Last May, Nowy Styl Group was chosen by a French commercial court to buy most of the assets of Majencia. With this acquisition and the takeover of Kusch + CO in January, the Polish office furniture manufacturer is clearly aiming for the leadership position in Europe. French magazine Office et Culture editor Jean-Paul Fournier met Adam Krzanowski, president of Nowy Styl, in Krakow in June and asked him how he envisions the integration of Majencia in his group.
So far Nowy Styl has acquired only healthy and financially sound companies. How is it you bid for Majencia?
We were initially contacted in early 2019 by Vincent Gruau who was working on the continuation plan of Majencia. At that time, we had just taken over Kusch + Co in Germany and were not so open to the idea of integrating another company. Nevertheless, as it was a major opportunity, we decided to study the matter and visited Majencia in France.
We went through the numbers and met with the receiver. Eventually, the organizational (restructure) was deemed too heavy, the amounts of debts too important and the level of risk too high; so, we informed Vincent Gruau that we would not follow up. A few days after our decision, the receiver contacted us and informed us the continuation plan was being switched to a receivership plan as it was no longer possible to operate the company. He asked us if we would be interested in taking over only the assets of the company. We answered we would consider bidding only after some diligences and access to the data room was granted to our team for three weeks. Eventually we decided to tender for several reasons.
In France, Nowy Styl is growing very fast. In 2019, our sales volume will be around 30 million euro. But, even growing by 10% (or even 20%) every year, it would take us years to reach 100 million euro (revenues of Majencia in 2017).
Majencia had a strong customer basis, including major accounts.
We also considered the fact that, from our experience, to be a market leader you need to be local, i.e. have a strong local organization including production in order to stay close to the customers. For that reason, we bid for the plants (Noyon for metal products and chairs, Bressuires for wood products) and obviously we intend to keep them running, the same way we kept the manufacturing facilities of all the companies we bought in Germany and Switzerland. Indeed, it is not possible for us to move everything to Poland and organize logistics, delivery, after sales, claims, etc., from here. Some functions may be centralized, others must be decentralized. If you want to be flexible and agile, understand and answer the needs or your clients, you must be local. Also, you will not want to do minor adjustments to products in your huge factory, you will want to do it locally. Same for the production of mock-ups and so on.
We offered half a million euros for the assets, we committed to keep 266 employees and to set up a new entity, Nowy Styl-Majencia, with a capital of 10 million euro and debt funding of 9.5 million euro.
What are your objectives for the new Majencia?
With this acquisition, we intend to become the leader in France and sell over 100 million euro as soon as next year. From an organizational point of view, many decisions need to be taken but nothing is decided yet. We are still considering our long-term options and, to tell the truth, we are today focused on the short-term.
The court took its decision on a Thursday afternoon, and Friday the company was ours. The following week, I visited Bressuires, Noyon and Saint Cloud and met the teams. The meetings took place shortly after the last staff was let go by the receiver. The morale of a number of employees was obviously on the low side, and I knew that not everybody was happy to see us around as they would have preferred the company be taken over by a French actor. I told them it was now time for action and that, on our part, we were promising long-term jobs and would do our best and commit all necessary resources and energy to rebuild the company.
Indeed, restarting production and operation is not an easy task. The daily problems are huge. For instance, you have to restart the IT system from scratch because we take over only the assets. But you have in the old system a large number of orders for which we have to ask the clients whether they want. Then you have to migrate the order to the new system with new instructions. Same for the inventory of finished products and components. We also had to rebuild relations with suppliers. Fortunately, many of them were already suppliers of Nowy Styl, and we could sign new contracts rapidly. We have been able to restart production only this last week of June; we now start manufacturing and delivering the first 5 million euro worth of orders which have been reconfirmed.
The other key objective is to rebuild trust with customers. We have already met some of the key accounts. Many of them have a long-lasting relationship with Majencia as a supplier. They understand the situation and are willing and ready to continue working with us as long as we start delivery complete and on time again quickly. The good news is nearly none of them took advantage of the situation to find their way out of the contract they had with Majencia.
How do you see the integration of Majecia in the Nowy Styl Group from a cultural point of view?
Today Nowy Styl is probably the most successful company of its sector in Europe. With the acquisitions of Kusch and Majencia and our double-digit internal growth rate, 2019 group sales should be close to half a billion euros. The reason for our national and international success is that we are a Polish company selling only 10% in Poland. It means we know how to work and deal with different peoples and cultures. Our major strengths are our managerial skills and our company culture. When we hire people, we focus on behavior as much as competencies; we do not look for stars but for customer-oriented people open to cooperation and teamwork. We have always been able to inject these values in the companies which have integrated the group.
I am fairly optimistic in the case of Majencia. First, because in our French Nowy Styl structure we had people hired from Majencia, and they had adapted easily to our culture. Second, because we already started working with the managerial levels, and we see very good feedback. We explain to them our way of working and how they should adapt to be successful.
Several groups of people have already visited our factories and their reactions have been very positive and sometimes, even enthusiastic. We explain to them how we work and at the same time we gain information which will be valuable to redefine our strategy for the French market. Their own French experiences start interfacing with ours, which is a mixture of Dutch, German, Swiss, French, British and, of course, Polish experiences.
What major organizational changes do you envision for 2019-2020?
Many changes will be necessary but, for the time being, nothing is decided. We are presently working on some important subjects. The first one is the way to organize our presence in France: two companies (Nowy-Style Majencia + Nowy Styl France) or one merged company? The idea is to have a structure we can easily explain to customers and also eliminate any risk of bidding against ourselves in large tenders.
As for brands, we have been working for some time on our group branding structure. Majencia comes as one more brand to integrate in our chart.
Decisions on these two major issues should be taken before year end.
From the product perspective, Majencia was already in a process of reduction of its offer. Teams from Majencia, Nowy Styl France and Nowy Styl Poland are already working on a portfolio which will combine products from France and from other units of the group. The idea is also to determine if some group products could be manufactured in France. Product-wise, our strategy is to centralize design and development and decentralize final assembly in order to save on transportation and be more agile on delivery to the final user. The change over to the new collection should be made easier by the fact that Majencia was selling mostly direct, and we shall thus be able to visit directly the clients and explain to them the rationale behind the switch. People-wise it is important for us to rebuild the link and the trust between Majencia and its employees. We must keep the talents and prepare ourselves to be able to attract more of them by demonstrating we are a good company to work for.
As for the distribution system, in the last years Majencia was selling direct. Nowy Styl sells direct and through dealers in all the countries where it operates, and I believe it is the most efficient way. (The) decision is not made, but the model for the French market will, most probably, be direct and indirect.
Finally, we have already decided to discontinue all Design and Build activities as … we had informed the court. The D&B team was too often in competition with some of the local contractors which are also our direct customers. We also suspended the furniture as a service test; I believe the idea is interesting, but the time is not right.
As a conclusion, what is your overall impression after 45 days?
When we bid for Majencia, we had the feeling a unique window was opening: We would never have another opportunity to acquire a company selling 100 million euro in a major European market.
Normally, due diligences last several months. For Majencia, we took the decision fast and were very conscious it would be a risky operation. Because Majencia is now a major strategy for us, we are prepared to spend money, time and energy.
Majencia brings a lot of convinced and dedicated people and a strong customer basis. Nowy Styl brings the know-how and tools of the best company in Europe, business model, ways of working nationally and internationally, ways of sharing knowledge and new developments, design process, IT systems. I am aware ... a lot of effort will be needed, but I am now fairly optimistic we shall turn Majencia around.
Editor's note: In an effort to bring you the most relevant and timely office furniture news from around the world, Business of Furniture occasionally trades content with our friends in the industry. This story originally appeared in Office et Culture magazine.