3 questions to smart minds

Private investors seek advice on direct investments

For this 3 questions to Peter Beusch

Pesca Equity Part­ners in Munich
Photo: Peter Beusch
9. April 2019

Private inves­tors and asset mana­gers are incre­asingly looking for oppor­tu­ni­ties to enter into entre­pre­neu­rial invest­ments directly. A number of them also want to actively accom­pany the further deve­lo­p­ment of a direct invest­ment. Specia­lists offer advice, due dili­gence and access to inves­tors and their networks, not least active support in the deve­lo­p­ment of companies.

For this 3 ques­ti­ons to Peter Beusch, Mana­ging Part­ner, Pesca Equity Part­ners in Munich

1. What prompted you to offer this speci­fic advice? When was Pesca Equity Part­ners founded?

We foun­ded Pesca in 2012 and have been active with it for 7 years now. At the time, we wanted to diffe­ren­tiate oursel­ves from the exis­ting clas­sic fund struc­tures with an entre­pre­neu­rial approach. The aim was and is to have as much flexi­bi­lity as possi­ble within the scope of the invest­ments we seek to make and also to open up access to networks and expe­ri­ence via the capi­tal. A decisive factor for us was the fact that there is a high level of inte­rest in direct invest­ments on the part of private, entre­pre­neu­rial inves­tors such as family offices and private compa­nies, but also in some cases in the insti­tu­tio­nal sector, but that the exis­ting “clas­sic” offers do not meet expec­ta­ti­ons in terms of trans­pa­rency or oppor­tu­ni­ties for parti­ci­pa­tion. We tend to work quietly and strive for long-term and, above all, trus­ting coope­ra­tion with our investors.

2. What are the advan­ta­ges and also disad­van­ta­ges asso­cia­ted with your consul­ting? Are you and your part­ner colle­agues inves­t­ing too? What is the scale of invest­ment and what are the finan­cing structures?

Of course we co-invest, only then do the invest­ments make sense for us. Our advan­tage is that we do not initi­ally have any requi­re­ments in terms of struc­ture or parti­ci­pa­tion level. For us, it is secon­dary whether we invest the capi­tal in the company for add-ons or for growth, or whether we buy shares from the foun­der or foun­ders for private reasons. We as Pesca want to under­stand the over­all situa­tion, the back­ground of the tran­sac­tion and the objec­tive. If this is convin­cing, we will find a struc­ture that is opti­mal for the exis­ting share­hol­ders and the company. Since it is usually the mana­ging part­ner who remains inves­ted in our holdings, what matters to us first and fore­most are the people and the envi­ron­ment we find there. Hence our focus on “prima­ries.” If it does­n’t fit with our ideas, we’d rather leave it alone. Our biggest advan­tage is certainly the flexi­bi­lity and our reliability.

A disad­van­tage in our very entre­pre­neu­rial approach is some­ti­mes the ability to fulfill the speci­fi­ca­ti­ons given there in the unfort­u­na­tely very broad and often exag­ge­ra­ted M&A proces­ses that are common today. That disci­pli­nes us, but when neces­sary we also get it right, as was the case most recently with the invest­ment in the Brüning Group. As a rule, we invest between EUR 5 million and EUR 20 million, but we always find solu­ti­ons if it goes beyond that.

3. They work for insti­tu­tio­nal inves­tors, entre­pre­neurs or family offices. Can you describe your inves­tors’ ideas and needs in more detail?

Ever­yone wants to make money, of course, but there are alre­ady signi­fi­cant diffe­ren­ces. This alre­ady starts with the imple­men­ta­tion of the tran­sac­tion — above all our entre­pre­neu­rial inves­tors are usually much more inte­res­ted in the acting persons and their entre­pre­neu­rial skills and hardly in the due dili­gence reports. That’s why we usually offer our inves­tors direct access to the company — right up to support­ing the company as an advi­sory board, if that makes sense. It is only important that first the tran­sac­tion and later the company is not “trou­bled” by it. The decisive factor for us is the successful deve­lo­p­ment of the company — and all inves­tors must be subor­di­nate to this principle.

Of course, in our case, inves­tors have much more trans­pa­rency about the deve­lo­p­ment than in a clas­sic fund. And last but not least, there are signi­fi­cantly lower costs asso­cia­ted with our direct approach. But we also observe that more and more insti­tu­tio­nal capi­tal is looking for this type of parti­ci­pa­tion. — Ever­yone likes our rela­tively defen­sive approach: we look for sensi­ble and solid medium-sized compa­nies, rely very heavily on the exis­ting manage­ment (often the mana­ging part­ner) to conti­nue the successful deve­lo­p­ment of the past in the future, and have rather cautious return expectations.

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