Management of a company after the acquisition
We only acquire companies in succession situations that are sustainably profitable with EBITs between EUR 3 and 20 million and are leaders in their market niche. The only reason for the sale here is that the shareholders wish to relinquish entrepreneurial responsibility. We are characterized by the fact that we all have many years of operational management experience in medium-sized companies ourselves and present a successor right at the beginning of the sales process, whom the sellers can get to know personally. Successors and new shareholders sit at the table from the first moment, we talk from entrepreneur to entrepreneur, and can thus make decisions quickly and reliably.
As we exclusively invest equity capital of the ARGOS partners, we are independent from other decision makers and can solely focus on the entrepreneurial development of the companies. Unlike private equity companies, which have to sell after a few years due to fund terms, we hold our companies for the long term and have not sold any of our companies since ARGOS was founded in 2001. In contrast to strategic buyers, we secure the independence and identity and thus the life’s work of the sellers.
Many entrepreneurs in succession situations put major investments in digitization topics on hold before handing over the company. Therefore, as new shareholders and successors, we are often confronted with the need to catch up in this area. Nevertheless, digitization should not be an end in itself, but should enable the achievement of specific business goals. Therefore, after a business acquisition, our initial focus is on operational business transition, a deeper understanding of key success factors, and the development of business priorities.
When we talk about digitization in smaller SMEs, we often talk about the provision of key business figures, the optimization of production planning, logistics and customer service, or a better exchange of information with suppliers, sales and field service. However, the prerequisites for digital solution approaches are complete and structured basic data, defined processes and standardized ERP programs, which is usually a major challenge in practice. There is no alternative to laying these foundations in the long term, but it requires energy and patience.
Implementing digitization topics and the corporate goals they pursue therefore usually requires process adjustments and thus changes in individual habits. This should be done with a sense of proportion and sufficient support for the individual. Such change management takes time and often does not serve a quick increase in value of the acquired companies. However, it is essential for sustainable value development, which is in line with ARGOS’ long-term entrepreneurial approach.
Many company results in recent years have been influenced by various external factors such as the Corona crisis, material shortages, raw material and energy price fluctuations, or other effects of the Ukraine war. Depending on the sector and business model, some companies have had to accept considerable burdens on earnings, while others have emerged as winners. While some developments have lasting effects (e.g. energy prices), others are to be classified as one-off special effects (e.g. Corona closures).
Against this background, deriving a sustainable result as a basis for evaluation is not easy and requires significantly more substantive discussions on business development. On the basis of the company’s long-term earnings development, e.g. over the last ten years, we try to identify general trends. Permanent market changes can be confirmed via market and customer interviews. In this way, special effects can be adjusted (upwards and downwards) and a purchase price basis can be derived that is fair and transparent for all parties.
About Frank Herdeg
Frank Herdeg graduated as an industrial engineer from the University of Karlsruhe (TU) and earned an MBA from Union University (New York). He worked for McKinsey in Munich and Boston between 1996 and 2003, and then for three and a half years as sole managing director of Carrier Sütrak, a manufacturer of air conditioning systems for buses.
Since 2006, Mr. Herdeg has been managing director at ARGOS (www.argosinvest.com). Under the leadership of the two shareholders Dr. Hans Peter Maassen and Florian Pape, ARGOS takes over profitable medium-sized companies in a succession situation. After the acquisition, Mr. Herdeg commits himself as successor and managing director on site.
From 2008 to 2013, he was managing director of GALFA, a surface coater in Finsterwalde, where he still supported the introduction of a new ERP system until 2016. Since 2017, he has been managing director at KEBOTHERM in Oschersleben, a full-service provider for windows and doors with installation and service. In addition, Frank Herdeg is an active advisory board member for other investments, e.g. a special logistics service provider in Austria acquired in 2020.