3 questions to smart minds

Entrepreneurs invest in SMEs and stable macro trends

For this 3 questions to Fabian Kröher

Winter­berg Group AG in Zug and Winter­berg Advi­sory GmbH in Grün­wald near Munich
Photo: Fabian Kröher
15. Febru­ary 2023

Invest­ments in mature SMEs and at the same time early-stage compa­nies require a broad spec­trum of compe­ten­cies. The four foun­ding part­ners of Winter­berg Group AG invest in start­ups and at the same time launch thema­tic funds focu­sing on buy and build with SMEs in succes­sion situations.

For this 3 ques­ti­ons to Fabian Kröher, foun­ding part­ner of Winter­berg Group AG in Zug and Winter­berg Advi­sory GmbH in Grün­wald near Munich

1. How did you come to be active in two such diffe­rent invest­ment clas­ses? What is the focus of the Winter­berg Group? Are you also feeling the effects of the past year?

The four foun­ders of Winter­berg Group all come from large manage­ment consul­tancies such as BCG, Bain and Kear­ney. Toge­ther, we first foun­ded our own consul­tancy, which today has about 80 employees at various locations.

Howe­ver, we always wanted to do more than just stand on the side­lines as coaches, so we star­ted inves­t­ing in compa­nies directly and indi­rectly in paral­lel. At some point, our invest­ment busi­ness became so large that we were able to operate our own family office, Winter­berg Group AG. We see oursel­ves as active inves­tors and co-entre­pre­neurs who, through our own expe­ri­ence and with our consul­ting team, are able to provide our port­fo­lio compa­nies with highly effec­tive support. This applies to start­ups, mature SMEs in succes­sion situa­tions and also to many other special situa­tions in the life cycle of a company — by the way, in good times as well as in bad! After all, the day-to-day life of a company is usually not rosy, and great value gains are often achie­ved by maste­ring great chal­lenges! Buy and Build with SMEs in succes­sion situa­tions accounts for by far the largest part of our activities.

We are in the fort­u­nate situa­tion that we were able to restruc­ture more or less our entire port­fo­lio shortly before the two “black swans” of the last 3 years and focu­sed early on topics that are now on everyone’s lips, such as medi­cal tech­no­logy, the circu­lar economy or test­ing services. But of course, we are also feeling the effects of the huge and, unfort­u­na­tely, terri­ble chan­ges that our world has had to expe­ri­ence in recent years; some­ti­mes to the point of heart­brea­king, perso­nal fates in our team. But whether port­fo­lio or team — we conquer every storm toge­ther. And after every storm, the sun always shines again — often surpri­sin­gly quickly and unex­pec­tedly brightly.

2. Each year, you set up at least one fund of appro­xi­m­ately Euro 15–30 million, with which you invest in compa­nies on a topic-speci­fic basis. Why did you choose this approach?

Through these smal­ler funds, we selec­tively take LPs directly into indi­vi­dual buy and build themes. We have thus deli­bera­tely opted for a more unusual, “hybrid” approach between the indus­try-stan­dard “deal-by-deal” or “Euro 100+ million blind pool” models: On the one hand, we would like to have finan­ced the complete buy and build stra­tegy in each case, but on the other hand we do not neces­s­a­rily see abso­lute size as an advan­tage. Our excep­tio­nally high equity stake in the funds allows us to focus on small targets and, in the event of a successful buy and build, to realize maxi­mum multi­ple arbi­trage in addi­tion to growth effects.

At the end of the fund’s life, we have ideally built a group with Euro 5–10 million EBIT from 3–10 indi­vi­dual compa­nies, with profes­sio­nal struc­tures and a strong manage­ment team, which is then attrac­tive for stra­te­gists as well as for larger finan­cial investors.

3. What are your views on impact investing?

We are certainly not clas­sic impact inves­tors, and we take a criti­cal view of many deve­lo­p­ments in this direc­tion, espe­ci­ally when at best only “green­wa­shing” is being done.

Howe­ver, we always focus on strong, consis­tent macro trends without excep­tion. Many of the top macro trends today corre­late with impact inves­t­ing themes. This is exactly where the circle closes for us: We are deeply convin­ced that the abso­lut­ely neces­sary chan­ges towards sustainable manage­ment can only be achie­ved if these solu­ti­ons also work econo­mic­ally! Above all, you can only mobi­lize the back­bone of the German economy, the more than 2.5 million SMEs, which employ well over half of all employees, and which have neither crazy venture capi­ta­lists nor unli­mi­ted oppor­tu­ni­ties on the finan­cial markets, if it pays off for these SMEs! But if that’s the case, you can achieve huge chan­ges — and ulti­m­ately influence value chains world­wide via the export of technology.

So we are quite convin­ced that we are making the world a little better by buil­ding a group of mecha­ni­cal engi­neers in the field of circu­lar economy, from compa­nies that would not have mana­ged the succes­sion of their founder/shareholder/managing direc­tor (in one person) without us. But we still would­n’t call oursel­ves impact inves­tors, as I mentio­ned before.

About Fabian Kröher

Fabian Kröher is Execu­tive Direc­tor and Co-Foun­der at Winter­berg Group AG. He spent 10 years as a consul­tant at Boston Consul­ting in the indus­trial goods sector before start­ing his own busi­ness as a co-foun­der of a consul­ting firm and startup. He sold the startup, Mine­rals Value Service GmbH, to a large Ameri­can media company in 2015, and the consul­tancy Singu­lar Group is still in the port­fo­lio of Winter­berg Group AG. The first startup was to be follo­wed by many other invest­ments, so that Winter­berg has mana­ged a cumu­la­tive total of appro­xi­m­ately 200 million euros in assets to date.

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