Why entrepreneurs like to invest in family businesses
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!
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.
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 (www.argosinvest.com ) 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.