Target Information

Avallon has established the first private equity fund in Poland specializing in management buyouts, known as the Avallon MBO Fund. This fund is managed by a team of Polish experts who have advised on over 70 MBO/LBO transactions since 2001. The Avallon MBO Fund has a capital of EUR 50 million and includes a diverse range of investors, such as the European Bank for Reconstruction and Development (EBRD), the Swiss investment bank LODH, along with various other international financial institutions.

The launch of the fund was celebrated with a press conference attended by notable EBRD representatives, including Kazimierz Marcinkiewicz, EBRD Director for Poland, Bulgaria, and Albania; Dragica Pilipovic‑Chaffey, Director for Poland and the Baltic States; and Patryk Borzęcki, Principal Banker.

Industry Overview in Poland

The private equity landscape in Poland has shown promise, yet, historically, there has been a shortage of funds dedicated to management buyouts, particularly for small and medium enterprises (SMEs). Globally, MBOs have been recognized as a prevalent method of acquiring businesses, highlighting a gap in the Polish market where such investment strategies are underrepresented.

SMEs play a crucial role in Poland's economy, constituting a significant portion of its GDP and employment. However, without sufficient funding avenues, many of these businesses struggle to adapt and evolve, limiting their potential for growth and profitability. The introduction of the Avallon MBO Fund aims to address this by offering dedicated financial support tailored for SMEs engaged in management buyouts.

In Poland, there is an increasing trend toward private equity funding as more entrepreneurs are looking to transition ownership to management teams, thus ensuring continuity and sustainability within their enterprises. The Avallon MBO Fund aims to capitalize on this trend by providing essential capital and expertise to support strategic and operational restructurings of SMEs.

As the private equity industry matures in Poland, there will be greater emphasis on leveraging management buyouts as a viable financing structure, promoting a culture of ownership and long-term investment in the sector. The fund is committed to leading this charge and reshaping the landscape for SMEs through focused investments and management collaboration.

Rationale Behind the Deal

The primary objective of the Avallon MBO Fund is to invest in small and medium-sized enterprises through management buyouts and leveraged buyouts, primarily in Poland. There is a significant opportunity to purchase controlling stakes, allowing the fund to invest alongside management teams. With an expected average investment size of around EUR 5 million in equity, the fund will employ leverage for most transactions to enhance returns.

The strategic focus on SMEs aligns with the growing need for financial solutions that facilitate structural improvements in these businesses. By emphasizing operational and strategic restructuring, the fund will drive profitability and market competitiveness for its portfolio companies, thus stimulating economic growth in the region.

Investor Information

The Avallon MBO Fund is supported by a robust roster of investors, including international financial institutions and banks, which underscores the credibility and potential of the fund. The involvement of the EBRD, a prominent player in fostering economic development, highlights the fund's commitment to sustainable investment practices and contributing positively to the Polish economy.

This combination of experienced management, strong investor backing, and a targeted investment strategy places the Avallon MBO Fund in a strong position to make a significant impact on the local business landscape, particularly among SMEs seeking capital and guidance.

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The establishment of the Avallon MBO Fund represents a potentially transformative investment opportunity in the Polish private equity market. By focusing on management buyouts, this fund not only addresses a critical gap in funding but also empowers management teams to take control of their companies, enabling continuity and growth.

With the expected size and scope of its investments, the fund is well-positioned to drive substantial operational improvements and profitability within its portfolio, therefore yielding favorable returns for its investors. The emphasis on SMEs is particularly laudable, as it seeks to uplift the backbone of Poland's economy during a time where many businesses are in need of restructuring or additional support.

However, the success of the Avallon MBO Fund will largely depend on the implementation of effective operational strategies and the ability to successfully execute MBOs. If these aspects are well-managed, the fund could set a precedent for similar ventures in the region, fostering a robust private equity ecosystem.

Overall, if the fund's operational intentions are realized, it could indeed become an exemplary model for private equity investment in Poland, championing the cause of management buyouts and encouraging a more sustainable and dynamic market environment for SMEs.

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