Opportunity
Drive consolidation in the highly fragmented industrial MRO distribution space to create an industry champion, leveraging our expertise in take-privates, operational improvements, and transformational M&A.
Approach
Acquire Brammer, a fundamentally good but under-managed business at an attractive price, to act as a platform to drive large scale consolidation in a market where scale is a differentiator. The subsequent acquisition and merger with IPH was underpinned by significant industrial logic, driving enhanced scale and coverage. In partnership with management, Advent helped create a unified culture and developed a value creation plan aimed at enhancing key strategy levers, operational productivity, and importantly, cementing its position as a leading consolidator in a highly fragmented market.
Impact
Created a market leading multi-specialist omnichannel European industrial MRO distributor, with an unparalleled offering of products and value-add services across geographies, underpinned by technical advice from Rubix’s highly knowledgeable experts. As a result, the business has been able to drive organic and inorganic share gains.
The nuts and bolts
Alongside safety and environmental incidents, unscheduled downtime stands out as one of the most expensive occurrences for industrial and manufacturing plants, costing the industry as much as USD $50 billion annually.
Shutdowns can consume 1% to 10% of available production time – these unproductive hours cannot be recovered, and expenses related to labor, production, and lost revenue must still be borne. Rubix provides a thorough service model to get production lines moving again, and to prevent these incidents from recurring.
Against this backdrop, Advent was drawn to Rubix’s truly mission critical and recurrent offering. Its role is essential in keeping European factories and plants up-and-running through the provision of tailored solutions to customers who often do not have the same breadth and depth of technical knowledge.
The sustained need for these MRO products arises from the high relative cost of potential downtime – and restart – associated with machine failures versus the cost of Rubix’s maintenance solutions. As a result, maintenance cycles are completed without major delay, even during periods of economic turbulence.
Rubix specializes in a wide range of industrial products and value-add services, including bearings and mechanical power transmission components, flow technology and fluid power products, machining, cutting, tooling and general maintenance products, as well as associated logistics and technical services such as gearbox and motor repairs, condition monitoring and predictive maintenance solutions, and product customization.
The business was created in 2017 by Advent through a transformational merger between Brammer and IPH. Advent initially took Brammer private from the London Stock Exchange in February 2017, and subsequently began bilateral discussions to acquire IPH from PAI Partners. This second deal was finalized in September 2017.
Alongside our Operating Partner, Johan Sleebus, a highly experienced executive in industrial distribution following his previous role as Chairman and CEO of close competitor ERIKS, we were able to deepen our conviction in Rubix through the creation of a highly bespoke value creation plan.
Sleebus, who now serves as Chairman of Rubix, said of Advent’s involvement: “Partnering with Advent has enabled us to become an even better partner for our customers, suppliers, and employees. The combination of Brammer and IPH propelled us to move forward from a position of great strength and pursue further growth.”
This merger showcases Advent’s ability to execute complex deals. The transaction involved the combination of a UK public-to-private deal of an underperforming business that required a turnaround plan, with a subsequent merger between two businesses of equal scope and scale. The combination of Brammer and IPH to form Rubix has proved to be truly transformational in a market where scale really matters.
“This combination of equals has proved to be highly beneficial in enhancing Rubix’s multi-specialist value proposition, ensuring it is the partner of choice for more than 200,000 customers and one of the leading suppliers all across Europe,” shared Samuel Stewart, Assistant Director at Advent and board member at Rubix.
“We are incredibly proud of what we have achieved with the brilliant management team at Rubix. We created one of the top M&A players with a fantastic track record of buying complementary businesses at a good price, allowing Rubix to establish itself as a leading industrial provider in Europe.”
Shonnel Malani
Managing Partner, Advent
A one-stop-shop
On the back of the transformational merger, Rubix has established itself as a market consolidator, with more than 70 acquisitions completed under Advent’s ownership. Advent’s support allowed Rubix to accelerate its M&A program.
While IPH had been executing three to five deals annually, with our guidance the combined business was able to increase the velocity of these transactions, acquiring ten businesses annually. Through these acquisitions, Rubix has been able to not only increase its scale but crucially add additional capabilities.
The market remains highly fragmented, and Rubix is well placed to continue its consolidation, with a > EUR €20bn M&A pipeline providing decades of further runway. “As we completed numerous M&A deals, Advent and the leadership team focused on seamlessly integrating each of these companies, ” explained Selim Loukil, a Managing Director in the Portfolio Support Group (PSG) at Advent.
The unique breadth and depth of products, value-add services, and technical advice provided across the 22 geographies in which Rubix operates continues to prove attractive. Rubix provides a ‘one-stop-shop’ to large, European customers interested in streamlining their operations, as well as obtaining cost-savings benefits, which Rubix is able to provide to customers given its ability to purchase materials and products at scale. This strategy has played a crucial role in driving market share gains among large European customers.
Engineering a value creation plan
Advent’s PSG team supported the business in making key hires across the organization, including appointing a Chief Transformation Officer and simultaneously providing functional Operating Advisors to support Rubix in improving its digital, procurement, and commercial excellence capabilities.
Additionally, in partnership with management, the Advent team has identified numerous ongoing opportunities to streamline operations and drive continuous improvement through category management, pricing compliance, and branch and warehouse consolidation. Rubix’s leadership team also continues to pursue growth in its key strategic levers as part of the jointly developed value creation plan: scale with large key accounts, the transformation of the business’s digital presence, and value-added services.
Becoming an omnichannel provider
In addition to having one of the largest local networks across Europe, Rubix sought to broaden its go-to-market offering through significant digital investments to create a true omnichannel model to better serve customers across each touchpoint. These investments in Rubix’s digital infrastructure and tools included e-procurement solutions that seamlessly connect Rubix’s systems to customers, as well as launching a webshop. These efforts have led to a ~30% CAGR in digital sales since entry, now representing ~25% of group sales.
The business also saw an acceleration in its digital activity during the outbreak of Covid-19, with the company redirecting customers to its online platforms, while making every effort to keep its physical network open, enabling customers to benefit from the enhanced availability that Rubix could offer, thanks to its scale.
The finished goods
Since the start of the partnership with Advent, Rubix has seen its customer proposition and offering evolve from that of a solely product business to providing a comprehensive solution across a suite of products, technical advice, and value-added services.
This has established Rubix as a partner of choice for customers, combined with the value-additive nature of its enhanced technical, logistical, and ESG services when addressing customer issues. Also, this has increased the stickiness of these relationships with numerous customer teams across the factory floor increasingly reliant upon Rubix’s support.
Over the course of Advent’s involvement, Rubix has made significant progress in achieving its strategic priorities: enhancing its unique one-stop-shop offering to drive pan-European key account wins; supporting growth across its digital and services offerings; driving continuous improvement across its operations; and leading the consolidation in what remains a highly fragmented market. This has enabled a notable improvement in customer and employee engagement, while also delivering double-digit earnings growth since the start of Advent’s ownership period.
Rubix is well placed to cement its position as Europe’s leading MRO provider of industrial products and services through further organic and inorganic market share gains.
