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Submitted by:

Varun GuptaVikash Juneja

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About Singulus

Singulus, a business that manufactures CD metallization machines

Singulus commands a 48% world market share, originally part ofLeybold with shared sales, marketing and service with otherbusiness 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 firmSchroder Ventures (SV) needs to decide whether to acquire thebusiness 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 torun Singulus

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Private Equity in Germany

In Germany, private equity was less developed thanin U.S. and U.K.

2.42.79

4.364.89

0

1

2

3

4

5

6

Germany Austria/

Switzerland

UK US

International Comparison of Cultural Environment for

Entrepreneurship

Scale 1: Highly unfavorable environment, 5= Highly favorable environment

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Opportunity .

Singulus is part of Leybold AG (a German machinery company).

In November 1994, Swiss machinery and engineering conglomerateOerlikon-Buehrle Holding AG acquired Leybold AG from DegussaAG.

OBH & Leybold combined with the world market share of 90%.

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

48.4%

40.4%

5.4%

2.2% 1.8% 1.8%

Installed Base in Percent

Leybold

Balzer

Tokuda/Shibaura

FTL

Nobler

Ulvac

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Opportunity ..

1991/1992 1992/1993 1993/1994

Ratio of COGS v/s Sales 0.37 0.44 0.43

Ratio of GP v/s Sales 0.63 0.56 0.57

Ratio of OP v/s Sales 0.45 0.39 0.38

47116

39666

25363

17521 17426

10832

29595

22240

14531

21146

15529

9736

1991/1992 1992/1993 1993/1994

Historical DataSales COGS Gross Profit Operating profit

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Opportunity

27575

43542

48620

57937

9512

18166

21530

29141

18063

2537627090

28796

1105814339 14876 15543

Y-1995 (8months) Y-1996 Y-1997 Y-1998

Future Projection

Sales Cost of Goods Sold Gross Profit EBIT

- Large Market Share

-OHS is targeting for Weak-

Co to take over

- Low results (in decline

stage)

- Enthusiastic Projections

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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 indelayed payments and bal. 1/3 financed by advancedpayments for Singulus metallizers

Getting loan was difficult due availability of non-tangibleassets 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.

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