Submitted by: Varun Gupta Vikash Juneja

About Singulus
Singulus, a business that manufactures CD metallization machines Singulus commands a 48% world market share, originally part of Leybold with shared sales, marketing and service with other business of Leybold. Singulus has been put up for sale by Swiss industrial conglomerate Oehrlikon-Buehrle Holding AG (OBH) The companys assets are primarily immaterial in nature (intellectual property, list of customers and suppliers) Deal offered DM30 million (formal currency of Germany, known as Deutsche Mark) (US$1 = DM1.66) in revenues and DM8million in EBIT . At the time of the case, April 24, 1995, a team at buy-out firm Schroder Ventures (SV) needs to decide whether to acquire the business and at what price
First, it is not clear how much SV should offer to pay for Singulus. Second, it is not clear whether SV can attract the right managers to run Singulus

Private Equity in Germany

In Germany, private equity was less developed than in U.S. and U.K.
International Comparison of Cultural Environment for Entrepreneurship

6 5 4 3 2.79 4.89 4.36

2.4

2
1

0
Austria/ UK US Switzerland Scale 1: Highly unfavorable environment, 5= Highly favorable environment Germany

Opportunity .
Singulus is part of Leybold AG (a German machinery company). In November 1994, Swiss machinery and engineering conglomerate Oerlikon-Buehrle Holding AG acquired Leybold AG from Degussa AG. OBH & Leybold combined with the world market share of 90%.
Installed Base in Percent
2.2% 1.8% 1.8% 5.4%

Leybold Balzer
48.4%

Tokuda/Shibaura FTL Nobler Ulvac

40.4%

U.S. Federal Trade Commission ruled that for the acquisition of Leybold to be acceptable OBH would have to dispose of either Leybold or Balzers.

Opportunity ..
Historical Data
Sales COGS Gross Profit Operating profit

47116 39666

29595
25363 21146 17521 17426 22240 15529 10832 14531 9736

1991/1992

1992/1993

1993/1994

Ratio of COGS v/s Sales Ratio of GP v/s Sales Ratio of OP v/s Sales

1991/1992 0.37 0.63 0.45

1992/1993 0.44 0.56 0.39

1993/1994 0.43 0.57 0.38

Opportunity
Future Projection
Sales Cost of Goods Sold Gross Profit EBIT

27575 18063 9512 11058

- Large Market Share -OHS is targeting for Weak48620 Co to take over 43542 - Low results (in decline stage) 27090 25376 21530 - Enthusiastic Projections 18166
14339 14876

57937

29141 28796

15543

Y-1995 (8months)

Y-1996

Y-1997

Y-1998

A Buyer (DVI)
Denton Vacuum Inc. (DVI) offered its letter to Singulus, offering US$ 18 mn for the business 1/3 in Cash, 1/3 in delayed payments and bal. 1/3 financed by advanced payments for Singulus metallizers Getting loan was difficult due availability of non-tangible assets to the business. Complete Chain moved like this: FTC Pete Denton Don Nelson Eddie Miller SV/ ING/ Flemings von der Groeben & Hoskins (Exclusivity) LOI got signed but Venture Capitalist as SV has to convince.