The M&A market in EMEA is navigating through a period of transformation, driven by both market dynamics and technological innovations. At our recent Dealmakers Breakfast Brussels, Smile Invest shared insights into the complexities of dealmaking in the current market through the lens of its recent acquisition of IGS GeboJagema, highlighting the importance of strategic foresight, adaptability, and the power of partnerships.

Background and strategic vision

IGS GeboJagema (IGS), founded post-World War II, has evolved from a mold and tool maker for companies like Philips to a key player in the medical market, producing high-precision tools for products such as contact lenses and injection pens. The company’s journey is a testament to its ability to adapt and innovate, aligning with the strategic vision of Smile Invest, a private equity firm known for its focus on technology, healthcare, and innovative B2B companies.

Smile Invest identified IGS as a prime candidate for investment. The firm’s evergreen fund structure provided the flexibility needed to tailor investment horizons to the specific needs of each company, a significant advantage in the competitive M&A landscape.

Challenges and strategic responses

The acquisition of IGS was not without its challenges. Initially, the company faced a decline in EBITDA due to the second COVID-19 wave, which led to tense negotiations with banks. This period tested the resilience and strategic foresight of Smile Invest, which opted to maintain a long-term perspective despite short-term financial pressures. The firm’s decision to expand into the US market was pivotal, addressing customer concerns about local servicing and positioning IGS for future growth.

Another significant challenge was the impending departure of IGS’s long-standing CEO. Smile Invest navigated this delicate transition by appointing a new CEO with a collaborative leadership style, essential for scaling the company’s operations and fostering a team-oriented culture.

Innovative partnerships and market expansion

A key turning point for IGS was its strategic partnership with pharmaceutical company Eli Lilly, which separately invested $3 billion in a new manufacturing facility in the Netherlands to expand its oral medicine supply chain. This collaboration underscored the importance of aligning with industry leaders to drive growth. Eli Lilly’s reliance on IGS for the production of injection devices highlighted the critical role of precision and reliability in the medical market. The partnership not only boosted IGS’s revenue but also solidified its reputation as a trusted supplier in a highly regulated industry.

The expansion into the US market was another strategic move that paid dividends. By establishing a local presence, IGS was able to better serve its American clients and capitalize on the growing demand for its products. This expansion was facilitated by the acquisition of a company near Atlanta, which provided the necessary infrastructure to support US operations.

Lessons for M&A professionals

The Smile Invest-IGS case study offers several lessons for M&A professionals. First, the importance of thorough market research and proactive relationship-building cannot be overstated. Smile Invest’s early engagement with IGS and its focus on understanding the company’s market dynamics were crucial in securing the deal.

Second, the ability to adapt to unforeseen challenges, such as the COVID-19 pandemic, is essential. Maintaining a long-term strategic focus, even in the face of short-term setbacks, can position a company for future success.

Finally, the value of strategic partnerships is evident in the IGS-Eli Lilly collaboration. Aligning with industry leaders can drive growth and enhance a company’s market position, providing a competitive edge in the M&A landscape.

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