3 questions to smart minds

Convince entrepreneurs who have not yet cooperated with private equity investors

For this 3 questions to Daniel Fischer

Montagu Private Equity
Photo: Daniel Fischer
22. Septem­ber 2022

The path to the right inves­tor can be a long one for SMEs — and some­ti­mes a rocky one. Howe­ver, they are in the best posi­tion when entre­pre­neurs have pene­tra­ted their company down to the last detail and have done their homework.

For this 3 ques­ti­ons to Daniel Fischer, Direc­tor at Montagu Private Equity

1. What DNA does a private equity team need to locate and acquire compa­nies that were previously owner-opera­ted or family-owned?

Such “prima­ries” — i.e. primary tran­sac­tions in which an inves­tor takes a stake in a company for the first time — require good intui­tion, a network built up over many deca­des with deep know­ledge of the respec­tive indus­try and, not least, pati­ence and meti­cu­lous work. Montagu has its own team for this purpose, which often spends years in discus­sion with the owners of a company or divi­sion before the decis­ion to invest or sell is made. In each of our target indus­tries, we know the few truly top compa­nies and main­tain cont­act with them so that when one of them “hits the market,” we can quickly submit an adequate offer. Above all, this means that, based on our know­ledge of the company and the sector, we can also imme­dia­tely present a convin­cing invest­ment thesis and a viable concept of how we intend to successfully deve­lop the company in the years that follow.

Foun­ders and owners who run their compa­nies them­sel­ves are natu­rally concer­ned that their life’s work should be in good hands and that their employees should have successful pros­pects. But corpo­rate groups also attach great importance to the posi­tive further deve­lo­p­ment of spun-off units. We have been addres­sing this concern for many years with our carve-out exper­tise: since 2002, we have carried out 28 such tran­sac­tions and, as a result, have again signi­fi­cantly expan­ded our exper­tise in this field in recent years.

2. They invest prima­rily in health­care topics and service tech­no­lo­gies. What is your focus in the area of health?

We like tech­no­logy-based and “indis­pensable” busi­ness models, such as provi­ders of services or outsour­ced proces­ses that are essen­tial for the successful busi­ness opera­ti­ons of their custo­mers. That’s a very broad spec­trum. For exam­ple, until recently we were invol­ved in a service provi­der for billing medi­cal services to payers in Germany. RTI Surgi­cal is one of the world’s leading surgi­cal implant compa­nies, offe­ring physi­ci­ans and their pati­ents a broad port­fo­lio of biolo­gi­cal solu­ti­ons as well as implants made of synthe­tic materials.

Or take Arko­pharma, a company we acqui­red from family owner­ship in 2014. We sold the French market leader for natu­ral medi­ci­nes to the German Derm­a­ph­arm Group just a few weeks ago. The use of tech­no­logy is another very important aspect. Our port­fo­lio includes examp­les such as Nemera’s networked medi­ca­tion dispen­sing systems, smart surgi­cal instru­ments at Intech Medi­cal, and Main­care, a soft­ware provi­der for elec­tro­nic pati­ent records.

3. How does Montagu support port­fo­lio compa­nies in growth and development?

We help them to deve­lop a stra­te­gic busi­ness plan for further growth, but also to imple­ment it opera­tio­nally. In our expe­ri­ence, there are seven key levers for growth: sales opti­miza­tion, invest­ment in new products and services, geogra­phic expan­sion, tech­no­lo­giza­tion and digi­tiza­tion, opti­miza­tion of opera­ting proces­ses, the acqui­si­tion of compe­ti­tors or market play­ers with comple­men­tary busi­nesses, and carve-outs. We have exten­sive exper­tise and expe­ri­ence in all of these fields. Working closely with the respec­tive manage­ment teams, who contri­bute their indus­try expe­ri­ence and vision for the company’s future, we support the compa­nies through experts and our network, among other things. Carve-outs, i.e. the spin-off of a busi­ness unit into an inde­pen­dent company, are a parti­cu­larly inte­res­t­ing case. If such a divi­sion suddenly recei­ves full atten­tion, is no longer in compe­ti­tion with other busi­ness units for resour­ces, and has an inde­pen­dent, moti­va­ted manage­ment, it often opens up comple­tely diffe­rent poten­tial than within a corpo­rate struc­ture. Univer­sal Invest­ment is a vivid exam­ple of this. As part of two banking houses, this was a successful and profi­ta­ble busi­ness. But since its acqui­si­tion by Montagu, Univer­sal Invest­ment has become the abso­lute market leader for fund admi­nis­tra­tion and asset manage­ment services for funds in Germany and Luxem­bourg, growing by around 15 percent every year.

About Daniel Fischer

Daniel is a member of the invest­ment team based in Frank­furt and respon­si­ble for the DACH region. He joined Montagu in 2013 after working for 6 years at 3i in Frank­furt and London. Prior to that, he worked at Clay­ton, Dubi­lier & Rice and Morgan Stan­ley. Daniel holds a master’s degree in busi­ness admi­nis­tra­tion from the Univer­sity of Frank­furt and an MBA from the Univer­sity of Iowa.

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