Aforge Finance & Degroof bank: from joint ownership to international ambitions

Built around two main pillars–mergers and acquisitions and wealth management–Aforge Finance has equipped itself with a third: an international plateform. Amongst the largest M&A boutique firms in France, the company has implemented new partnerships with first rate players before merging with the Belgian bank Degroof, which has just acquired 50% of its capital. A flashback of Aforge’s success as told by Damien Bachelot, its co-founder.

Set up by Damien Bachelot and Claude Garnier, the consulting firm Aforge Finance has continuously stood out in the French market. From the very start, both founding members have bet on a model that is based on two skills: the advice on mergers and acquisitions as well as on wealth management. This is the model that was favoured by entrepreneurs. This model has gone from success to success as it encompasses all problems that selling entrepreneurs may have to face.

A model created by entrepreneurs for CEO & founders

The meeting between both founding members of Aforge Finance has brought together two talented minds. Damien Bachelot started off his consulting career with Arthur Young before becoming the director of the consulting and finance company Ecofinance. He then moved on to managing Ernst & Young’s department of mergers and acquisitions for five years, before setting up his own business. His meeting with Claude Garnier was all the more critical that both professionals complement each other perfectly. Claude Garnier is now the director of the department of wealth management and family office, after working in this area for over 17 years for various financial companies such as Société Générale or Groupe Suez. Aforge Finance sees to the welfare of corporate managers, notably with regard to their private capital by advising them on wealth management and benefits and in terms of their professional capital by advising them on their equity financing operations, in particular mergers and acquisitions. Since its beginnings in 1995, the corporate department of Aforge Finance has specialized in the market of medium-sized businesses, the target being transactions between €30-500 million. Whereas the big investment banks were focusing on large businesses, Aforge increased its lead with the mid-market. And judging by the current economic climate he was right, the mid-market has shown to be less volatile than others.

Dual intervention and a multidisciplinary approach

Working from a model that favours proximity with businesses, in particular through a network of family offices, the team of Aforge Finance managed to take market shares off the largest investment banks. Expert in mid-market corporate finance, Aforge Finance has now become an undeniable eminence, for the professionals of private equity as well as for those responsible for mergers and acquisitions. Its business model was built on the possibility to involve both the board on financial strategy and mergers and acquisitions on the one hand, and the department of wealth management and strategy as well as the family, office on the other. Being the first consultancy firm to have put together, within the same company, teams specialized in both fields; Aforge Finance has implemented a dual approach that allows both directors and share holders to deal with marketing problems whilst taking into account their worries on wealth management. Not only do both activities complement each other, but they also intend to develop their already strong industry expertise in the luxury industry (Jean-Paul Gauthier-Hermès, Gianfranco Ferré, Joseph- Albert Frère, Jimmy Choo, etc.), media and health (Unither or Cornéal deals). This dual approach is made stronger by the pluridisciplinary approach of the Aforge teams who step in on several subject areas and activities. “A multidisciplinary approach is what makes the strength of a team", emphasizes Damien Bachelot.

Outstanding deals

In the course of the last three years, the board has been involved with over 100 deals making up a global volume of around €9.5 billion. What are the reasons that explain this increase in terms of volume? A stronger awareness and the diversity of its customers: family businesses, financing, but also industrial businesses that rely on Aforge for their mid-size operations. Because it is unique and has a pluridisciplinary approach, Damien Bachelot’s team has quickly grown to become one of the first independent French advice boards. Aforge Finance is now widening its sphere of activity by taking part in larger deals, as is shown by their presence and advice to Gilde with regard to the takeover of Novasep to the American firm Rockswood (425 M€), or by the leveraged buyout of Sagem Communications (383 M€). Various companies and industrial businesses call upon Aforge Finance: they have recently advised the group Club Méditerranée on the leveraged buyout of Club Med Gym. They have also advised Sercel, a subsidiary of CGGVeritas on the purchase of Metrolog and the American group Allergan on their buy out of the group Corneal Laboratories and the leveraged buyout of an activity that was no longer strategic. Private equity funds also play in important role: Aforge has been advising since the beginning of 2008 OFI Private Equity on their purchase of Gault et Frémont, Initiative & Finance during the leveraged buyout of Fondis Electronique, as well as 21 Centrale Partners with regard to the leveraged buyout of Averys.

New global partnerships

After the opening of its offices in Lyon and Geneva (respectively focusing on a global approach and operations management), the increase in the number of partnerships made abroad with national leaders allowed the company to grow on the international scene. For instance, in order to reinforce its presence on the global market, the French advice bureau has joined forces with Giuliani Capital Advisors (that is now a part of the Australian group Macquarie, international bank with a broad range of activities and whose head office is in Sydney) and with the German bank Sal. Oppenheim (private Frankfurt bank set up in 1978). Two Chinese merchant banks joined these strategic partnerships: China M&A Management, set up in 1997 and a Chinese market pioneer, and New Stone Capital, so as to enjoy the benefits of wider coverage on the mergers and acquisitions market. The company is now in a position to play a role on the Indian market with ICIC, the second largest Indian bank. Aforge Finance also works with Investec, a South African bank that benefits from strong market penetration in Britain, South Africa, Asia and Australia. Based on the success of these international partnerships, Aforge Finance is now well positioned on both the French and international markets.

Strategic partnership with the Belgian bank Degroof

In keeping with the new international background, Aforge Finance management team of has now decided to go even further. In order to be able to weigh in on deals that are more and more varied and to be a factor in the fast growth of their expanding clientsthanks to a wide range of credit and cash products – the founding members of Aforge Finance decided to ally with the most important private bank in Belgium, Degroof. The figures speak for themselves: 950 associates, €29.1 million net profit after tax (fiscal year 2006-2007) and more than €27.5 billion worth of assets under management. An important milestone is thus reached: Damien Bachelot and Claude Garnier keep control of Aforge Finance’s capital whilst opening it up to their new partner and their executive officers. “This is already true for the executives and officers of the Degroof Bank who hold around 60% of its capital”, emphasizes Damien Bachelot. Aforge Finance gives the Belgian bank an edge which it did not have in terms of mergers and acquisitions on the French market. Degroof allows Aforge Finance to lean on a group that manages approximately €30 billion in assets (taking into account the funds managed by Aforge Finance). This new partnership will allow both parties to put into place a powerful European platform that will support the growth of its customers, family businesses, private investors, companies and institutions. Moreover, it will give the group a new international identity.

Finally, Aforge Finance will also be able to count on its latest partner to access to the much sought-after statute of French capital 'in exile' in Belgium. Several terms of references are already under way. The founding members of Aforge Finance, who have a very close business relationship with their clients, will not rest on their laurels and intend to carry on developing their group further. Whilst securing its internal resources by giving them a share of its capital, the managing directors of Aforge stroke a partnership with Degroof, a bank that is equally ambitious, with an equally ambitious mindset. Aforge/Degroof: entrepreneurs serving entrepreneurs.