Although still as driven as in his younger years, Jaap van Baar is beginning to seriously consider selling his business IE Systems in 2021. The Bergen-based entrepreneur believes it is time to step down a gear. His mission: find a buyer who knows the ropes.
Intellegent Environmental Systems devises smart solutions for a variety of sewage issues, with a unique specialty in combating sulfur dioxide (H2S) - a toxic and explosive gas, recognizable by the smell of rotten eggs. H2S is thus an unhealthy and dangerous phenomenon, which also affects sewer systems and can cost operators. As a result of his knowledge and experience, Jaap is therefore under a fast-track key with many Dutch municipalities and water boards.
Jaap: "In the Netherlands, 65 billion euros worth of sewage systems have been constructed and every year 1 to 2 billion euros are invested in renewal and maintenance. Sewerage is a complex world with a limited number of players. IE Systems has built a good name for itself in this, without being a competitor to other specialists in the market. That is also a heavy responsibility." For the work of IE Systems, Jaap and his outside man Mark traversed the entire country for years. But now Jaap thinks it's enough. In February 2022, he contacts Joost Baltus, acquisition advisor at Prisma Advies Groep.
Strategic party or independent specialist?
Jaap van Baar and Joost Baltus once sat together on the member council of Rabobank; so the two have known each other for some time. "I knew that Joost operates independently and - like me - dares to walk off the beaten path. That appealed to me." Together they orient themselves to the profile of the desired acquisition candidate. Joost thinks mainly of larger parties in the market, for whom IE Systems could be interesting from a strategic point of view, while Jaap prefers to look for an independent specialist.
"I did not want acquisition by an established business to undermine the independence of IE Systems. That position absolutely had to be guarded." However, Jaap also realizes that it becomes quite a challenge for a solo entrepreneur to have the necessary baggage on three fronts: sewage engineering know-how, a commercial attitude and financial clout.
The next steps in the acquisition process: preparing an information memorandum, including a valuation of IE Systems, and posting an anonymous sales profile on acquisition platform Brookz. This yields a number of responses, which initially do not produce a truly promising match.
TBS-SVA wants to expand
At the end of August, Martijn Bos, CFO of TBS-SVA, also approached Joost via Brookz. This North Limburg-based company is a national market leader in drainage solutions, such as gullies and manhole covers. The same field as IE Systems, with different areas of expertise. So for Jaap, TBS-SVA is not an unknown party; indeed, the two businesses purchase specific products from each other for their projects. After internal optimization, TBS-SVA is ready for growth and expansion.
At the end of August, Martijn Bos, CFO of TBS-SVA, also reported to Joost via Brookz
Martijn: "We are a leading business in the market. If we want to supply adjacent products, we can do so by innovating ourselves or through acquisitions. IE Systems therefore came along at a good time for us." For Jaap, TBS-SVA meets an important condition: a related market segment without unwanted competition.
Search for new machinist
A period of personal introductions and probing followed. Martijn: "We had to get to know the products and services of IE Systems. What exactly do you do and how do you do it? Does this suit us and how can we continue this? That's how we did gradually become impressed with IE Systems' complete offering." For his part, Jaap wants to know what TBS' intentions are with the business he has put his heart and soul into. "There is some overlap between the two assortments, but certain products and services are new to TBS. I was curious how they were going to solve that." Martijn also sees that it is not possible to fully integrate IE Systems into TBS.
At the end of December 2022 there is a verbal deal in outline, three months later the signatures are on the final agreement and the perfect match is a fact. Jaap van Baar is a happy man: his business has transferred well on all fronts. As long as it is desired, he will remain involved as adviser.
Cross-fertilization and growth opportunities
IE Systems will continue as an independent part of TBS-SVA. Martijn: "IE Systems has developed beautiful innovative sewer concepts. It has reached 30% of the Dutch municipalities so far. The commercial clout of TBS makes substantial growth possible."
"I expect a nice cross-pollination between TBS-SVA and IE Systems, allowing us to offer a broader package. H2S reduction will of course remain IE Systems' flagship product."
