Many private equity managers are currently facing difficult tasks – also due to the impact of the corona crisis on the supply chain. Great potentials are no longer hidden in the balance sheets. Instead, the goal is to harmonize existing systems, optimize organizations, and achieve sustainability goals. This can only be achieved with a profound understanding of what happens on the factory floor.
In addition to innovative financing – something the industry has long been known for – new cooperation models will characterize collaboration with companies in the future. The opportunities for successful teamwork are good. This is underlined by a survey conducted by Staufen AG for the “Industry Paper Private Equity” among 200 owners and top executives from German medium-sized companies. Key finding: Investors are in need and happy to be chosen as partners. At the same time, however, companies want more dialog at eye level and more industry knowledge from investors.
As part of our study, we identified 6 key insights:
When it comes to tapping new sources of funds, one major solution is also considered: More than one in four companies is open to new owners. Given the turmoil caused by the corona crisis, capital requirements will remain high in the future.
In most cases, fresh capital is needed because of the threat financial distress, growth must be financed or new markets need to be explored. There are also differences between sectors: In particular in industry, investors often play a role in succession planning.
The majority of companies trust financial backers to achieve the desired turnaround, while 80 percent even believe that financial investors can achieve this much faster than other owners. However, they are also considered difficult partners, and their behavior is oftentimes criticized.
Financial investors have a good overall reputation in the business community. Two-thirds of companies have absolutely no preconceptions about financial investors, and 66 percent of executives also agree with the statement: “I have no problem with an investor as an employer.”
When analyzing balance sheets and financial flows, financial investors skillfully navigate through the thickest fog of key figures. However, with respect to operational expertise, they often fly blind: Only one in three companies surveyed in the study sees operational excellence when it comes to private equity.
The formula for success for a beneficial cooperation between financial investors and companies is a well-balanced mix of hard and soft factors. Industrial companies see the foundation primarily in a partnership that operates at eye level and benefits from shared values. Retail and service companies also place particular value on good market knowledge.
If you would like to learn more about the results of the study, click here to download the free industry paper “Private Equity”.
