Interview with Matthias Waehren, Givaudan

Matthias Waehren was CFO of Givaudan from 2005 until the end of 2016 and is now in charge of various strategic special projects. Previously he was with Roche and held financial management positions in various countries. During his tenure as CFO of Givaudan, Givaudan has realized one very large and - especially more recently - several smaller (in the two-digit and smaller three-digit million area) acquisitions. Givaudan is the leading industry consolidator in the field of Flavors and Fragrances („F&F“).

Jürg Kurmann M&A: Which success factors in M&A have become more important for you over time with increasing experience?


There are several factors, mainly caused by the fact that we have made acquisitions in different regions of the world and in all sizes. For me the following success factors have won crucial importance:

  1. At the beginning of each acquisition project, i.e. before any resources are committed to it, the acquisition rationale must be absolutely clear. We ensured this by always formulating a one-page press release as it might look at Closing. This document had to show very clearly – and this was a non-negotiable requirement by our CEO - the value for the investors and the benefits to the customers of the two companies created by the transaction. Of course, this was not about already preparing the press release itself, but to enforce the discipline of only dealing with projects that clearly promised the required value contributions to investors and customers.
  2. Decision speed is a key differentiator for a successful acquisition process. This is not only the case in competitive bidding contests but also helps prevent the opening of the process in one-to-one negotiations. To this effect, it is an advantage to work with a small team and as far as possible with internal resources. We had, for example, no M&A department but the coordination of acquisition projects was the responsibility of the Group Controller while executives from the business units who were specifically assigned for each project carried out the specific tasks. As all these executives were regularly trained on our M&A processes, the designated persons immediately formed an efficient and effective team.
  3. In the case of transactions with entrepreneur-owners, the price is rarely the only decisive factor but trust building and paying respect to the seller’s person and his achievements are normally just as important. It is quite different when the Chairman or the CEO of the prospective buyer personally makes contact with the owner of the target from time to time and perhaps even meets with him over a meal in a private setting, than when the prospective seller only has to deal with a large number of consultants and lower echelon managers. For such targets, to have a very focused Due Diligence is also key, since smaller firms have only limited resources to answer questions.
  4. Process discipline over all phases, especially also in the integration is crucial. Especially with smaller transactions, one must resist the temptation to reduce the effort. A purchase contract is always a purchase contract, which always requires the same meticulousness.
  5. As a large well-known buyer, we were accustomed to investment bankers and consultants proposing acquisition opportunities to us. After the main market consolidation had happened, however, we noted that these intermediaries had little knowledge in the area of smaller niche players, which became increasingly of interest to us. We realized that with our own people at the front we were much better positioned to identify the "hidden gemstones" of smaller, innovative companies. Therefore and with great success, we have systematically charged our own people from the line organization with scouting tasks. Correspondingly, for the pipeline to remain filled on a continuous basis, it is important that the relevant front-people are briefed regularly with the acquisition criteria and are motivated for their scouting tasks.



Jürg Kurmann M&A: Which was your most surprising incident in an M&A project or where you learnt the most?


For me, the most impressive experience was that we successfully managed to make a very large transaction, for which due to special circumstances only an extremely short time window was open, which, however, also was a great opportunity in itself. The crucial factors for us to achieve this were:

  • extreme short decision-making channels and processes within a management team that acted like a well-oiled machine in complete trust to each other and with everyone concentrating on his specific aspects;
  • we were accustomed to "doing the work ourselves” with our own resources, i.e. with a minimum of external consultants and in this case we also could well assess by ourselves the business which was very familiar to us;
  • since the target was an important player in our business, we had it constantly under "observation" and at the given time, we were therefore prepared for a speedy assessment and decision making.



Jürg Kurmann M&A: Which development in M&A do you expect in the next 1-2 years?


With around 70% market share of the top five, the F&F (Flavors & Fragrances) market is now already strongly consolidated. There are, however, still many innovative smaller companies in the market that will provide targets for a sustained high level of M&A activity. In addition, due to the already high market share in their incumbent areas, the large market players are expanding their activities through acquisitions into adjacent areas such as Givaudan with Active Cosmetic Ingredients in the Fragrance Division and Integrated Solutions in the Flavors Division.


Due to the already very high current multiples, which - except for very special situations - are unlikely to get higher, it is currently also attractive for company owners to sell.


About Jürg Kurmann Mergers & Acquisitions


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