Entrepreneurs invest in SMEs and stable macro trends
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.
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.
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.