INSIGHT
New ownership at Max Mothes
Word of a catastrophic system implementation and a cascade of senior management changes had long before permeated the fastener industry but the announcement that Max Mothes was insolvent still came as a real shock. A seemingly impregnable bastion of fastener tradition had been revealed as riven by crippling fractures. In August Schüring & Andreas acquired the assets – sufficiently unusual white knights to make Phil Matten want to discover more.
O
ne of Schüring & Andreas’ four partners, Frederik Roth extends an amiable welcome to Max Mothes office and former warehouse in Düsseldorf. This magazine once described it as an Aladdin’s Cave of fasteners,
a maze of storage racks, twists, turns and corners concealing an extraordinary multiplicity of fastener treasures. No longer: even before the insolvency the inventory had been relocated to an expanded facility across the Rhine. By the end of the year the sales and administration personnel and functions will also have moved – which is why we also head for Neuss. Max Mothes first moved to the Düsseldorf site in 1937,
nineteen years after its establishment. Once in an industrial area, as the city prospered it was surrounded by residential building, so that the last permitted development was an upwards extension of the offices in 1990. Max Mothes relocated its production operation to Neuss and added three warehouse halls. In 2010 the Neuss site was further redeveloped to accommodate the main inventory – some ninety thousand fastener stock lines. Inevitably, theories abound on the reasons for Max Mothes
failure. An apparent attempt in 2008 to radically adapt a newly installed Navision ERP system to accommodate traditional procedures unquestionably had a devastating short-term impact on the company’s ability to locate and make sales of its massive product range. Losses ensued, says Frederik Roth, with a consequent collapse in confidence on the part of the, surprisingly, seven banks involved in the business. “The banks put in a restructuring officer,” says Roth. “Another in a series of external managers and advisors. These are situations I have seen many times, no-one listens to the people in the company who normally know exactly what should be done, instead millions are spent on reports from people that have no understanding of the business.” The banks, says Roth, halved the working capital in the business, pulling out some ten million euros. “That makes sense in recession but not when the recovery takes off and the customer needs more supplies.” The impasse, according to Roth, then was that the banks were not prepared to extend further credit unless the main shareholder committed sufficient cash to convince then. It didn’t happen and the cracks in the edifice
rapidly widened. Be these things as they may the discussion is insightful
– revealing some of Frederik Roth’s personal business philosophies. Trained in Switzerland as a mechanical engineer, he worked initially as a sales engineer. His father’s illness brought him home to Frankfurt and a family engineering business heavily reliant on sales to General Motors. The business sold to Eaton, which rapidly demonstrated an unwillingness to invest strategically, Roth joined ABB and entered the rolling stock industry. Responsible for engineering at a plant in Berlin, a merger with Daimler presented him with managing its closure. “I decided I did not want to do that and left ABB.” He joined a fund that bought Mittelstand companies. “What I never liked, though, was selling the companies. I believed we should continue to develop them in the long term.” In the run up to Schüring & Andreas acquisition of FEAG GmbH, which had been a ‘captive’ electrical engineering business within Siemens, Roth was approached by Hermann Andreas and Tom Peiffer, two of his now partners. “Hermann was a friend from my Berlin days in the nineties. I joined them because I believe in their values of long-term investing and it put me in the position of owning the company but not having to sell it.” Which is exactly why these white knights are unusual. Since 1996 Schüring & Andreas has built its holdings by acquiring at-risk Mittelstand companies, investing in them but retaining them in the long term. The partnership has so far invested in five groups comprising fourteen operating companies, which employ 1,400 people and generate annual sales of 190 million euros. Since 2000 Schüring & Andreas has invested 60 million euros in these operations. “The investment strategy is very simple,” says Frederik Roth. “Peter Schüring and Hermann Andreas realised that there is a need in Germany to save Mittelstand companies that have fallen on harsh times. We acquire businesses that have become the victim of insolvency. The only criteria are that the company has a solid core business and actually that we like it - that we fall in love with it. We follow a simply buy and build strategy. We buy it with our own money but we do not exit. We change the top management and we run the businesses ourselves.”
60 Fastener + Fixing Magazine • Issue 72 November 2011
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