will receive a 20% minority stake. AutoBinck had previously already invested €2 million in Snappcar and Founders had also gotten on board at an earlier phase. The two investors will also receive interest, but it is unclear at what rate. What is clear, however, is that the combined shares of the consortium still only amount to a minority stake in the company.

Currently Snappcar currently operates in the Netherlands, Denmark and Sweden and, according to the company, within these three countries it has a total of 250,000 users who share 30,000 cars together. The new investment should help the company in achieving “a big hairy audacious goal” in these locales and beyond. Within the current year Snappcar wants to expand to two or three more cities, and with the next 18 months it has designs on a further six European cities. “This could be achieved autonomously, but also with acquisitions”, according to co-founder Victor van Tol. Previously the company acquired the Danish Minbildinbil and Swedish Flexidrive car sharing services.

Consortium Europcar invests 10 million in car sharing scale up Snappcar

Ambitious Goals

However, the grand designs of Snappcar do not end there, with the company’s more idealistic long-term goal remaining the strong decline in the number of cars in Europe. As their operations grow, the hope is that in five years there would be up to 5 million fewer cars than at present, resulting in a CO2-reduction of millions of tonnes, and a lot of extra free up space in urban areas. According to Snappcar, the average car is standing still for 23 hours a day and the company has dedicated itself to fighting this inefficiency.

The €10 million injection is not the only way in which associating with Europcar can attribute to achieving these ambitions. “Besides capital, Europcar also brings knowledge of the traditional car rental industry to Snappcar,” Van Tol noted, concluding that in the near future, when at certain moments no Snappcars are available, the app can instead point its users to Europcar-vehicles, “This way you can help each other.”

The financial injection can also support the development of new and useful features for the Snappcar-app, such as the possibility to use the app to unlock a car without needing a key.

Europcar

For Europcar, Snappcar is a welcome addition to the company, which will help it in fulfilling its own ambitions. Europcar was founded in 1949 in Paris and with a fleet of approximately 214,000 cars, it operates in more than 140 countries. In 2006 the company became part of Eurazeo, which is among Europe’s largest investment companies.  

In the coming years, the car rental company wants to become a worldwide leader in the field of mobility solutions. The company sees a bright future for car sharing concepts. By acquiring a stake in Snappcar, it further expands its portfolio of affordable and tailor-made solutions, by offering customers an attractive alternative to owning a car. The acquisition took place through Europcar Lab, the division of the company that is dedicated to promoting innovation.

Improved Corporate FInance - Ingen Housz - Rothschild & Co - Hogan Lovells

Deal makers

For financial M&A support during the negotiations, Snappcar turned to the Amsterdam corporate finance boutique Improved Corporate Finance. Frank Verbeek assisted the deal on behalf of Improved, while Matthijs Ingen-Housz, founder of INGEN HOUSZ, was sought out by the Dutch scale-up to oversee the legal aspects of the transaction.

Rothschild & Co Corporate Finance Advisor Matthieu Lattes and M&A analyst Guillaume Girardeau provided Europcar with M&A services. To handle the legal components of the deal, International law firm Hogan Lovells supplied a team of lawyers that was led by Audrey Distler.

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8 tips for successfully buying or selling a distressed business

18 April 2019 Consultancy.uk

Embarking on the sale of a business is one of the most challenging experiences a management team can undertake. Even serial dealmakers acknowledge that the transaction process can be gruelling, exposing management to a level of scrutiny and challenge through due diligence that can be distinctly uncomfortable.

So, to embark on a sale process when a business is in distress is twice as challenging. While management is urgently trying to keep the business afloat, they are simultaneously required to prepare it for scrutiny by potential acquirers. Tim Wainwright, an experienced Transactions Partner with Eight Advisory, says that this dual requirement means sellers of distressed businesses must focus on presenting their business in a way that supports buyers in identifying value, whilst simultaneously being open about the causes of distress. 

According to Wainwright, sellers of distressed businesses should focus on eight key aspects to ensure they are as well prepared as possible:

  • Cash: In a distressed situation cash truly is king. Accurate forecasting and day-by-day cash balances are often required to ensure any buyer is confident that scarce cash reserves are under proper control. 
  • Equity story and turnaround plan: Any buyer is going to want to understand the proposed turnaround strategy: how is the business going to enact its recovery and what value can be created that means the distressed business is worth saving? Clear presentation of this strategy is essential.
  • The business model: Clear demonstration of how the business model generates cash is required, with analysis that shows how financial performance will respond to key changes – whether these are positive improvements (e.g., increases in revenue) or emerging risks that further damage the business.  Demonstrating the business is resilient enough to cope with these changes can go a long way to assuring investors there is a viable future.
  • Management team: As outlined above, this is a challenging process. The management team are in it together and need to be consistent in presenting the turnaround. Above all, the team needs to be open about the underlying causes that resulted in the distressed situation arising.  A defensive management team who fail to acknowledge root causes of distress are unlikely to resolve the situation.

8 tips for successfully buying or selling a distressed business

  • Financing: More than in any traditional transaction, distressed businesses need to understand the impact on working capital. The distressed situation frequently results in costs rising as credit insurance becomes more difficult to obtain or as customers and suppliers reduce credit. Understanding how these unwind will be important to the potential investors.
  • Employees: Any restructuring programme can be difficult for employees. Maintaining open communications and respecting the need for consultation is the basic requirement. In successful turnarounds, employees are often deeply engaged in designing and developing solutions. Demonstrating a supportive, flexible employee base can often support the sale process.
  • Structuring: Understanding how to structure the business for the proposed acquisition can add significant value. Where possible, asset sales may be preferred, enabling buyers to move forward with limited liabilities. However, impacts on customers, employees and other stakeholders need to be considered.
  • Off balance sheet assets: In the course of selling a distressed business, additional attention is often given to communicating the value of items that may not be fully valued in the financial statements. Brands, intellectual property and historic tax losses are all examples of items that may be of significant value to a purchaser. Highlighting these aspects can make an acquisition more appealing.

“These eight focus areas can help to sell a distressed business and are important in reaching a successful outcome, but it should be noted that it will remain a challenging process,” Wainwright explains. 

With recent studies indicating that the valuation of distressed business is trending north. With increased appetite from buyers who are accustomed to taking on these situations, it is likely that more distressed deals will be seen in the coming months. “Preparing management teams as best as possible for delivering these will be key to ensuring these businesses can pass on to new owners who can hopefully drive the restructuring required to see these succeed,” Wainwright added.