3 questions to smart minds
Photo: Andi Klein

Further development of small and mid caps by the investor

For this 3 questions to Andi Klein

Mana­ging Part­ner at Triton Partners
Photo: Andi Klein
20. April 2021

The tradi­tio­nal small & mid cap segment includes many compa­nies with high inno­va­tion poten­tial. Howe­ver, there is often a lack of know-how or a strin­gent stra­tegy to imple­ment inno­va­tions or possi­ble digi­tiza­tion opti­ons. In this context, inves­tors can make a signi­fi­cant and effi­ci­ency-driven contri­bu­tion and signi­fi­cantly deve­lop compa­nies in a short period of time.

For this 3 ques­ti­ons to Andi Klein, Mana­ging Part­ner and Head of TSM at Triton Part­ners in Frank­furt am Main, Germany

1. In which small and medium-sized compa­nies do you see the grea­test poten­tial for profes­sio­na­liza­tion? Where the need?

Within our SME fund, we focus on profes­sio­na­liza­tion, expan­sion and digi­tiza­tion. Many of our invest­ments are clas­sic succes­sor compa­nies or compa­nies that are still mana­ged by the foun­ders and have grown consis­t­ently over the years. It is often the case that the exis­ting struc­tures and proces­ses are not suffi­ci­ent for what has been achie­ved and, above all, for further and acce­le­ra­ted growth, and that adjus­t­ments are necessary.

These adjus­t­ments include both stra­te­gic and opera­tio­nal issues:
One exam­ple is how to gene­rate further growth without losing control. What about your own inno­va­tive strength? What markets can a company tap into? What manage­ment and control struc­tures are needed without rest­ric­ting flexi­bi­lity and crea­ti­vity on the ground? Many entre­pre­neurs or mid-sized mana­gers are also inex­pe­ri­en­ced and ther­e­fore reluc­tant to grow inor­ga­ni­cally and make acqui­si­ti­ons, whether in their home market or internationally.

In addi­tion to the topic of M&A, the profes­sio­na­liza­tion of opera­tio­nal proces­ses, for exam­ple through digi­tiza­tion, also plays an essen­tial role in the topics of effi­ci­ency and growth. In gene­ral, our indus­try exper­tise, our many years of expe­ri­ence in deve­lo­ping compa­nies and our inter­na­tio­nal presence enable us to create added value: both for the entre­pre­neurs, who usually remain inves­ted, and for our investors.

2. The topic of digi­tiza­tion is on the minds of virtually all compa­nies. Where do you or Triton come in on this topic? What contri­bu­tion can you make?

At Triton, we have a group of experts who deal exclu­si­vely with the topic of digi­tiza­tion. The poten­tial that can be unlo­cked through digi­tiza­tion is immense for all compa­nies in our focus sectors — services, indus­try, health­care and consu­mer goods. The spec­trum ranges from the auto­ma­tion of inter­nal proces­ses such as online tende­ring in purcha­sing manage­ment to online marke­ting and the deve­lo­p­ment of new appli­ca­ti­ons for a wide variety of needs. This can be an app that signi­fi­cantly simpli­fies the daily routine for field staff. For exam­ple, a fitter can call up his daily sche­dule via app and also order a spare part directly from the custo­mer online.

Another exam­ple is health­care: Our invest­ment Meine Radio­lo­gie Holding trans­mits MRI images and analy­ses directly from the radio­lo­gist to the ortho­pe­dist or gene­ral prac­ti­tio­ner, secu­red by a code. This ensu­res that both physi­ci­ans can discuss the findings and further treat­ment at the same time — even in the presence of the pati­ent — either directly or later. This is conve­ni­ent for the pati­ent, who does not have to trans­port a CD around, and above all saves time and unneces­sary effort. Seriously, my son does­n’t know any CDs anymore. Nevert­hel­ess, the majo­rity of data trans­ports here still run like this. We are chan­ging that, we are pioneers.

We also regu­larly work with various specia­lists for speci­fic digi­tiza­tion topics, who are then mana­ged by us in a focu­sed manner.

3. In which sectors do you see the grea­test oppor­tu­ni­ties for deve­lo­p­ment in the future? Are there geogra­phi­cal diffe­ren­ces in Europe here?

As alre­ady mentio­ned, the poten­tial is basi­cally there for all compa­nies and is also very large. If we look at health­care, the Nordic count­ries are often further ahead in digi­tiza­tion. The pande­mic has also shown that Germany needs to catch up. When it comes to digi­tal initia­ti­ves (online prescrip­tion, appoint­ment booking, online diagno­sis, etc.), Finland, for exam­ple, is much further ahead. We are very fami­liar with these issues, as the largest private health­care provi­der was part of Triton’s port­fo­lio — here again it pays off that we as a Mittel­stand fund act inde­pendently but within the Triton Verbund.

Perhaps the direct compa­ri­son to our neigh­bors to the north is limp due to diffe­ren­ces in health care. Nevert­hel­ess, digi­tiza­tion also makes things easier in this coun­try, both for doctors and pati­ents, as the exam­ple of Meine Radio­lo­gie Holding just mentio­ned shows.

As far as inter­na­tio­nal growth is concer­ned, we often see natio­nal cham­pi­ons, espe­ci­ally in Germany, who have achie­ved a top posi­tion through great products and great service — but have not tack­led the issue of internationalization.

A good exam­ple of this is our port­fo­lio company Inwerk, where the two foun­ders have placed their trust in us: Inwerk is the German online market leader for office furnis­hing solu­ti­ons, with great value for money products of its own, with top design and has won seve­ral awards, most recently the pres­ti­gious iF DESIGN AWARD in gold. The bottom line is that Inwerk is still a purely German company today. Here, we are curr­ently working toge­ther on inter­na­tio­na­liza­tion and further growth concepts — and adap­ting the orga­niza­tion to further, acce­le­ra­ted growth. We have a lot of expe­ri­ence in this area through our own orga­niza­tion and our network. For the compa­nies, this often means brea­king new ground, but it’s incre­di­bly fun when things really get rolling after joint hard, inten­sive work.

About Andi Klein

Andi Klein

is Mana­ging Part­ner and heads the Mittel­stand funds at Triton. Prior to joining Triton in 2009, he held various leader­ship posi­ti­ons at Proc­ter & Gamble in Germany, Switz­er­land, Belgium and the United States for eleven years. His entre­pre­neu­rial self-image coupled with Triton’s more than 20 years of expe­ri­ence in the small and medium-sized company segment led to the launch of the successful Triton Mittelstandsfonds.

About Triton

Since its foun­ding in 1997, Triton has laun­ched ten funds and focu­sed on compa­nies in the indus­trial, services, consu­mer goods and health­care sectors.

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