Bavaria Yachts is Back in Business

It was officially announced last week that Bavaria Yachts has been bought out of administration by a private equity fund, and the transaction has been approved by German authorities. The yacht builder went into self-administration in April, 2018 and has been looking for new backers since then. The restructuring also includes the catamaran brand Nautitech, which is built in France. With a total of 800 employees, Bavaria Yachts has one of the largest work forces of any recreational boat builder in the world.

In a statement, Bavaria said the unnamed private equity fund, which is advised by the Berlin-based investment company CMP Capital Management-Partners, has acquired Bavaria Yachts and all of the shares in the French subsidiary Bavaria Catamarans SAS.

All 550 employees of Bavaria Yachts in Giebelstadt, Germany and all 250 employees of Bavaria Catamarans in Rochefort, France will transfer to the purchaser. It seems that no jobs will be lost.

Both parties have agreed not to disclose the purchase price.

The Bavaria Yachts plant in Giebelstadt is one of the largest and most modern boat building facilities in the world for the size and type boats it builds.

The following material is from the Bavaria Yachts Press Release in edited form—

Fewer Models

Bavaria plan on reducing the number of models it builds from 26 to 10 to 12 to “reduce complexity.” The R55 motoryacht, previously produced in Croatia, will for the first time be built at the company’s headquarters in the first half of 2019. The molds and tools are currently being transported from Croatia to Germany and will be installed in Giebelstadt.

Production of the C50 has been “revised, on the production line as of November.”

C50 has been successfully revised, big and small sisters to follow. Work has already started on this, and production has been modified in some important respects: The C65, presented in 2018 but not successful, will no longer be built; the E-Line (electric propulsion and hybrid yachts) has been discontinued.

The C50 sailing yacht has been removed from series production and technically reworked as a prototype. Following successful re-engineering, the C50 will return to series production from November 2018. The findings from this process will now be transferred to the flagship C57 and its little sister C45. The C57 is now on the production line and at the same time the findings from the C50 are being made use of in the ongoing production of the C57.

Moderate new developments are planned from 2019. Two or three new product launches per year are feasible for a shipyard. Fast production, reliable quality, and plenty of space, along with sporty performance and a competitive price/performance ratio, are to be the hallmark of Bavaria Yachts once again.

CMP Capital Management-Partners is a German investment company that has specialised in the acquisition of companies in distress in Germany, Austria, and Switzerland since its foundation in 2000.

Security for employees, customers and suppliers

Kai Brandes, Executive Partner of CMP Capital Management-Partners from Berlin, which represent and advise the investing equity fund, explains: “We are delighted about the successful conclusion of the transaction: The purchase agreement has been signed, the approval of the Federal Cartel Office has been given and the closing, i.e. the fulfilment of all contractual conditions, has just taken place. This means security for the employees, for the customers and for the suppliers.”

New Management

With the investment in the company, CMP employees assume operative management responsibilities on site. In the case of Bavaria, Dr. Ralph Kudla, restructuring expert and partner at CMP, will join the executive board.

The managing director of CMP Capital Management-Partners, Kai Brandes, said: ‘We are convinced of Bavaria’s global market potential and will sustainably develop the company. The restructuring measures will focus on regaining market share and improving production costs.”

Works Council counts on closer integration of sales and production

Christian Hartmann, the Works Council Chairman of Bavaria Yachts, is relieved: “The purchase agreement is now all wrapped up, all 800 jobs in Giebelstadt and in France have been secured. We consider the fact that CMP strongly supported the purchase of the company a good signal.” For the future, Hartmann is counting on closer integration of sales and production: “We see production and sales as cornerstones, carrying the company together.

Optimum planning in construction, a continuous production process and a sales division that synchronizes customer requirements with production, are to be the hallmark of Bavaria Yachts in future. We as the workforce would also appreciate closer involvement in the further development of production and sales. The people who work on the yachts every day are enormously important for improving existing procedures and methods.”

“A Good Investment at a Good Price”

CMP Capital Management-Partners has been an investor in the German-speaking SME sector since 2000. “As an active investor, we pursue an operational and entrepreneurial investment philosophy. We concentrate on companies that have a healthy operational core but which find themselves in a situation of necessary change,” says Kai Brandes, who is also Chairman of the Advisory Board of Bavaria Yachtbau Holding GmbH. “We believe in the development potential of Bavaria and we are impressed by its loyal employees, dealers and customers. A good investment for a good price.”

Future Operations

Dr. Ralph Kudla, a partner at CMP, has also been a Managing Director of Bavaria Yachts for over a week now. He said, “In order to regain sustainable competitiveness, a high degree of experience in change processes and consistency in operational dealings is required. For the implementation of the measures that will realign the company, CMP is not only providing financial resources through the funds it advises, but also supporting the management on-site as and when required.

“Stabilization, further development and a return to the path of growth are key themes of the restructuring process. Furthermore, the future model range has still to be defined. This represents the greatest challenge and it will certainly take us six months or more to take the initial decisions and set some impulses.”

Nautitech Catamarans

The French holding “Bavaria Catamarans” will in the future revert to its well-established name “Nautitech” for marketing purposes. Dr. Ralph Kudla said that “Bavaria stands for yachts, Nautitech for catamarans. We believe that it is important for the two companies to be able to highlight their respective identities even more clearly in future. The two firms will collaborate closely in technical matters and develop the partnership between Germany and France even more vigorously.”

Break-even planned for financial year 2019/2020

In the first, abbreviated financial year and as a result of ramping up production, Bavaria will show a loss, which CMP will bear as the investor. Furthermore, it takes a relatively long time to implement efficiency improvements in boat-building. Some things go a little faster and have already been started, others take more time because they involve the actual structure of the boats. Break-even is planned for the next full financial year (1 August 2019 to 31 July 2020). The key improvements are expected in two or three years.

Dr. Ralph Kudla looks ahead: “We want to regain lost trust. We intend to keep Bavaria’s promises and meet its delivery dates. Quality must also improve again. And we want to involve our dealers more closely in strategy and product development. A dealers’ advisory board will be introduced to this end. In this way, we will hear customer feedback, pick up on it and turn it into product improvements as quickly as possible.”