Information on the Target

Clovin S.A. is a family-owned Polish company established in 1995, specializing in the production of high-quality cleaning agents for both professional (B2B) and consumer (B2C) markets. Initially focused on creating industrial detergents for sectors such as hospitality and healthcare, Clovin has evolved to include household cleaning products, which now account for the majority of its revenue. Over the last 24 years, the company has expanded its operations internationally, opening branches in Germany and Lithuania, and a production facility in Ukraine.

Currently employing over 230 people, Clovin’s products reach more than 25 countries across five continents. In 2018, the company reported revenues of 111 million PLN. Clovin is committed to innovation, with research and development departments dedicated to creating eco-friendly formulations that align with environmental standards.

Industry Overview in Poland

The cleaning agents industry in Poland has witnessed significant growth, driven by increased household incomes and a rising awareness of hygiene, particularly following the COVID-19 pandemic. Consumers are increasingly leaning toward premium products that offer better quality and eco-friendliness, leading to higher competition among local and international players.

Major corporations dominate the market, but local companies like Clovin are carving out a niche by focusing on innovative and environmentally friendly products. This trend aligns with global shifts towards sustainability, allowing Clovin to leverage its research capabilities to offer products such as laundry capsules and green cleaning supplies.

In addition to organic growth, the Polish market presents opportunities for acquisitions, particularly in the cleaning supplies segment. Companies seeking to expand their portfolios are exploring synergies with local manufacturers to enhance their market presence and product offerings.

As consumer preferences evolve, the focus on quality and sustainability will likely intensify competition. Companies that can adapt quickly and innovate will have a competitive edge, reinforcing the importance of investment in research and development.

The Rationale Behind the Deal

On October 29, Avallon MBO Fund entered into a conditional agreement to acquire a majority shareholding in Clovin S.A., with the founders retaining a significant stake. The deal is contingent upon receiving approval from the Office of Competition and Consumer Protection (UOKiK). The shareholders anticipate a collaborative effort to continue Clovin's extensive investment program, broaden its portfolio of innovative and eco-friendly products, and strengthen its domestic and export market positions.

This strategic acquisition aims to enhance Clovin's competitiveness in a growing but competitive market, ultimately maximizing the company's potential through organic growth and targeted acquisitions in the cleaning products sector.

Information About the Investor

Avallon MBO Fund is an established investment firm known for its focus on mid-sized enterprises in Central and Eastern Europe. The fund has successfully managed investments in various sectors, including notable stakes in companies like VELVET. Avallon MBO’s investment strategy involves collaboration with management teams to drive growth and profitability.

With a solid understanding of family-owned business dynamics, Avallon MBO believes in the value of fostering relationships with founding families, ensuring their vision and expertise is conjoined with financial backing for optimal company growth.

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The acquisition of Clovin S.A. by Avallon MBO Fund is poised to be a strategic move in a thriving market. The decision reflects Clovin's growth potential and the increasing demand for high-quality cleaning products, especially those aligning with eco-friendly practices. As consumer behavior shifts towards sustainability, Clovin's innovative product offerings position it well to capture market share.

Furthermore, Avallon MBO's experience in driving similar investments suggests that they could effectively support Clovin's ambitious expansion plans. The fund's commitment to enhancing brand strength and extending market reach is likely to pay dividends in both domestic and international arenas.

However, the competitive landscape poses challenges, as larger corporations wield significant influence. Clovin must continuously innovate and adapt to maintain its position. The collaboration with Avallon MBO could provide the necessary resources to bolster its marketing strategies and product development efforts.

In conclusion, this deal represents a promising investment opportunity for both parties. Avallon MBO Fund's backing can enhance Clovin’s capabilities to leverage current market trends, ensuring sustainable growth and maximized shareholder value in the long run.

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