Carve outs are booming

Hypax has recei­ved capi­tal commit­ments of EUR 120 million for Euro­pean Invest­ment Deve­lo­p­ment GmbH und Co. KG, which focu­ses on complex corpo­rate carve-outs. This shows that inves­tors are reco­gni­zing the struc­tu­ral change in the market: many corpo­ra­tes are under pres­sure to focus their port­fo­lios — be it due to geopo­li­ti­cal uncer­tainty, tech­no­lo­gi­cal uphe­aval or return expec­ta­ti­ons of the capi­tal markets. 

Carve-outs are ther­e­fore not a niche topic, but an active stra­te­gic tool.

For us as a carve-out specia­list, now is the ideal time because we invest speci­fi­cally in situa­tions where tradi­tio­nal inves­tors are often reluc­tant — for exam­ple due to comple­xity or speed. Thanks to our opera­tio­nal exper­tise, we can not only finance such tran­sac­tions, but also imple­ment them quickly and relia­bly. For us, this is not a tempo­rary oppor­tu­nity, but a segment with long-term rele­vance and a strong struc­tu­ral tailwind. 

The chal­lenges are high on both sides, but they usually start with the seller: there is often a lack of compre­hen­sive, forward-looking sepa­ra­tion plan­ning. Many compa­nies unde­re­sti­mate how profoundly a carve-out affects almost all areas of a company — from legal struc­tu­ring to IT, insu­rance, HR, finan­cing, IP rights, accoun­ting, gover­nance and tax issues. This leads to uncer­tain­ties, delays and, in the worst case, deal break-offs. 

On the buyer’s side, the risk lies in overe­sti­mat­ing the actual feasi­bi­lity of a carve-out — or plan­ning opera­tio­nal syner­gies too early. It is important to note that you are not buying a fully inte­gra­ted busi­ness unit, but a cons­truct that must first be made inde­pen­dent — inclu­ding new IT infra­struc­ture, finan­cial systems, contracts, employee reten­tion and market posi­tio­ning. Anyone acting with a “buy-and-forget” menta­lity risks losing value. 

Our approach is based on part­ner­ship with the manage­ment. As a rule, the manage­ment team of the spun-off company remains on board — it knows the busi­ness, the custo­mers and the opera­tio­nal proces­ses. We supple­ment this team with expe­ri­en­ced experts in areas such as finance, opera­ti­ons, IT or supply chain in order to ensure inde­pen­dence from day one. We do not see oursel­ves as control­lers, but as entre­pre­neu­rial spar­ring part­ners at eye level, combi­ning stra­tegy, imple­men­ta­tion exper­tise and capital. 

Carve-outs do not follow a stan­dard model — which makes it all the more important to have a clear struc­ture in the sepa­ra­tion: gover­nance, proces­ses, compli­ance and finan­cial report­ing must be rede­fi­ned and func­tion inde­pendently. We provide a tried and tested setup for this — prag­ma­tic but struc­tu­red — which we adapt flexi­bly to the respec­tive situation. 

Now that the company has been stabi­li­zed, the medium to long-term goal is to achieve sustainable value growth. In addi­tion to growth — for exam­ple through inter­na­tio­na­liza­tion or targe­ted acqui­si­ti­ons — this also includes impro­ving opera­tio­nal effi­ci­ency. We analyze poten­tial for opti­mi­zing cost struc­tures, redu­cing capi­tal commit­ment and realig­ning the finan­cing struc­ture. New invest­ments and digi­ta­liza­tion also play an important role here. Our goal is to create an econo­mic­ally robust, focu­sed and compe­ti­tive company with a sustainable posi­tion in the market. For us, the exit is not a short-term goal, but the result of successful deve­lo­p­ment work. 

Phil­ipp Sterkel

Phil­ipp Ster­kel is Mana­ging Part­ner at Hypax, an invest­ment company based in Berlin and London that specia­li­zes in corpo­rate carve-outs.

Prior to joining Hypax, Mr. Ster­kel was an Invest­ment Direc­tor at CMP Capi­tal Manage­ment-Part­ners in Berlin and a Prin­ci­pal at Aure­lius in Munich. Mr. Ster­kel star­ted his career in M&A at J.P. Morgan Cazen­ove in London. He studied at the Univer­sity of Mann­heim and ESCP-EAP. 

contact@hypax.com