Management buy-out of APE Motors completed with assistance of KPMG in Latvia
KPMG Baltics and KPMG Law supported the management and the minority shareholders of APE Motors in the acquisition of shares from the majority shareholder (Management Buy-Out - MBO), and the acquisition of a subsidiary in Estonia. As part of the process, KPMG in Latvia structured the deal, assisted in the attraction of a bank loan and provided legal support in all stages of the transaction, including drafting documents and deal closure.
APE Motors SIA is one of the largest retailers and wholesalers of car parts with a long track record operating in Latvia since 1995 with an annual turnover of over EUR 24 million, assets of EUR 12 million and employing more than 120 staff.
“It was a challenging project with parties trying to strike a deal for a number of years. KPMG got on board during the COVID-19 pandemic and despite restrictions our cooperation turned out to be dynamic. An additional challenge was that not all shareholders took part in the deal and the seller remained in the company as a minority shareholder.
At first we structured the deal and modelled future cash flows of the company to lay the basis for negotiations with the bank,” said Karlis Urbans, Associate Director, M&A, Deal Advisory, KPMG in Latvia.
Not only did KPMG in Latvia structure the deal and coordinate the deal value and the offer between the parties but also both attracted funds and coordinated the process of attracting funds. The unexpected difficulties that we were faced with in the process resulted in KPMG planning and carrying out the acquisition of the Estonian subsidiary of APE Motors and coordinating negotiations with the minority shareholder who was not part of the deal. KPMG Law contributed to the deal by providing a full range of legal services and establishing a holding company in the form of a special purpose vehicle (SPV).
The seller was represented in the deal by advisors from United Bankers and Sorainen.
“The deal of APE Motors marks one of the trends in M&A, one that in some cases is observed also in the Latvian market, the so-called management buy out when the management takes the opportunity to acquire a significant stake or all shares to gain control over the company. Investors, on the other hand, can use this as one of exit strategies. More often than not the management does not have any previous experience in organising deals, which makes advisors all the more important as they are in the position to provide the required support throughout the process as in a classic M&A transaction”, said Ieva Tillere-Tilnere, Partner of KPMG Law Firm and Head of the M&A Practice.