EMERAM Capital Partners - Dr. Sven Oleownik: Private Equity, German Mid-Cap & Investor-CEO Relationship

[MUSIC] >> Leading corporate transformation, the podcast by VHAU Autobysime School of Management, powered by PWC. On the transformation of companies and their culture, from decision makers, for decision makers, or from entrepreneurs, for entrepreneurs. [MUSIC] >> Hello, everyone. Welcome to another exciting episode of Leading corporate transformation. Leading how a podcast powered by PWC. I'm your host, Sardin Usjan, and as always, I'm joined by the rock star of corporate podcast, Cory from PWC. Together, we'll be bringing you the latest insights on corporate transformation. >> Hey, Sardin. Thanks for this warm welcome. Haven't heard this for a while, but it's a pleasure. Hello, everybody. Hello, listeners. It's good to be back. It's Cory. Cory again. Go with her, Shazen. The co-host of the podcast. As you know, I'm the transformation consultant in this talk. I do lead our industry sector consulting at PWC Germany. And with this background, I'm here to, of course, ask the questions around how companies optimize their organization, how they reinvent their business model, et cetera. Today is a special moment in our podcast series, because we are now switching gears. We are turning to the investor piece of the game. And I'm very happy to have a private equity partner with us who will speak about the industry, who will speak about his personal career. And he has a lot to say, especially in these times. And I'm very honored. And we are very honored that we have today with us, Dr. Sven Oliovnik, from Emram. Sven, over to you. Yeah, hello. Happy to join your team as a rock star, probably. Thanks so much. So let me briefly introduce myself. I'm Sven Oliovnik. I'm now for two and a half years with Emram. Before that, I was having another private equity firm named Kim Fjöhn-Junik. So basically, having their German office. But after doing a deal together with Emram, we've reminded that we have been already studied and experienced university together. And so I decided, or we jointly decided, together with the deal, we invested jointly in Soffer Tutor, to try it together again. And so I moved two and a half years ago to Emram. And here now I'm a partner. Emram is a private equity investor. It's not a public listed. It's just privately hold. We are having funds. We are investing out of these funds. And as is so called growth buyout investor. What does it mean? We are investing in three sectors. You can, if you want to dive deeper, I don't want to bore you now here in our podcast. You can go on our website to get better understanding. So just briefly, we are investing in three sectors. It's mainly IT techs and software, non-discretionary consumer and services businesses. And the companies should have $245 million of EBITDA, depends a bit on the growth rate. We should be able to invest into majorities, starting the equity tickets for maybe 15, up to 50, can go bigger even together with other partners and co-investors. But what's important for us that I call it always blood and soul of the business plan should be on boards, being ambitious to bring the company to the next level. And this is basically what being a growth buyout investor means. Looking at the fund size of MRM, what is the size? The size of the first fund was 400. Okay. So basically there was 350 and we did the so-called top of 50 again. So it summed up to 400. And we are now at the end of the fundraising of our second fund, which will be slightly bigger, but we are up to closing it. So I can't really be that transparent. But given the current sentiment in the market, we are super happy that we have been able to raise a significant amount and that we are able to, let's say, be fully, have full firepower and being fully operational. And this results even in a super cool performance, not only in terms of numbers, but even in terms of deals, because we in the last six weeks, so within six weeks, we've been able to do three new investments. So in a new fund, we have four new investments already, which is still up to closing. And so deployment goes well. Pipeline is super good. We are able to invest very selectively in very attractive companies. And very ambitious and cool teams we are able to support. Well, this great. So congratulations on your fundraising performance. We are going to dig into what makes your fund, previous fund very successful, obviously. But let me just start from elsewhere. What's happening in the world of private equity at the moment? What's happening at the moment? You can read it in the press. I would say, but we can try to go a bit deeper even to get you a better understanding what's currently happening. So I would, in principle, say, private equity is still a super attractive asset class for all investors. And private equity is still a super attractive partner for management teams to ever bring, they want to bring their company. So the market is still very well-working. Of course, we have some external factors. It's not only about what happens in Ukraine, what's the impact on our economy, what is happening with the future election in the US, what's, and all this kind of stuff. It's even a bit, let's say, the story is also about the asset allocation of investors per say in this given sentiment and environment. And this is the reason why a lot of private equity firms are at least struggling to raise new funds. And we have a kind of consolidation process at the moment, which we can see. Therefore, we feel ourselves in a very good position because we had a very good performance, so investors are trusting us, are giving us money again. And therefore, we are able to invest and I strongly believe that the few ones who are able to be operational and able to invest at the moment will become even stronger in the future and gain a digital market share. So just to clarify for our listeners, when you are talking about private equity world, are you covering large cap, mega cap, small cap, mid cap, or are you particularly focused on a particular segment? So we are covering smaller, as I stated before, starting at three to five million in terms of EBITDA and 15 million. This is so-called smaller mid-cap market. We are covering. And in Germany, the smaller mid-cap marketing is super-tracked because we have a lot of so-called famous German middle-aged-owned in the different sectors. So the environment you characterized applies particularly to the small to mid-cap? I cannot tell you how, what are the issues of the large cap funds? Of course, because this is a completely different market. I know that investments in, for example, so-called special situations, restructuring, stuff like that, are doing very well and are very much requested. I know also that a lot of funds investing in infrastructure, energy, whatever. Of course, it's a bit the talk of the town at the moment. So, of course, within the private equity industry, you have a segmentation of some of them are growing faster, some of them are maybe suffering on the, like, venture capital are suffering from it, push back at the moment. So, and you gave a good, let's say, overview on the current environment in which you operate. Looking at the investment opportunities, how is the situation here? So, what I can tell you is, if you look at the market, we, I guess, have eight times more deal flow than we have experienced five years before. This is really fantastic to develop on for us. I guess this is because we, at least, were able to make M&A advisor mainly to understand much better what we are, what we are standing for, what kind of assets we are looking at, and where we, in which areas we want to invest. And this brings us into a position, which, as I stated already before, to invest much more selectively, and to be called, and even since we have specialized more on these growth biosecments, so fully focused on the segment we already had from the very beginning, but we have shaped our focus even a bit better, and we are able to create better angles, how to bring the company to the next level. So, this is not only about finding the right deals, this is even about convincing shareholders and managers, but we are the right partner for these people, for their future ambitions to bring the company to the next level. And it's not, and sometimes M&A, I don't want to blame them, but it's pretty clear that they just want to do a deal. And once they have, we have signed at the notary, they sent the bill, and then for them, the story's gone. They create a nice tombstone and send it around, and celebrate, those things dinner. The virtual tombstone. And this is the moment when the work for us really starts. Because this is a kind of, let's say, marriage. We are then together for four, five, six, sometimes even more years. Sometimes the environment changes. And I think we're going to talk about this even a bit later. Therefore, you have to have a very good idea, very trustworthy, trust each other, that you can bring the company back on track and stuff like that. And we became much better in this field and this area. Okay, just to link back to what you said, we are seeing a lot of great deals. Could you explain what makes a great deal for you? A great deal is basically a company which is performing very good above the market average, in terms of revenue growth and profitability. A company which has a, at least partially very good team, as I said, blood and soul of the business plan. And you see how the management team, of course, sometimes people need to be added. The organization needs to grow at well. But at least you can see a very, very educated and vicious management team, how they want to bring the company to the next level. And how we can develop a joint understanding, how we can cooperate, and how we can support them. So there must be a kind of a fit. And if this fits, we make up our mind. If this is a deal, we really want to invest. And we jointly believe that we can really make a success, create a successful story out of it. So how do you assess that fit? Oh, well, this is. That's a magic. That's a magic. That's the secret. At the end of the day, you can analyze a company from the different angles. Famous commercial due diligence, financial due diligence, famous, I don't know what else you need to do. And this is all, let's say, the hygiene factors. But then you need to develop a kind of a feeling, who are the people behind? How do they behave? What drives them? How do they behave when critical points are coming up? Are they putting their money or their mouth? Do they have not only skin in the game because we just want to be secure, but do we get the feeling that we are fully aligned? And how to develop the company? And how to support them, how to work together? Is there trust in belief in each other? Do they trust us in a way that if they want to address a critical point, they are addressing this point very transparently, openly and proactively? It's not that we are, and they don't give us the feeling, oh, they are the dumb investor guys showing up from one week, once in a while, and now we somehow need to entertain them because we have a new board meeting. But that we are sharing our experiences and that we are raising nobody has the perfect answer on a different aspects. But it must be allowed that everybody who has something to say is willing and motivated to add that, and that it is respected even if an intern has a good idea. Why shouldn't we respect this and take it and just create something out of it? But just to get this straight, this means you encourage the management to invest as well? How does it look like? It looks like it depends a bit on the individual situation. For example, if you have an entrepreneur who was already, we had this case now recently, for example, we invested in a company called ProVital Active in the PEDFU environment. So this company was sold off by a former owner of the company. He managed a company very successfully and basically we asked him to sell the company because he wanted to secure his succession. He was in the mid-50s and he said, well, there is even a life after that. Depending a bit on the partner I am finding, I am ready to reinvest an amount which we need to discuss. And we convinced him to invest 25% of his proceeds to reinvest into the company. So 25% is a decent amount, of course. This is one part of the story. The other part of the story is that when you have managers who cannot afford to buy 25% or so because they are just lacking the money, we are the question about transparency and trust begins because we then need to discuss how much can you invest? What is reasonable? Because we want these people to be motivated, to have to be aligned, but we don't want to stress them that they cannot sleep anymore in the night when some problems arise. They should have skin in the game, but they shouldn't, let's say, ruin themselves if things go south. And we are offering them a system where they can invest whatever they can do. And we are leveraging their amount in different structures, being sweet equity, being sweet equity, and be structured normally. This normally, we are asked for it equity and shareholder loans to get them to a significant shareholder amount as a basis. And then, of course, they will get calls once they have succeeded in a way that certain IRR-hurtles or thresholds have been achieved so they can get additional calls in order to still improve their proceeds. Why don't we then talk about your magic formula? What makes MRM a very successful private equity investor? How do you add value to your portfolio company? Is that, say, your competitors relatively do not? Maybe there is an example from your investment portfolio like Boards and More or a company that you can take as a customer. Basically, we have created six columns. We see ourselves as a business development partner. Business development partner means basically we have defined six columns and playbooks how we are supporting our portfolio companies. The first one is about strategy. We are jointly defining where and how to play. This means not only regions, sales channels, products, offerings, prices, whatever you can sum up in strategy. The second point is organization. For example, in whatever field you are active in, sometimes you have, it's even worse because you have a strong customer concentration. So whenever you promise to deliver, you have to deliver. This means the organization needs to be able. It's not that the revenue is growing and the organization is always lagging behind. The organization needs always be behind the revenue growth because sooner or later otherwise the engine is always driving in the red zone. Sooner or later the engine will break up. Therefore, we are trying to discuss together with the management. What brings us in the position, what kind of organization brings us in the position, processes and procedures to be able to deliver whatever is needed in the future. The organization must normally be six months, one year in front of the revenue plans to be able to do so. The third one is digitalization. How can we support our companies and bring in additional experience, why digitalization, and improving the processes, why growing. HR is important. Governance is important. And ESG is important. We see ESG is a value driver. We are defining, once we have invested a 100-day plan, it means within 100 days, it means within the first 100 days. We create a joint idea of how to develop the company, but we want to bring the company within the next five years. We are defining this plan within the first three months. We have a joint understanding about budget, prioritization, how can we support, is it at on where we can support, is it at HR where we can support, is it whatever it takes. And this creates a kind of a working plan, a working which we are going to, let's say, which gives us an orientation, even a kind of internal benchmark, where are we? Do we need to change? Do we need to, how can we proceed? How can we improve? And this is even a, and it's not only about the plan. It's not only about the transparency. It's the joint understanding is basically freeing up the, the oil discussions from disappointments from misunderstandings, because you have everything is clear on the table. It's a big incentive to talk about topics proactively. And there's basically less room for misunderstandings and for undermining the necessary trust in how we work together. So it's not that we want to have full transparency about the company, how the company is operating, because we don't trust the management. It's more that we have full transparency because we don't want to talk about this kind of stuff, about transparency. We want to, it gives them, and it brings them definitely in a situation where they can be much more open, because we have been able to see things early enough. They are able to talk about important topics early enough, and so we can get to a new plan, a new idea, a new budget, whatever is necessary, even early enough. And everybody of us knows that no business plan turns into reality. Once it is written, it's only a, let's say, a tool to be able to discuss, in a structured way, what were our ideas, what went well, what went not so well, and how can we improve in a very incremental and a day-to-day basis, and not once in a while to throw in a bump and to see how this went wrong. So we need to kick out the management. No, it's a matter of, it's a tool how to improve, let's say, the working situation. I mean, this sounds very interesting the way how you work as a business development partner. What are the biggest challenges you normally face, and how do you deal with them? When it comes to this approach, because I can imagine that management, of course, gets a closer alignment with the investor, and the investment is taking care, and asking many, many questions that what we learn, you want to understand how the mechanic of, or how the machine works, basically, and you are very close to management. And this is a challenge for management, because it, of course, brings them to a next level of speed, right? So what are the biggest challenges? Yeah, it brings them to a next level of speed, but so first of all, this is a very challenging idea and a very elaborated toolbox. And what you need to understand is, but everybody needs to understand, there's a phase of onboarding, I would say. We always say, "I know it, and I don't know how to explain it in English." So, and this is a process you really need to get acquainted to each other. And this takes a lot of time, a lot of effort, a lot of discussions, maybe sometimes a dinner, and certain events, how you can, you are able to prove that you are a supporter and not a controller. And, of course, the management needs to understand that they are steering the company. And they are responsible for it. And we are just sparring partners. We are not steering the company. And sometimes, and this is a very tiny road sometimes, because sometimes managers believe, "Oh, they are now showing up again. We are discussing strategy." They are adding ideas, how to structure a workshop. And so they sometimes think, "Oh, we can now lean back and enter the entertainer or even worse." We are just executors, which they aren't. We are supporters. They are executors. They need to bring the ideas, they need to deliver, they need to discuss transparency, what they can do, what they cannot do, and what they might face some issues, and how they can ask for support. And then we do everything which is necessary to support them, but we are not steering the company. And getting acquainted to this kind of, let's say, working together, which is a very intense one, a very intense way of joint collaboration. This takes some time. But you expect performance. You expect results. You expect impact from the management. You are as an investor looking at this very straight. We expect, of course, performance. But we help them even to achieve this kind of performance. So what we are doing, for example, this is our ideal situation. If you invest into a company, I don't know, doing 50, just to give an example, which does maybe 50 million terms of revenues, and has a headquarter is active only in Germany. And then you do, for the first time on it, which needs to be integrated, then you are going to expand the company internationally, then you add a new business unit, whatever it is. And the company grows from 50 to 150 million turnover. It's a completely different game. We, for example, experienced that we had a company, which was basically had quality in Germany and being globalized. So within a bunch of few years, they were active all around the globe. So they were not anymore able to just go next door and ask a colleague how we are going to do this or that. Because there was a time gap of six hours, and you need to get organized. You need to substitute a kind of ad hoc organization to a wire process and procedure management tools. And this is a complete different culture and the complete different skillset. And we are discussing this. We are discussing with the management. If this is the strategy and we want to become an international company and we want to grow wire, I don't know, ten atomic positions, which we indeed did. Then we believe, and this is our experience, the skillset changes from this to this direction. And are you willing to do that? Or are you probably better, are you the right CEO for the company? Or are you probably better chairman? Because you are full of inspiration, but you're not a manager, day-to-day manager. You are bored in getting, you get bored, you are bored out. If you have to motivate on a day-to-day basis, people from operations. And you cannot deliver thousands of ideas from which only 50 take into reality and materialize. And this is where trust and belief kicks really. It's not about the numbers. We have promised you to grow by 20%. And now we achieved on the 15 are you disappointed? No, that's not the point. It's more about these topics I mentioned or just mentioned. And then you are able to be successful. When you are really able to be, if you are in a position, you can discuss about these critical topics, which have impact on the role of the individual contributors to the success of the company. Then this makes it really successful. What is the primary source of tension between the management team and the investor team in your case, other than perhaps the perception that there is sort of two hands-on engagement? I'm not sure if there is a primary source of tension, to be honest. But for example, what I personally, and this was in another case, I'm not talking about Emoram, what I, for example, experienced was that when you are going basically to discuss about the reinvestment and the role of the management and the successions and bad and good lever clauses, and then you are diving down in very awkward details. And then it can happen that this is not creating the desire to own platform. It creates a kind of potential misunderstanding, which makes the onboarding process even longer and harder. And then it can happen that, for example, the co-investor who is still running the company believes that you want to kick him out, because you want to improve your returns, you want to pay him his, I don't know, earn out or whatever it is. This could create tensions. And this is maybe not a super good example, but I'm trying to explain that the source of tensions is either you are not 100% aligned or you were not able to create the platform where at least everybody has the feeling that you are 100% aligned. You, people are trying to over promise because they don't understand that they don't do a deal, that the first deal is not the final deal. It's the beginning of a deal. joint journey to then do even a much better deal because our ambitions is to make a company that only two times bigger but even two times better and to bring the company even valuation-wise to the next level. And so the first deal must be a good one but the joint journey creates much more value and this is the reason why we need to be able to set up this kind of platform and to be really fully aligned and here you can do a lot of mistakes. And then when you are working together for such a long time it's damn sure that critical topics may come up markets are changing. Look at the corona crisis. You need to be then able to basically sit together and make up your mind and get things done. Just solve the issues and therefore you need and this is even a way we talk about the role of investors and even the education you said before and this is even raising the question about are we just financial is this financial services industry? Yes, but it's also a kind of consultancy so investment is much more than just being active in the financial services industry. I mean there's always this comparison between family owned businesses and private equity and it's like the pros and cons and there's always you know there's a certain tension behind this discussions often. We talked before about this and you had this this prominent saying that there is the right investor for a company at a certain point in time. Can you tell us a little bit what you mean by this and what does it mean if you compare private equity to family owned businesses? I would say there is no special structure which is very much creating problems or creating value. If you look there is it's not a given situation that the family owned business will be successful forever because there are a lot of good examples for very successful family owned businesses even over generations but there are very good examples for really great failures because I don't know the third generation some are interested in dividends, the other investment in investments so they are not aligned any longer and whenever this alignment is suffering whenever there is no how to say if there is if they and a company needs to be at the end of the day needs to be successful otherwise it will not be able to grow it will not be able to pay dividends it will not be able to create value it will not be able to attract talented people and so on and so forth so there for example if there is a very successful entrepreneur and he looks for a successor then it's often very hard to attract the best talented people because top tier one managers they say oh I'm not going to make my future career depending on the I don't know day to day mood of the entrepreneur because I probably want to do things differently things differently and this all very often doesn't work out and so finding the right successor for a company which is 100% owned by an owner by the founder is much more difficult than when there is a more let's say a kind of a kelly braiding shareholder like a private equity investor on board who is basically balancing a bit these kind of let's say emotions and decisions so secondly private equity if you look then there's a different service even from the B4 car was able to create more growth to create more new jobs and to create more wealth than public listed companies and family owned businesses of course you can say okay that's a kind of pre-selection effect and stuff like that but at least it's not that it's just not the case the private equity is because we need always to look who's the next owner and who's then who's when we are going to sell who's then believing in the next phase of the company and due diligence processes are now so much into the details that you are at the end of the day not able to let's say dress up the company and to sell it if there is no real value behind so you always can you can sell a company at the decent price only if you find somebody who's believing and for good reasons believing in the future of this specific asset and this is one of the reasons why earlier mentioned for certain situations and certain situations means we are able to supply a company with the money we are able to supply companies with the right skill set we are an attractive partner for tier one management and and motivated people so and we are and we are we can bring a lot of know how at the table which some other companies simply can't because they don't have access to this vast experience and then when it comes to a certain size wants the company as basically has been growing from let's say 52 or 200 million probably then they maybe have a better new owner because the next private equity fund who is a mid-cap player and then a logical player and this is a certain it's just a question about the life cycle or somebody who can add value because he's active in Southeast Asia or whatsoever in a different region where the company wants to grow but we are not with ourselves present and stuff like that it obviously depends a bit on the situation excellent so I want to focus on governance for a second so you're investing in a company that kind of gives you a board seat so I presume how does governance in the world of private equity look like so in our world it's quite easy we are the major shareholder as I stated before we want to support the management and this is what we are doing but if we see that thing we are not able to develop together with the people who are our core investors or who are managing the company if we see that things go not in the right direction we need to take action and this is what we do but this is let's say the ultimate do you bring external board members yes of those companies yeah this is how do you select them or what are your criteria considerations in general so we normally in this situation side for example I mentioned before we had a former owner of Provital he reinvested 25% we invest 75% we agreed without he was asking for it that he is going to have a board seat we are going to have a board seat and we are going to have a kind of a neutral member as probably even as a chairman our pirate's faucets in the chairman is a strong word as a pirate advising basically and calibrating sometimes even being able to calibrate the different views and adding of course value and in this case we are still in a kind of a negotiation phase because Provital is a multi-level marketing company we are trying to get somebody in whom we know very well who is experienced in this very well experienced in this specific market field well because we want to support the company in with this business model and we want to basically bring in know how a company needs to have when it further grows when it gets more when it internationalizes and this guy is super experienced in this environment so it depends a bit on the situation in this case it's for us it was very important to understand that this specific person wants to add has experience in this specific sector there might be other situations for example boards and more we have a very well trusted colleague I've Pritman who is heading the supervisory board we are working with him for many many years he's super experienced in the wider space of consumer products and he has an affection for digital processors for getting close to the client and this is supporting the boards and more with who is a B2B to see company in getting let's say the best of all worlds remaining a B2B to see company but getting closer to the end customer what understand we want to just understand better what the consumer needs are to be able for example to develop our products and to get inspiration for our innovation processes out of it for example so we talked about Puvital maybe there's another prominent investment for Emram which is Diva A can you talk a little bit about this one because you you just de-invested from We just signed the deal here. We are in the process of closing. But Diva is indeed a very interesting company, or indeed a very interesting investment case. And the reason is, it's basically a service company, and I don't want to bore you with too many details. But the idea from the very beginning was in the digitalization services sector. At these times, you could see a lot of many very specialized services companies. And they addressed a specific topic and always talked, for example, to the head of marketing, to the head of sales, to the head of logistics, to the head of finance, to whomever. But they were never talking to the CEO. How can digitalization-- how can digital processors, digitalization, how is this impacting a whole company, how is this impacting strategy, and how can they be able to get up to this kind of level. And so we basically-- we met just a consultant, for still an hour, who had the idea to bring together a bunch of companies who were complementary to each other. But in being complementary, they were able to basically bring a new offer to the market, and in doing so to make the step up from talking just to a tier two management-- to decline at a tier two management level to talk to the CEO. And support these guys then in improving their strategy and, let's say, more global processes. So and what we did is basically, we bought five companies in one signing. We brought them together because we have seen the value in bringing these complementary companies together. But what we did, indeed, was not-- we sign it, and then we made up our minds how to integrate these companies. We made the whole post-merger integration, a so-called post-merger integration, pre-signing. So we discussed with all these five companies, with the heads of all these five companies, what's the value of the individual company? How are you going to reinvest? For which clients will you be responsible? For which offering will you be responsible? What are the incentives? I don't know, even details. What's the car policy? Where is the headquarter and stuff like that? And so we basically made all-- we created the kind of, let's say, a post-merger integration handbook, an organization handbook, let's call it like that, where we basically discussed strategy, organization, incentives, and all that stuff. So there was a kind of, let's say, a roadmap, how to get there. But there was even a clear understanding. And all the owners, all the owner of the smaller companies, they all signed, basically, not only the contract, they signed their willingness to work along the roadmap we outlined in this organizational handbook. And this was a super successful story, because this created not only a new company and bringing together these five companies, this was even the platform to be able, I guess, to acquire seven or nine more in the course of the business. And DIVA AM really succeeded. They proved that the ideas were right. Of course, there was some bumps on the road. By the way, the best idea we then had was that Timon Au, who was just, let's say, the inspirational guy at the very beginning, he became the CEO, because he was so much in the business, and he was so much convinced about his own concept that he basically was, we were asking, why aren't you not investing? Why are you not going there? Why are you not putting your money, where your mouth is? And I guess he made a great journey with us. And so we are now happy to handle with the company, because we strongly believe that this is now the right partner for the next step, because DIVA became very international. They are able to deliver their services all around the globe, but then now they are making the next step. So many of our listeners are having a finance background. So my question also related to DIVA. By the way, we were supporting Timon on the journey with some consulting support at that time. But looking at the role of a CFO in this play, how do you look at this CFO role? What do you see as a function of finance? How does finance need to contribute to the value case? The CEO needs to get an enable on board for realizing his strategic ideas. And this is, of course, the role of a CEO as well, but even more of a CFO, because the CFO has to deliver a toolbox to create in an ever-changing model, ever-changing business, because it's getting more international and stuff like that. We are making it on acquisition. So it's changing on a day-to-day basis. He needs to be able to deliver the right transparency, the right KPI dashboard, to be able to get at least a timely access to what we are really doing and how is the company performing, because this is the basis for the-- this is the transparency we need to take the right decisions. And it's not only about taking the right decisions in which areas, products, regions, services we want to be active in. It's even the right decisions. What's the right financing framework for it? And we always want to put a-- we always want to put a financing structure in place, which is able to support the growth ambitions of the company and not limiting the growth potential of the company. And this is very difficult because you need to get money at work. You need to get a very efficient financing in work at work. But it needs to have certain buffers if things make take longer if I don't know, are not delivering what we expected. And this is, of course, the work of the CEO for-- so it is a much-- it is the sparring part of the CEO. And this is a much more important role. And this is, by the way, even difficult if you had an entrepreneur who was the number one, who was basically steering the company by his bank account, because for him, this was just enough to get the right transparency, managing the company at long a certain cash understanding. And now he's getting an ice level sparring partner. This is even kind of transition. These kind of CEOs sometimes need to take because they need to understand that they have now somebody next to them, which make them even stronger. OK. I have one more question, Gory, at your end. Since you talked about CEO, let's talk about CEO, could you paint a profile of an ideal CEO for you? The ideal CEO are guys like Tille Evela, who is active at Bortonmore. Are guys like Tim and Ouh, at DivaA. For example, and why these are just examples. And why these guys are so deep in their product, so deep in their offering. They are acting as entrepreneurs. They are taking decisions quickly. They are no bullshitters. They have no ego. Of course, they have a certain personality and they are characters. And rightfully so. But at the end, it's always the company, which is in their center of mind, and in their think in 24/7, I would say. And you feel that they are not just managers. You feel that they are married also to their company, which is good. And this makes these companies successful. But only if they don't mix it up with, I don't know, the old-fashioned CEO as a certain ego is difficult to deal with, because if things are changing, they might bring the company in the wrong direction, or they might sometimes even not be able to hand over certain responsibilities to managers around them. And I strongly believe that the most successful entrepreneurs and CEOs are people who understand their own limits. And without fearing that they are giving something away from themselves, they just can improve themselves if they surround them by smart people. And I guess this is the miracle of a lot of successful entrepreneurs that they always understood. I might be good in a certain field, but if I want to make my company grow, if I want to be successful, I need to create a platform to attract the most elite and people. And the more I can add of them, the more I grow, even in my own personality, with my own character. and this is to see these guys as an inspiration and this is what all these people I just mentioned. Yeah, that's a perfect segue actually. Then to also looking back at your career and your current career. So Sven, you have been in consulting. You have been in the deals consulting for many years. You have been in the senior partner position here before you switched to private equity. Now you're in the end game with private equity partnership. Can you tell us a little bit about yourself? What were very important steps in your career? Let's start with this. I said it earlier, it's all about reverse engineering and it doesn't make sense as in career advice. I really believe that I always have an anecdote. We all studied BVL here in Germany at these times. If we recall how we went to university and how we basically met other colleagues. It was very segmented in the people who started marketing or strategy or these kind of esoteric stuff. The others who were basically specializing in controlling financing. These people went not only to different professors and had different specializations. They did not meet at the same parties. They were not interested in the same activities. They were even looking at each other. Not super respectfully, but disrespectfully. Nobody understood how this all sums up and can really create value. What the often see is, of course, things have changed. But if we open the window and look into the so-called German middle stance. I guess there are not many bankers, controllers or bookkeepers out there who were able to build up companies successfully. These are always people who have been driven by a certain idea about the product, the idea about strategy. They were convinced that they can create a new market and do things differently. They were able to hammer this idea home in different ways. Now the financial industry comes from different angles. It's a pure financial services industry. It was created from this angle. And so a lot of bankers, bookkeepers, due diligence, financial due diligence, guys stepped in. And of course, rightfully so. But the idea is now how can this grow together? And this is the difficulty. Because everybody of us has a certain strength. And normally, if we come into problems, we rely on our strength. And we are not open to enter in new areas. We are not open to new experiments. But for me, it's the combination of strategy, the combination with organization, with finance, with controlling, with psychology, which is even more esoteric for some people. Because at the end of the day, it's all about the motivation of people, about what they are fearing, what is motivating them. And if you are able to combine these different aspects, then I think this is a very good layer for really being a successful investor. Not only who is not able to do a good investment, but who is even able to manage a company or support a management team through the different stages of an investment. And so if I look back at my career, I'm very thankful that I started indeed in private equity. But at least time's private equity was not even nobody knew how to spell it. And even due diligence was a kind of a new fancy word. But it was basically a bunch of three people. One was coming from a very wealthy family. Another one was coming from an aristocratic family. He knew everybody had a tremendous network. And the third one had a know-how. So I called him the three musketeers. He was a former McKinsey partner. And these three guys joined forces and invested private and family money into turnaround situations. And I was with them for about two years. But in parallel to my job, I wanted to finish my doctorate. And they offered me a contract, 80% salary, and only four days work in. And with the 80% salary it worked out very well, but not with the four days. And so I decided to leave because I wanted to finish my doctorate. I decided to make a step aside and said, okay, guys, I'm now going to leave. I got offered a position at Diesel One Partner, which is a consultancy focused on the German Middle Stand. Or not Middle Stand focused on the German family on businesses. And for me, this was very interesting to work with people who were basically spending their own money. It was a complete different situation. So understanding even what's the difference between a managed company and a family on business. And at the beginning, I wanted to stay with Wiesel, who was just until I would have completed my doctorate. But then I liked it so much to work for his family on businesses that I stayed there for nine years or so. And in consulting. So this was basically strategy consulting. Sometimes it was even restructuring, but with a different label probably. And I think this was a great time to lay the ground for understanding how a Middle Stand company really works. And after that, I worked for this was even the way because these family on businesses always had the need for a certain financing events came up. We want to grow. We need to restructure. We want to pay out family members. We don't get along any longer anymore. And this created the corporate finance angle within Beesel, who were on partner basically. But then I decided to go for the lawyer to do the business there because it was my ambition to do this for a more global company. And I had the same clients on the one hand, but I could was able to add private equity and larger corporates to my client portfolio. And so I came even in contact with the private equity environment. And I liked it so much. Even having board seats in different companies because I was always feeling a bit regretful when we signed a deal at the notary. We had so much ideas, but other people were able to realize them that I said, okay, let me again move to the other side of the table. And I think these experiences of working on financing and investment for mid-cap companies, for larger entrepreneurs, depending on the decisions of a larger corporate and then this bond of their businesses. This gives you so much insights in different life cycles and situations of the people managing companies, which is still, I'm still, I think this gives me a lot of experiences to be able to maneuver in the situation of the day. So if you summarize it, that means you say it is important to get this broad, let's say, experience and then put it together in an entrepreneurial environment if that is possible in the end. If you have this capital perspective. And I am, of course, it's a kind of reverse engineering, but I strongly believe a company is successful until it's able to sell the products in its specific markets successfully with a high margin. And of course, you have to have the transparency, but at the end of the day, it's a very entrepreneurial task. And therefore, this is one reason why I believe strategy matters much more than just numbers. Of course, but the numbers must be right and you have to have access, don't get me wrong, but if the strategy and the idea is not the right one, a messed up company, a messed up strategy will never become a good one because you have a good CFO in place. A good strategy can be very successful if a right CFO is supporting it, but not the other way around. And therefore, it's very, and for me, it's, I strongly believe it's much easier to get mentally access from a more insecure environment. If you are able to maneuver and be open with these insecure environment in terms of strategy, it's easier than to get the understanding why numbers are important and how you look at the numbers and how you believe in them. And it's much more difficult if you are from the numbers, if you're coming from the numbers and you believe that one plus one is always two to get in these insecure environment and then discussing about strategy. The strategy, the experience, it's very often that younger colleagues are struggling much more in the future. and making the step from financing to strategy than colleagues from strategy to finance. And even to psychology, because how to deal with people, it's not only a number scheme. What are you going to discuss with a CEO when it's getting really important? You discuss strategy and you discuss how to make his succession successful and how to, I don't know, make a transition successful. And of course, you discuss how to measure it. But getting the conviction that this is the right step, this is what makes a company successful at the end of the day and get the people behind it and motivate it. And therefore, I believe digging deeper into Excel is necessary, but it's not notewendig, but not too successful. But this sounds very much like you need this entrepreneurial mindset. You need to understand how to build the value case, not just to track it, right? So this brings us basically, and we could talk for hours. And that's for sure. But this brings us basically to our last question, which I would like to relate to this entrepreneurial spirit, because is there any kind of book or podcast that you would suggest that can help to give insights in such an entrepreneurial spirit? Or is there any kind of piece of art that you would say people should take a look at and understand it, because it translates something like this? Probably most attractive podcasts of Gourry's, of course, used to listen to them, which gives a lot of fruitful insights. But I would say we talked about Herbert Hensler before. Herbert Hensler is a great guy. He was the former head of-- he's the he created consultancy being the head of McKinsey here in Germany. And he published a very nice book, which is worth reading. But even older management books like Michael Porter gives nice insights, because he has a kind of, let's say, structured approach, how to look at competition markets, and it segments how to make the right segmentations, which gives cool toolboxes even, and inspirations, how to look at these important kind of stuff. And of course, I would say whenever you have the possibility to discuss with experienced people how to read an information memorandum whenever you get it in your hands, gives a lot of very good insights, how to really read between the lines, and the very hands on way. Sounds like what was right in the past might be still valid for today and for the future. Sometimes. Well, thank you. This was amazing. And I'm glad we are gradually moving into the P world, because you're basically looking at a whole bunch of different perspectives and insights compared to the corporate public sector company CEO that we've talked to. Yeah. And then we can say this was a kickoff, and we will have more to come on the CO level, more on the strategy piece, and as when was highlighting it. And there's also more coming from the private equity. So to our listeners, thank you very much for listening to us. And I hope you get many great insights. And you've learned a lot. And we do look forward to speak to you very soon. Thanks. Thanks, Sven. Thank you. That was leading corporate transformation. The podcast by Vika Ul-Arobysime School of Management, powered by PWC. Editorial team, Marvin Shunah, and Zimann Girlach.