Interview – Bruno Charnay, SFEL

DEALCOCKPIT: Can you introduce yourself? 

Bruno Charnay: I am Bruno Charnay, 52 years old. I bought a company that manufactures lighting equipment and fixtures for the tertiary sector and industry 20 years ago. I was approached by Lighting Développement, a group that also works in lighting and that wanted to grow externally, which is a very strong trend in today's market. I subsequently sold SFEL after a process that took almost a year. 

DC: Could you take us back over the development and history of the group you established? 

Bruno C.: In 2003, I bought an initial industrial structure in the lighting sector with an iconic brand dating back to 1928, called GAL Éclairage, which at the time was purely a distribution business. In 2004, I took over SFEL, a factory that had been a subcontractor to this first structure. I am an engineer by training and my father is an industrialist, and we took over these structures together at the time. The early days were difficult. We invested money in both companies, but nothing much happened until, after two or three years, we finally started to get our heads above water. The two companies then developed in an interesting and linear way. Arriving in 2013, we found ourselves with a team of around fifty people and a solid profitability, as well as a revenue that had multiplied. 

DC: What have been the most impactful innovations in your industry? 

Bruno C.: The arrival of LED technology was a real technological breakthrough, not so much in terms of manufacturing, but in an economic respect. A large proportion of the manufacturing that was still done locally at the time – by which I mean the extended European area – was relocated to Asia, which put a big brake on many structures, depending on how they were positioned. 

DC: What was the main impact of this on your company? 

Bruno C.: In 2019, I had to close the first company I bought, namely the distribution company, because we were distributing mainly European products and the market had disappeared. It was also difficult for the manufacturing plant, because we were systematically too expensive with the products we were making, which had previously enabled us to develop rather well.  
However, the crisis gave us the opportunity to work with a number of major accounts, notably the RATP (Parisian public transport company), with whom we continue to work very closely. The RATP used to work with Philips, but when Philips closed all its factories in France to manufacture in Asia, they found themselves without a supplier. They thus approached us after we responded to their call for tenders, which enabled SFEL to take a leading position in the market. We were making relatively generic products at the time, but they were developing well because the market was growing. 

DC: Have there been other times of crisis? 

Bruno C.: We were faced with two difficult years due to the COVID-19 period, which aggravated the main crisis of raw materials and LEDs. As there were numerous crises at the same time, this turned out to be a particularly difficult period. 

DC: How did you get yourself out of it? 

Bruno C.: We secured four or five contracts with RATP, including the whole of the Metro line 4, a contract worth several million Euros. Thanks to this contract and other opportunities, we were able to record a very good year. Two years ago, we therefore started to regain revenue as well as a healthy profitability. Last year was exceptional, since 50% of our turnover came from RATP. It wasn't easy, but ultimately, it allowed us to make ends meet, if not thrive. 

DC: What were the other opportunities? 

Bruno C.: In a similar development, we have been included in the technical reference systems for nuclear power plants over the last year or two, where there are around 20,000 lighting fixtures. With the end of fluorescent tube technology, these facilities are obliged to replace their existing installations, which represents a considerable market.  
The latest major players are the Paris airports, in particular Roissy and Orly, which issued a call for tenders for European solutions. They selected eight manufacturers, which included us, because we were beginning to gain increasing recognition in the market. There were a number of international manufacturers like Philips and three smaller players, two of which were selected, including ourselves. We therefore bounced back partly thanks to these major accounts. I wonder what we would have become without the RATP, for example.   
The second powerhouse is everything to do with the circular economy. There are very few factories in France, and we are well structured, proper, and organised – we are part of something that's rare these days, which is why I have had several enquiries from people who wanted to buy the plant. 

DC: The right opportunities at the right time. However, the success of a company is not achieved by chance. Wouldn't you say that your perseverance as a manager played an equally important role? 

Bruno C.: Yes, it was also a willingness on my part to relieve the tension and to support this company for 20 years despite the ups and downs of the market. I am thinking of the LED crisis, which was one of the things that was particularly difficult to deal with personally.   
More precisely, I had planned to sell three years ago. It did not happen, because the balance sheets weren't good at the time. I knew that they would improve in the future - which has been confirmed - thanks to the orders from the RATP, but unfortunately, financiers do not commit based on promises. This time around, it was no longer a question of promises, there was finally some concrete substance. One of the people who was interested 3 years ago came knocking at the door again last year, still wanting to buy. Very interested in SFEL, and reassured by our exceptional year and the improvement in our balance sheets, we managed to reach an agreement. 

DC: Apart from the LED crisis, your sector has also faced a number of challenges in terms of legislation and ecological context. In concrete terms, how have you tackled these challenges? 

Bruno C.: As far as legislation is concerned, there is not much we can do other than follow suit. We have done as we did before with the rise of other technologies. As far as the ecological aspect is concerned, we are trying to discuss and join forces with the few existing French manufacturers to make the case that it is more virtuous to manufacture in France than to import cheap, lightweight products from Asia, which may well be of decent quality, but which have a very high carbon impact. The big disadvantage of these lights is not so much transport, which has a negligible impact in terms of CO2. The 20,000 kilometres by boat between China and Brest are insignificant, especially compared to the combined transport between the factory in China and the port in China, then between Le Havre, the port in France, the logistics platform and finally the customer. That's three overland journeys, whereas we only have one, because we manufacture almost in the centre of France, so we only need one journey to reach our customers. 
But the real carbon impact of a lighting fixture comes primarily from its electricity consumption. Since we all use more or less the same LEDs and the same fixtures, we all achieve similar efficiencies, which makes it impossible to significantly reduce the carbon footprint at this level. This makes it difficult to promote the virtue of manufacturing in France.  
RATP is an example of a company committed to a genuine approach of circular economy and maintainability. 

DC: How do you differentiate yourselves?  

Bruno C.: For us, there are two ways of standing out as a French manufacturer: maintainability and end-of-life of the products. What sets us apart is the repairability of our products, as well as their end-of-life management, which is a really important issue for me. If we want a circular economy, we need to create the circle. We therefore offer our customers the chance to return fixtures to us at the end of their life, because we know how to recycle them.  
At the moment, we all content ourselves with the fact that we pay eco-taxes on the assumption that everything is recycled. In reality, the organisations responsible for recycling face many challenges. Imagine a light fitting that arrives on the recycling conveyor belt; it finds itself between a mixer, an electric razor, and a toaster. The shredding process does not allow materials such as gold, silver or even plastics to be recovered efficiently. The plastics used in LEDs cannot be recycled because of their density and technical constraints. As a result, they are burnt. At best, a little aluminium and steel is recovered. 
What I am proposing is to improve this process. If we send the lights to an ESAT (Establishment and Service for Help through Work), they can dismantle them. This would enable us to recover the materials without crushing or burning them, and reuse them to make new lights. It is a much more virtuous approach that I firmly believe in, and one that seems to me to be the obvious way forward. The fact is, only local actors like us can make this a reality.  

DC: What is the social and societal aspect in this approach? 

Bruno C.: We have joined forces with other French manufacturers around a research consultancy, namely Utopies, which carries out a study to determine the economic and social impact of our activities. We hope and believe that there is a growing number of players who are sensitive to these issues. Unlike an importer who only employs sales people, our process is more complex and requires more staff. By promoting local businesses, we create jobs in these local structures, which stimulates economic development. So paying a little more for locally produced lighting - or other products - has a double positive effect: economic and social.   

DC: Selling a business requires strong internal communication, particularly to prepare the team you have assembled for what is to come. How did you announce the sale? 

Bruno C.: I imagine this is always a difficult moment for anyone selling their business. At least it was for me. When you devote 20 years of your life to a company, it is a milestone that obviously evokes emotions when it comes to an end. It's a sort of mourning process. As far as the staff were concerned, I thought it was going to be very complicated to announce, but in the end it went a lot better than I thought it would. 
Obviously, we never really welcome change, which I understand perfectly, because the first instinct when heading towards the unknown is to resist it.   

DC: Of course. On the other hand, were they not reassured by the fact that a takeover could also ensure the long-term future of the business? 

Bruno C.: It is difficult to be completely reassured because there are always promises being made in takeovers, but you never truly know where things are going. My vision, and what I appreciated, was that there was a good synergy and a real desire to develop the site, which is quite a pleasant observation as a seller and for the people with whom I worked for 20 years. That was the sentiment I conveyed to my teams, but some people had had bad experiences, which can give rise to concerns and which in turn also provoked harsh reactions. I understand this quite well, which is why I reassured them as much as I could, telling them that there was a lot of potential and possibilities. For them, this remains to be confirmed, of course. 

DC: I imagine it is reassuring for your staff that you will still be there for a while? 

Bruno C.: It is. In fact, I am staying on as a part-time employee of the group, which was part of the negotiation. My 20 years' experience in the field and my contacts are an important resource, and for Lighting Développement it was essential that I stay on. 
Furthermore, I am also reinvesting in the group. Having a considerable part of 20% of the amount reinvested in the group was one of the factors that allowed us to reach an agreement. 

DC: For this handover, you chose to work with DealCockpit and we would like to thank you for that. How did you come to this decision? 

Bruno C.: The dataroom very quickly became an obvious choice, as it enabled us to exchange information very efficiently. I had initially planned to close it after three months, at the end of the audit, but in the end I kept it until the deal was signed, for two main reasons: firstly, as soon as we really started to make progress, particularly with my lawyers whom I had hired at the last minute, it was very practical to have all the important elements centralised in a dataroom and to be able to add to them gradually.  
Secondly, what I hadn't realised before was that the dataroom enabled me to manage several proposals. You never know whether the transaction will go through - until it is signed, nothing is definitive. If it does not go ahead, you can keep the dataroom open and it will be ready for the next opportunity. Of course, it is an investment, but it is for these two reasons that I have kept the dataroom open until the deal was signed. 

DC: As, like you, we are a French and local business, we would like to thank you for using us in this transfer. Do you have any final advice for sellers? 

Bruno C.: It is an adventure that you do not expect. I certainly was not expecting the length, the complexity of the operation and all the emotional work involved. So, my advice is to take your time. As long as it's not signed, it's not final; a handover requires patience.