Digital workout for German SMEs
Europe seems to have survived the worst of the Corona pandemic for the time being. But economic uncertainty remains high. This is also reflected in the investment strategy of financial investors. On the one hand, sellers’ valuation ideas often do not yet reflect the individual opportunity and risk situation. On the other hand, it will now be crucial to finally create the necessary infrastructure and the right mindset for digitization and innovation in future-proof technologies and services. What SMEs need now is a workout program for sustainable digitization.
Industry segmentation is the be-all and end-all if you want to make a statement about the current status. We do not necessarily expect a rapid recovery in some sectors — the medium-term effects of the Corona crisis on many companies will only become visible slowly. Especially tourism and gastronomy start delayed. Whether customer habits change will only be seen later. Capital goods and automotive are very much dependent on the future assessments of unsettled entrepreneurs and consumers. It is not yet possible to say where this will level off. However, even before Corona, we were cautious about cyclicals and disrupted sectors. Thus, we are dealing here with a catalyst for a development that has long since begun. The companies that are most attractive to investors are those that can quickly adapt their business to the “new normal” and profit from it. These are not always as obvious as Amazon and Zoom. German SMEs have a lot to offer here in terms of small, innovative companies.
The right lever is to invest now in innovation and infrastructure for digitization. The highly flexible and individual structures of German SMEs in particular have the best prerequisites for this. The equity provided by a long-term thinking SME financier is the appropriate lubricant for this. Short-term thinking by investment bankers will not be a solution that works here. It does not make sense to separate development and production due to economic pressure from Corona and labor cost advantages quickly calculated on the excel sheet. In order to keep process innovation and the associated know-how and training in the German SME sector, production must also be local. This will only be possible through increasing automation. Companies that offer products and services for this purpose are promising investment opportunities.
About VR Equitypartner
VR Equitypartner is one of the leading equity financiers in Germany, Austria and Switzerland. The company supports medium-sized family businesses in a goal-oriented manner and with decades of experience in the strategic solution of complex financing issues. Investment opportunities include growth and expansion financing, corporate succession or shareholder changes. VR Equitypartner offers majority and minority investments as well as mezzanine financing. As a subsidiary of DZ BANK, the central institution of the cooperative banks in Germany, VR Equitypartner consistently puts the sustainability of corporate development ahead of short-term exit thinking. VR Equitypartner’s portfolio currently comprises around 100 commitments with an investment volume of EUR 500 million. For more information, visit www.vrep.de.