3 questions to smart minds
Photo: Jan-Oliver Kliemann

Why entrepreneurs like to invest in family businesses

For this 3 questions to Jan-Oliver Kliemann

ARGOS in Munich
Photo: Jan-Oliver Kliemann
14. Octo­ber 2020

Often, owners of a family busi­ness in a succes­sion situa­tion are looking for a part­ner who has a simi­lar under­stan­ding of sustaina­bi­lity and a sense of respon­si­bi­lity and who wants to achieve the future viabi­lity of the company. Finan­cial inves­tors differ in their invest­ment stra­te­gies in many ways. What attri­bu­tes do private inves­tors bring with them when they take a stake in a family business?

For this 3 ques­ti­ons to Jan-Oliver Klie­mann, Mana­ging Direc­tor at ARGOS in Munich

1. Why are entre­pre­neurs good at conti­nuing to invest in family busi­nesses themselves?

An entre­pre­neur is present at the loca­tion of the company with heart, soul and usually also with family. Capi­tal and manage­ment come from a single source, as is usually the case with a family busi­ness. There is no port­fo­lio approach where you write off a company. Giving up is not an option for an entrepreneur.
At the same time, as “family entre­pre­neurs”, we have a long-term approach. If I have a hori­zon of deca­des, I make diffe­rent decis­i­ons than if, as is neces­sary with a private equity fund, I alre­ady think about the soon exit when I buy. Exam­ple trai­ning program: At one of our compa­nies we run a very expen­sive specia­li­zed trai­ning program. For the first eight years, the program has no rele­vance to the success of the company, but mainly produ­ces costs. A short-term inves­tor would thus have to close the program. In the long term, howe­ver, the program is elemen­tary for secu­ring our junior staff and also our mana­gers, 80% of whom, by the way, have comple­ted our own trai­ning program!

2. How do you imagine the proce­dure in practice?

First of all, the perso­nal fit is important. You have to look yours­elf in the eye with the family busi­ness owner and ask: Is it a good fit between us? Conver­sely, the sales­per­son also asks hims­elf: Can the other person run my company? It is not uncom­mon for the seller to reverse the due dili­gence and take a close look at the buyer: How does the acqui­rer handle its exis­ting busi­nesses? Will he carry on my family busi­ness well? The old entre­pre­neurs usually stay at the company loca­tion. There are entre­pre­neurs who still come to the office every day after 15 years, others want to find emotio­nal distance rela­tively quickly. Nevert­hel­ess, when selling, the entre­pre­neur often asks hims­elf whether he will still be happy with the buyer selec­tion years from now.
For us as succes­sors in successful compa­nies, after the tran­sac­tion it means getting to know the company better and under­stan­ding the “DNA” of the company. How are things going in the company? Why are proces­ses the way they are? Many success factors can only be reco­gni­zed at second or third glance — and then only if you deal with them and are willing to learn.

3. Does it make a diffe­rence if an entre­pre­neur conti­nues a family business?

I think it makes a big diffe­rence for both the company and the envi­ron­ment. After all, there is no group that wants to leverage syner­gies sooner or later and impose its brand and iden­tity — and not least its group report­ing — on the company. There comes a person who is approacha­ble in the hall­way and with whom one can share private issues. Over­all, it’s perso­nal. The envi­ron­ment also remains stable. For exam­ple, we have never chan­ged the tax advi­sor, audi­tor or in-house lawyer of the family busi­nesses. Loca­tion and employees remain stable, as does a hand­shake menta­lity toward local suppli­ers and part­ners. These are evol­ved struc­tures that have their raison d’être. Social compon­ents are also important: As an entre­pre­neur, I can conti­nue projects such as local spon­sor­ship of the soccer club or the kinder­gar­ten. When I act with other people’s money, whether in a group or from a fund, I usually can’t do that. In addi­tion, as entre­pre­neurs we offer secu­rity to the company as well as to the envi­ron­ment, because we have not sold a company in 20 years of Argos — even an outra­ge­ous offer does not make a family entre­pre­neur think about selling if it does not corre­spond to his life planning.

About Jan-Oliver Kliemann
Jan-Oliver Klie­mann has been Mana­ging Direc­tor at Argos GmbH ( ) since 2013. Toge­ther with Hans Peter Maaßen, Florian Pape, Frank Herdeg and Julian Schrö­der, he takes over medium-sized compa­nies in succes­sion situa­tions in order to conti­nue them — without any inte­rest in resel­ling them (20 years Argos, 0 sales). The compa­nies are acqui­red exclu­si­vely with equity from Argos’ mana­ging direc­tors, so there is no depen­dence on exter­nal inves­tors. Target compa­nies are exclu­si­vely successful, medium-sized family busi­nesses in succes­sion situa­tions in the manu­fac­tu­ring and services sectors (EBIT margins >10%, EBIT EUR 3–15 million).

Jan-Oliver Klie­mann is a physi­cist and holds a docto­rate in engi­nee­ring. Prior to his entre­pre­neu­rial acti­vi­ties, he worked in a manage­ment consul­ting firm. He is married, has two child­ren and lives with his family in Munich.

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