In late 2005 ARX was introduced to three majority owner-managers of Donit Tesnit, a Slovenian manufacturer of industrial sealing materials and gaskets, with a long history of innovation, quality and reliability in mission-critical applications. ARX was attracted by the fact that Donit Tesnit is one of the European market leaders in a niche industry where production know-how, reliability and quality are key success factors.

The majority owner-managers were of differing ages and, as such, their perspectives on the business and career horizons began to diverge. The younger mangers had formulated a clear plan for value-creation over the medium-term, while the older senior manager was preparing for retirement. The challenge for ARX was to construct a discreet and timely transaction that satisfied the aspirations of the entire owner-manager group.

In early 2006, ARX partnered with the two younger owner-managers in a transaction that facilitated the desired full exit for the older owner, while introducing ARX as a new supportive majority shareholder with a clearly aligned focus on achieving the medium-term strategic plan for the company. In addition, ARX secured tailored senior debt facilities that supported the objectives of the strategy.

During the period of the ARX investment, Donit Tesnit:

  • Optimized its product portfolio and increased the proportion of sales of high-margin products,
  • Generated above market average sales growth of 10% per annum,
  • Streamlined its ownership structure,
  • Improved working capital utilization, and
  • Consolidated production and real-estate assets while creating efficiencies.

In late 2008 Donit Tesnit was sold to a Slovenian industrial group, while generating an attractive investment return for ARX and its partners.