"We rely on specialists"

Jan-Daniel Neumann, Managing Director at the financial investor Bregal Unternehmerkapital, reports in an interview on what typically changes with the entry into a medium-sized company and what consequences this has for the entrepreneurial confidence.

 

Mr. Neumann, the prices for companies seem to be higher than ever. How do you manage to earn a reasonable return on your investment?

Jan-Daniel Neumann: The entry multiples have been rising for about ten years now. To buy, wait and after a few years to sell at a more expensive price - this has not worked for a long time. Growth is therefore crucial and a roadmap is needed to achieve this.

 

What are the typical elements of such a roadmap?

JDN: First of all, we have to clearly identify the growth markets and the opportunities for a company in them. Often companies lack the necessary capital - or rather the willingness of the shareholder to take higher risks. We then provide the funds because we have a different risk appetite, compared with an entrepreneur who is coming up to retirement and who, above all, wants to preserve his assets.

 

What can capital be more sensibly used for?

JDN: We often see unused growth opportunities in the international field. If the vehicle OEM expects the supplier to open his own production in China or the USA, this requires a higher investment. But if the entrepreneur does not have the necessary experience in the market, the risk quickly seems too high.

 

But you have the experience with Bregal?

JDN: Actually, there is hardly any investment managers in our company who have not been abroad before. I myself lived in China for a long time. However, that is not the decisive factor. We rely on specialists who have the relevant experience. To this end, we have built up our own database, which currently consists of around 2,000 tried and tested specialists. We also work together with personnel consultants and a network of experts. This enables us to bring in the right managers who fit the job. Thematically, we are very broadly based, but we also leave some industries alone if we do not have the relevant know-how in stock, for example, Biotech.

 

Do you then place these specialists directly in the company?

JDN: This depends on how it helps to best realize the roadmap. In some cases this can be an advisory board role, in many others a direct operative function in the first or second hierarchy level. But in many companies the situation was like this before: the entrepreneur has made a lot of the decisions and has combined functions within his position. There is rarely a strong Finance department, since the Managing Partner knows his company inside out and there is usually no single successor who can fulfil all these tasks and roles, particularly at the beginning. That's why we bring in the right people. We always fill the position of the Head of Finance because as a rule, he also knows exactly what information is important for the implementation of the roadmap.

 

Are you also changing the processes and structures in teh company?

JDN: First of all we analyse the existing corporate culture. Ideally we build on it. If we did not change anything, we would not be doing our job well. But we also know that changes have to be closely monitored. Together with a personnel consultancy we have developed appropriate training modules; this can go as far as individual coaching.

 

What about the entrepreneurial trusts, the law firms that have worked with the shareholder in a trustworthy manner until now and often know the company almost as well? They are outside the company and yet can have a great influence on its success.

JDN: We are aware of that. It already starts with the sale. We advise every entrepreneur to have a competent corporate lawyer at his side who knows M&A processes. A participation by a financial investor is a complex matter. Whoever does not know what the contractual standard is will only cause unrest and, in case of doubt, give his client the wrong advice. We advise entrepreneurs who "only" have a house lawyer: "Take a specialist on board. We actually only recommend boutiques. These are often former employees of large law firms, but they prefer fast, lean structures. There is also no risk that they will permanently dispute the in-house lawyer's mandate.

 

What about tax consultants and auditors? They may lack the relevant know-how, especially for the planned internationalization.

JDN: The tax consultant usually played a major role in the company - he was often the quasi financial department. He should continue to work for the company; despite all changes, continuity is helpful in this position. Of course, a medium-sized regional law firm does not always have the necessary know-how, for example for China, but then we call in a local law firm for this, which works well.

 

Source: Die Unternehmervertrauten
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