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Duell actively pursues European acquisitions to support growth ambitions – CEO

Duell [HEL:DUELL], a Finnish powersport equipment wholesaler, is working through a list of potential targets across Europe and could make acquisitions “in the near future”, CEO Jarkko Ammala told Mergermarket.

While organic growth is Duell’s focus, M&A is an important part of the company’s strategy as it aims to grow revenue above the EUR 200m mark by 2025, Ammala said. Duell reported EUR 77m FY21 net sales, with EUR 7.3m operating profit. In the first nine months of FY22, the company reported EUR 89.3m net sales, up from EUR 57.5m in the same period in FY21.

The EUR 55.62m market cap company predominantly seeks acquisitions that will bring new clients but could also consider companies that will expand its product portfolio, he said. It could also consider product brands, not only wholesalers and importers, he added.

Duell could acquire in markets where it is already physically present – including Sweden, Norway, the Netherlands, the UK (England), Germany and France -, or new undisclosed markets, he said. However, for the next fiscal year its plan is to focus on its existing markets and, while it will look for opportunities to enter new markets, it is unlikely to do so until the following year at the earliest, he added.

Any acquisition in the Nordics, where it already is a significant player, will need to bring in new product segments , he said. It could look to add bicycle products – which it currently only has in Finland – to its portfolio in other markets too, for example, he said.  

Duell’s latest acquisition was Finnish wholesaler of bicycle parts Powerfactory Nordic, which it acquired for EUR 9.17m in May. The transaction expanded Duell’s product range into the bicycle segment for the first time.

The company’s sweet spot is targets in the EUR 10m-EUR 20m revenue range, Ammala said, adding it has previously acquired companies with approximately EUR 3m-EUR 4m, EUR 15m and EUR 25m revenues. It is interested in targets that are in good financial health and that have good working logistics chains, he said.

Duell scouts targets in-house but also regularly receives approaches from sellers or advisers, Ammala said. The company has participated in auctions but finds that valuations often creep up too high in structured processes, he said. In the case of its last four acquisitions – which it made in the last 14 months – Duell initiated talks with the targets, he said.

The company uses due diligence and legal advisers in transactions, he said. It has “continuous relationships with certain advisers”, he added without naming them.

So far, Duell has financed acquisitions from cashflow and has in some cases used earn-outs as part of the transaction fee structure, he said. It could also consider rights issues to raise funding for acquisitions, he said. The company has an idea of an M&A budget but can be flexible depending on opportunities, he added.

European market landscape and consolidation

While sponsors have actively invested in the sector over the past decade, the market remains fragmented with plenty of entrepreneur-owned companies that in many cases do not have a succession plan, he said. As well as Duell, there are three other large players that have a similar strategy of growing through market consolidation, he said, naming Belgium-based Bihr acquired by US-based, Genstar Capital-backed Arrowhead in July, Dutch Powersports Distribution (PDG) Group and France-based Parts Europe. A merger between some of the larger players could also be possible at some point as the market develops, Ammala said.

Duell has approximately 235 full time staff. Its range of imported products includes all motorcycling, snowmobiling and boating equipment, accessories, and spare parts, as well as equipment, accessories, and spare parts for bicycling, ATVs/UTVs, mopeds and scooters.