FIN A N CE - Deutsche Beteiligungs AG

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2. Retrospective assessment The concluding opinions of the interviewed management teams regarding their buyouts were complex. Almost every company underwent a number of changes that were implemented after the buy-out and received comprehensive support by the financial sponsor. The management teams found strategic input on corporate strategy especially helpful. This included strategy sparring during which the management teams could discuss and promote ideas easily and quickly. They also appreciated the transfer of know-how and methods from the financial sponsor’s network, which is often used to disseminate knowledge gained in existing portfolio companies to the newly acquired portfolio companies. In many cases financial sponsors suggested the use of external consultants with whom they had successfully worked before. One entrepreneur welcomed the fact that the investor’s network opened up resources for special projects which the company was unable to supply. Furthermore, the management teams wel- 10 comed support in M&A transactions, especially with regard to enterprise valuations and due diligence processes. Only one entrepreneur did not regard any of the suggestions or the support offered as helpful. He explained that the investor knew far too little about his market and his business to contribute in a constructive way. This is also the most often raised complaint. Five entrepreneurs complained that their investors brought up too many useless ideas or suggestions (especially regarding potential M&A targets or improvements in business operations), which only kept the management teams from doing their job since they had to provide comprehensive justifications for disapproving of these ideas in some cases. What type of support from your financial sponsor do you regard as helpful? (Several answers possible) Input regarding strategy, management issues, public relations etc. 6 Access to the financial sponsor’s network, transfer of methods M&A support/due diligence Backing, quick decision making Support regarding financing issues 1 None 1 Political contacts 1 Coaching in capital markets issues 1 n=13 Source: FINANCE Research 3 FINANCE Studies | Private Equity in Mittelstand Companies 4 4
What type of support from your financial sponsor do you consider to be obstructive? (Several answers possible) None 6 Too many useless suggestions or ideas 5 Tendency to supervise management 2 Exaggerated focus on financing issues 1 Leverage 1 External consultants creating overly high costs 1 n=13 Source: FINANCE Research “Shareholders are generally difficult.” Two managers felt they were being supervised by their financial sponsor. One complained that his investor’s focus on financing issues blocked a clear view on business operations and strategic questions. One criticised an (in his view) overly high leverage. While many managers had an ambivalent relationship regarding the external consultants favoured by their investors, one entrepreneur clearly opposed consultants. He said that external consultants merely created costs and limited management capacities, because the management was forced to continuously supervise them. In addition, they were of limited use, because their analyses were directed primarily at the private equity company. Overall, the management teams were content with their financial sponsor’s support. This also applies to the promises that had initially been made by their new shareholders (see table). Seven out of nine interviewees, who had FINANCE Studies | Private Equity in Mittelstand Companies received specific guarantees, confirmed that these guarantees had been fulfilled. Only one was disappointed by the reliability of his financial sponsor. What promises did your financial sponsor make during the buyout process? (Several answers possible) None 4 Support with expansion/M&A 4 Support with financing issues 3 External consultants can be recruited any time 2 Full backing of the management strategy 1 Access to the investor’s network 1 Future IPO 1 No interventions with business operations 1 High appreciation for the company 1 “Handsales” can be trusted 1 n=13 Source: FINANCE Research 11
Page 1 and 2: FINANCE Studies Private Equity in M
Page 3 and 4: Content I Executive summary 4 II Th
Page 5 and 6: Cooperation between management team
Page 7 and 8: II Study results 1. The interviewee
Page 9: Shareholders before the buy-out Ent
Page 13 and 14: Three entrepreneurs welcome the fac
Page 15 and 16: Would the changes have been impleme
Page 17 and 18: They are constantly screening M&A m
Page 19 and 20: not confirmed by the interviewees.
Page 21 and 22: Date of the Date of Secondary Previ

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