ACHIEVEMENTS DURING DBAG’s INVESTMENT

Revenues & Earnings

>20

PER CENT

Revenues and earnings have increased by more than 20 per cent per year.

22

COUNTRIES

Internationalization of business driven forward, active in 22 countries worldwide.

NUMBER OF EMPLOYEES

3x

Number of employees almost tripled.

New sales structure generates cross selling and customer growth

The automotive industry is characterized by a strong drive for innovation. The current drivers of innovation include the development of alternative drive systems, vehicle networking, autonomous driving and mobility services - all in all major challenges for manufacturers and suppliers. One company that has been facing these challenges since 1993 and growing with them is Formel D. The company has developed, also with the help of DBAG's investment, from a service provider to a provider of process solutions along the entire automotive value chain.

BACKGROUND

Formel D GmbH was founded in 1993 and since then has consistently expanded its portfolio of services for renowned automobile manufacturers and suppliers along the automotive value chain. At the beginning of the investment in May 2013, the company already offered various service solutions, from vehicle development and production to after-sales activities.

However, Formel D focused primarily on services where quality-relevant aspects were at the forefront. These included, for example, quality controls and the resulting rework in the event of defects or inefficiencies. A further service included the technical documentation of process solutions or the creation of operating manuals.

When Formel D was sold in 2017, the company had around 7,150 employees worldwide and operated more than 80 sites in 22 countries. The company maintained close and trusting relationships with German original equipment manufacturers and suppliers. The customer base also included companies from growth markets such as China, USA, Brazil, Mexico and India.

The company's market position and positive industry trends, such as rising automobile production, regular model upgrades or the continuing outsourcing trend among manufacturers, made Formel D an exciting investment opportunity for Deutsche Beteiligungs AG. These factors were complemented by DBAG's extensive experience in the automotive industry.

CHALLENGES

Following the investment by DBAG, a new corporate strategy was developed together with the then existing management. Germany, the USA and China were identified as key markets for Formel D. The goal: to expand the good market position and generate further growth.

In addition, the development of new products and services was also pushed ahead. The focus was on quality assurance and process optimization. Among other things, procedures for supplier quality control and vehicle testing were developed here, with a focus on services with low investment costs.

At the same time, the previous sales organization was restructured according to key accounts, customer regions and services. On the one hand, this enabled cross-selling potential to be leveraged, both with existing and new customers, and on the other hand, customer loyalty was further strengthened.

MEASURES

On the basis of the new strategy, the staff departments Human Resources, Legal, Finance and IT were first partially newly established or strengthened at the headquarters and in the selected growth regions. Loss-making business units in Belgium, France, Japan, Austria and Switzerland were either restructured or closed. 

However, IT was not only expanded in terms of personnel. New systems were also introduced. These included programs to improve internal processes and Salesforce, which strengthened the sales activities. The company's cash management was also optimised by pooling liquidity across the Group. In addition, compliance, reporting and ESG standards were introduced in accordance with DBAG's requirements.

In accordance with the jointly developed roadmap, the succession of the owners was successfully secured. As part of this reorganisation, the management team was strengthened with a new CFO at the beginning of 2014. In addition, the Supervisory Board was also strengthened by the addition of high-ranking industry experts.

EXIT

The strategic and operational measures have made it possible to tap previously untapped market potential to a considerable extent. As a result, sales and profitability have risen significantly, by more than 20 per cent per year since the start of the investment in 2013.

The many changes initiated during the four-year investment period of DBAG and DBAG Fund V have significantly changed Formel D. The result was a company that was equally attractive to strategic investors and financial investors.

In an auction process, financial investor 3i finally submitted the best offer and acquired the company in July 2017. By selling Formel D, the investors regained 5.4 times the funds previously invested.

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