Triton’s von Hermann: Pandemic became an opportunity ahead of Ewellix exit

The Ewellix sale is 'expected to generate a return of around 4x gross money', according to sources with knowledge of the matter.

Triton Partners was able to exit its portfolio company Ewellix a little ahead of schedule, as potential disruption from the coronavirus pandemic turned into an opportunity, managing partner Claus von Hermann told PE Hub Europe. 

In late July, Triton announced it had signed an agreement to sell Ewellix to Herzogenaurach, Germany-based Schaeffler AG.

During Triton’s 3.5-year ownership, via its Triton Fund V, Ewellix’s EBITDA grew by 78 percent, from €25 million to €45 million, according to sources familiar with the matter. The sources added that Ewellix is “expected to generate a return of around 4x gross money”.

“At one point we thought we’re probably going to hold it slightly longer, because we have to first grow out of covid,” von Hermann said. “But we actually saw the pandemic as an opportunity to accelerate our value creation plan. The management team did such a great job of repositioning this business that they captured a lot of growth in a lot of different pockets.

“We had done a lot of good work in a very short time period; we got a very attractive valuation for the business – that’s why we decided to sell.”

Gothenburg-headquartered Ewellix is a manufacturer of actuation and linear motion products, used in the fields of medical, mobile machinery, assembly automation and robotics, and various general industrial applications.

Triton acquired Ewellix via a carve-out from Sweden’s SKF Group in December 2018, rebranding the firm from SKF Motion Technologies. A carve-out, according to von Hermann, can create a “positive momentum” that can give employees a sense of belonging. “Sometimes it can come as a shock that the mother is OK with losing them,” he said.

London-based Triton inherited a “fragmented production landscape” when it acquired Ewellix. “We decided that we needed to consolidate Ewellix to be more attractive from a pricing point of view,” von Hermann said. “As a result, we ramped down three plants in Central Europe and shifted all those volumes into a new site in Bulgaria, which we just started during covid.”

Triton worked with the Ewellix management, the board and an external consultant to pin down the company’s strengths. This process included identifying growth rates in Ewellix’s end markets.

Ewellix’s path from acquisition to exit is an example of Triton’s investment strategy.

“We have a rule of thumb: if we’re able to fix the business within two years and focus on expansion, we are happy to engage,” said von Hermann. “We like complexity, but if it’s longer than two years, then we typically stay away from it.”