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There were similar findings regarding the positive
and negative changes triggered by the buyout.
There were more positive than negative aspects.
The latter covered a wide range (see chart
on next page). There do not seem to be any typical
private-equity-induced changes but rather
only company-specific changes. Again, strategic
gains are valued higher than technical improvements
in the financing department or the enhancement
of processes.
This positive image is confirmed by the fact that
eight entrepreneurs said that the buyout had not
resulted in any negative changes (see chart on
next page).
Benefits and drawbacks are often two sides of
the same medal. One interviewee complained
about exaggerated reporting requirements and
the tendency of his investor to supervise him.
On the other hand he considered it to be an improvement
that he was much better informed
Did your investor keep these promises?
12
No promises
were made
4
Partially
1
No
1
n=13 Source: FINANCE Research
Yes
7
about his company’s strengths and weaknesses,
risks and opportunities, because of the many
analyses and key performance indicators he had
been forced to work with.
Another entrepreneur welcomed the fact that
the buyout had enabled him to pursue the
growth strategy of his company more aggressively.
At the same time he criticised the general
attitude of financial sponsors, who are never satisfied
and always want to see higher returns
when the company performs according to plan.
Overall, positive responses dominate the picture.
Nine interviewees believed that the numerous
positively assessed changes in strategy,
organisation, and process management (see section
“Decision-making process”) would not have
been implemented without a buyout or would
have been implemented significantly later. Only
one company would have initiated the same
changes if the buyout had not taken place.
From the management’s perspective these
changes also include the fact that they are now
better able to focus on issues that directly add
value to the company. Internal communication
was named most often, especially with the middle
management, followed by due diligence
processes of M&A targets (see chart on next
page). Furthermore, the management teams
welcomed the fact that they had more time to
communicate with customers, to bring in new
business and to focus on new technologies and
products. Three managers disapproved of the
fact that they now have to spend more time on
reporting. They also criticised that financing issues
and the monitoring of external consultants
are very time-consuming.
FINANCE Studies | Private Equity in Mittelstand Companies