Why Buy-and-Build Is One of the Best Investment Opportunities | Frederik Brandis Interview

Most investors spent their careers looking for great companies. Today's guests started much earlier, backing the person before the company even existed. Frederik was one of the earliest believers behind RCPA, a business that went to do AD acquisitions, grow over 1,100 employees across 60 plus locations and ultimately sold to one of the world leading private equity firms, VARburg, Vincos. Frederik Prandes, founder and general partner of Avan Capital Partners. It's such a pleasure to have you with me today. Thank you for having me, I'm really happy to be here. What you do is pack ambitious entrepreneurs from day zero to acquire, integrate and scale small-service businesses into, consolidate at the market leading platforms. But how it started and what you've talked about previously while I was doing research was seeing a cap in the market, not for more capital, but rather a shortage of the right type of investor. And you've even said one who combines capital with emotional intelligence and helps founder realize they are full potential. What led you to that insight that entrepreneurs needed something fundamentally different? Yes. So, as for many good ideas, it didn't happen for me sitting in the room and jotting down ideas on a paper, but it happened through experiencing investing prior. So as you mentioned, we've done RCPA and at the beginning we're quite still, but when RCPA went more public, me, meaning the founders of RCPA and myself, started to receive a lot of deal flow from young buying build teams that wanted to do buying build journeys and were looking into the market for capital. And who is financing typical buying build journeys, so buying build meaning to buy cash generative businesses that have been profitable for a long time and kind of consolidating them into a larger organization. And this is typically financed by private equity. And the teams that we then we spoke to a lot of teams and the ones that we really liked had a lot of characteristics. You mentioned emotional intelligence. There's also kind of entrepreneurial drive, high degrees of energy, high degrees of intrinsic motivation. So people that really want to build something, wanting to build new organization and don't really want to be, I mean, hired or an execution arm for someone. And as it happens for most traditional, traditional priorities, if you do a roll up for them, which is kind of the view they take, it's that you're more of a manager or an executor for the strategy for a fund and you're not the founder of your company and have investors in your back. And that fundamentally changes how you feel about your company. It's also a more comfortable setup. So I don't think there's per se a problem of that. But for the segment of people that really liked, which is this high entrepreneurial high empathy, high emotional intelligence, high drive, that is a setup that doesn't work. They don't, they're in their mid firties. They don't want to report to the investment manager call based out of Munich or London or wherever. They want to build their company. They need institutional backing, they need capital, they need knowledge, they need processes. But they want to have the sensation and the reality of building their own company. And eventually we saw that many of the teams that we liked rejected this traditional private equity money for exactly these reasons. Then again, the idea of putting triple A onto per nurse, onto these kind of more traditional businesses that have the right level of humility and respect to kind of what has been built. At the same time have kind of novel ideas. It's so interesting and so risk mitigated that we were to be honest astonished that there is no institutional investor in Germany who really foster set setups. And our teams, what they did back then is they kind of gathered together a lot of family offices, high net worth individuals, all of which kind of backed their journeys. But none of them really took the time or had the resources to really kind of learn from all the different kind of buying build journey steves they've seen or they've backed and to build these processes from which the entrepreneurs can benefit from. And so in the end we saw there's an incredibly interesting asset class with triple A onto per nurse on traditional cashier businesses. There's effectively very limited to no competition. There's no one really serves an operating model that is interesting to the people that we think are really suited to do these businesses. And out of that learning we said, I mean we're doing this with kind of private capital means and our network. But you can also do this for us. And with that in mind I quit my previous job and started building AVEN and we're doing exactly that. We find entrepreneurs, we work with them. So you mentioned in your intro that we backed them day zero, we don't really do that. So we work with them day zero and we're sparing's partner and we help on these journeys but we don't financially support until you have a fixed industry thesis, some companies under L.I. But we want to be your partner together from a content perspective. And that's how we structured AVEN. We really focus on one specific use case which is these day zero, buying builds with AAA entrepreneurs. We focus on business services where the core value creation is non-AI also in the foreseeable future. So for us, AI is a productivity gain but no disruption to the core business model. And yeah, that's what we're looking for and that's what we're working in and that's a bit the story behind how we came about it. Nice. You mentioned so many times, triple A entrepreneur. Who is a triple A entrepreneur? That's one thing and I'd like to add here something you mentioned having this intrinsic motivation. What is the story you'd like to hear when meeting this potential triple A entrepreneur and is it about his background, is it about his maybe rough childhood or what is it? What are you looking for? What are you happy to hear? So, per se, we're not looking for background. My experience is that good entrepreneurs can have all sorts of backgrounds and there's no big merit in really selecting for particularly great investment banking, private equity, consulting backgrounds and the hit rate to have great entrepreneurs is not significantly higher. So for us, it's a lot about meeting people and we try to speak to everyone because I think you can learn inherently more out of a short conversation versus just looking at the background. And then leading into your second question, what makes a triple A entrepreneur? High degrees of or in our case, a triple entrepreneur. High degrees of drive, a motivation to succeed and a belief to succeed. You will have a lot of adversity sometimes it feels like it's not going to happen and also building this fund. I'm an entrepreneur building our fund and sometimes you're really down because you get 15 negative feedbacks from investors, from peers, whatever. You kind of need to steam through. You need for the entrepreneurs to be back. You need to have these high degrees of empathy, emotional intelligence. I mentioned that and given that we don't build greenfield like you would build a startup. But we go to people who have over decades built their legacy, very successful companies, great entrepreneurs themselves. And it's a lot about trust. It's about legacy conservation. It's about well being of employees. It's about serving the customers. It's about serving the local community in which these businesses are and having a sense for what's important to a business owner and how to establish a relationship, make them trust you and not just the owners, but also the employees. It's an absolute crucial skill in our market. And lastly, I would say it's probably rigor and attention to detail. If you buy small businesses, there's so many processes, so many complexities that you have to cater for, that you have to dig in. Also to create value, you have to always look at these processes, see what's going wrong, what is better in another asset that I have, how can we implement it elsewhere. And having this energy and also this eye to to find detail is the third big characteristic that we look for, triple A entrepreneurs in our definition. I have a few follow up questions on how do you find those? How do you, maybe more importantly, they come to you, but how do you measure them? And what have you learned over the years? And maybe how you evaluating someone before they built anything. But what gives you this conviction that they might be this special guy or a guy who goes and builds a meaningful platform for you. And maybe there are some signals or some things which keep repeating or maybe there is something based on your experience. I feel like my answer is going to be really dissatisfactory, but that's just hard. So I can't say, I mean, I've mentioned the characteristics. I wouldn't say there's like three, four, five, six signals that are like universally true that this is someone great. What I can definitely say is a learning. I think abstract discussions don't make sense. Basically, in the end, I think that's the first thing I can do is to get a new perspective. In any context, you should give yourself time to make a diligence on a person. It's very difficult also in any investment context. You invest in third startup, you meet the founder team, especially if you're a small investor, two times, if at all. And then they show, have some great energy in that call, and you invest. Typically, these learnings are very limited. So in my experience, to have a good judgment on a person or a team, it just takes time. So there are people who give incredible reasons, but you need people who also deliver incredible numbers. I always say they send us a little bit their companies with reasons and their companies with results, and results take time. So you need to find a model that gives you time for them to show results. And given that in our specific model, I am entrusted with the capital of our investors, and we entrust this capital to our entrepreneurs and founders. So in a way, I leverage myself through these founders to get access to this micro-cap segment of small companies. So diligence, the people, and having an understanding what their strengths are, what their weaknesses are, is crucial to our model. And we do that over these extended periods of time. So I meet people long before they have a concrete idea of what kind of industry, what they want to build. And then we onboard them into a thing we call now even Academy, and where we provide them with tools, intros, access to different kind of best practices that we have learned over the years. And then we do monthly at the beginning and eventually bi-weekly sparring, where we speak about progress, speak about different ideas, analysis of markets, and so on. And if you do this with a couple of teams, even at the same time, the biggest enemy of someone good is someone better. So you see a lot of differences in the different teams. How fast is the team moving? How doors their analysis have they found something in particular? How active is their pipeline? And how self-motivated do they go out and meet people? How well do they negotiate potential multiples on which they can buy the companies? So over these extended periods of time you give yourself a chance to see results. And that's our way to kind of find incredible people. And we provide, you know, what I mentioned earlier, these tools and sparring and so on. And this comes for us at no strings attached. So the founders can do this with us. They don't have to take our money once they're actually an investable opportunity. We don't have to give the money. Once they're an investable opportunity, of course, if we spend an extended period of time with them, we believe in them as people. They can still be a market that we don't love and then we don't do it. But per se, we trust into them when we spend this long periods of time. And then we believe that given our strong focus on the segments and, you know, like a very centered and focused strategy, where value creation becomes then much easier. So the value that we provide to the founders and give them that we don't ask for anything for the no special conditions for having work with them for this extended period of time. We believe that we can build these entrusted relationships with founders. And then we want to be a no brainer partner that there's absolutely no reason to not take on. Now, what about the current environment with with roll ups? Because there is a lot of momentum and social proof that backing those by and build platforms can be extremely lucrative. You've also seen the early days. Where do you think we are currently when it comes to timing and how should a serious investor also this and also this talent that entrepreneurs think about the current environment of building a buy and build or a roll up? You know, buy and build has existed for decades. It's not that we invented something crazy. The thing we've done is we kind of changed the operating model on how we do buy and build by creating this model that is now a day job repeating myself more interesting for entrepreneurs. And so per se, this kind of roll up is now a bit of the word roll up by and build is going a bit through the kind of more main streets, I don't know, word of mouth, but it's been there for a long time. I still think we're in the early days. And if you look at the amount of capital that goes into roll ups and especially in small businesses versus the amount of companies that are out there and the workforce that is working in small businesses, we are very early. There are thousands of industries, verticals that can be consolidated. And so I think there's huge potential out there. And from a risk return perspective, I think that is probably the most attractive opportunity as a kind of young-ish person. So for us mid-ferties is the ideal age to do a roll up. However, I think there's also a massive misunderstanding in the market that people think it's easy. Like, oh, I'm going to go out there. This business has been profitable forever. I just buy them. I have someone leading it and then I buy a second one and I'll be extremely wealthy. Not at all the case. It is, you need, it's kind of what I would describe before. Like the intersection between high empathy, high drive, high regard is a very rare skill that it takes incredible amount of energy to go around and meet people, build these relationships. You have to be extremely sensible in how to structure and how to motivate people. And, you know, in the end, you're buying customers, you're buying people in these businesses. For these companies, it's a fundamental change in the history that someone else owns them now to kind of maintain these relationships, build trust, make the change management happen within these companies and create somewhat cultural identification with the new company. It is difficult. It is exhausting. It takes all your time. It takes all of your energy. And so I think the difficulty is still underestimated. Despite me thinking that risk return, it is an asset class is pretty unique. Yeah. Okay. Buying build has been around for decades. Focut to ask in the beginning, how old are you? Frederick. I am 34. Okay. So, 34, but you were already the early investor of this early breakout win this success story in Germany, the story of RCPA. Could you maybe talk a little bit about this? Number one, and number two, when young entrepreneurs listening, some of them, this AAA plus quality, what is your take on this RCPA case when it comes to skill versus timing and luck? Yeah. And so how did RCPA come along? And so I originally have a more of a background in tech, and so did BCG, then the two startups. And I was at some stage considering to do an MBA. And if you have a tech background, the probably most interesting MBA is Stanford. So I had looked into the Stanford MBA program. And stumbled over this thing called search funds, which now is also Main Street Chat in Europe. But when I had looked at it initially, which was some eight years ago, there was really no one talking about search funds here. So and that's kind of my first touch point to this whole ETA, so entrepreneurship through acquisition space. And I then spend a week or actually a couple of weeks with a friend, this seven years ago to discuss whether we redo a search fund. And we for a number of reasons then decided against it. And then a few years later, I got together with Felix who founded RCPA. And he also came from a startup and he's like, okay, I want to go to this cash generation businesses. And obviously having had looked into the space, at least in the adjacent space before, I was very open to kind of have a discussion with him. And we then spend a lot of time together to get them with this co-founder, Stefan. And effectively said that, you know, buying build is a very interesting option. Looked in what has been done, what kind of makes a interesting market. None of us really had a private equity background. And then the guys, I mean, I love the guys who did it as operators, namely Felix and Stefan. And at the beginning, it was also Alex. And the opportunity, you know, by and build as a whole and kind of what drives value in these businesses, especially comparing to venture. And then decided that I find that so incredibly interesting and that it is so kind of undervalued at the potential in the asset class that I've did a from my standards, incredibly large investments into into RCPA. And yeah, the rest of the story, I think you're covering with Felix in a separate podcast. Okay. I had this question, which I really wanted to ask. It was like at one, at what point in your career did you realize that packing people might actually matter more than finding the perfect business? Here I would like to change this question and ask from you. As you mentioned, you were thinking of starting a search fund, but you decided not to do it instead. some some time went by and you partnered with Felix and Stefan and you You built this RC Park group. So What was the what was what were the lessons there? What was the thought process for you of making such decisions during your your late late 20s? I'm not sure if we understand the question. So the decision to invest into RC power or the decision to not do the search Fundal not to do the search fund and then time went by and the opportunity game and you were able to build Make sense and so I mean Doing a search fund is a substantially different way of doing business and doing a roller and It's considered you know, I mentioned the ETA. It's kind of two different ways to do ETA But what you do on a daily basis is super different a search fund you buy a large company where you ideally operationally really change the company that company is typically not in a urban area but somewhere rural and you have to travel there Monday to first day at least to kind of have an impact on the company and As a matter of fact, I did not want to move and spend Monday to first day alone and in I don't know where and live there and to me my My time was was very important how I spent my time I work hard. I still work hard every day and But I try to at least sleep at home as often as I can and What you do in a roll-up is is is very different because it's much more transaction You probably travel much more, but it's less about discussing operational levels and with with your senior management It is more about and meeting a lot of people and it's more transactional It's more building relationships, which at least to my character fits more and so I think there's also no judgment I think one is good and yet is also good, but just for me personally I prefer this transactional business and I did not do RC by as an operator. I mean, I'm even one layer above above that. So I'm an investor and I think to me personally roll-ups offer this very obviously unique way to create value and I'm doing this fun now because to me it's a great combination of Like thinking big picture working with people and developing strategies, but at the same time We as a fund are very operational Not because we execute for the founders, but because we build a lot of processes in the end our vision is to enable Micro-cap bind builds at scale and there's so many things that you have you have to do as an as an operator team that you have to From legal perspective from a operational perspective from a process perspective from a partnership perspective and we want to build kind of the operating system for founders to do this and that's why I love what I do now because I have this you know I have this big picture thinking at the same time. I have this huge operational kind of Not burden but a job to do and so I can be an entrepreneur in many different perspectives now Again, you've seen this big picture seeing a company going from one acquisition to doing 80 acquisitions and then doing an exit so And then you're you're very young when it comes to being a GP and and seeing that so what have you changed your mind since seeing this success of RC But now and and going forward versus maybe you and considering the things you didn't know before our SIPP I think the second part of the question is more fitting to me because given that at least in the role of space I had no experience before at least RC by which now is already five years ago and so for me It wasn't about changing my mind. It was really learning on you know a more blank sheet of paper So if I would have done ten years of private equity, I probably would have needed to change my mind, but I didn't and So there's this plenty of Of of of of learnings that that we've had and how to create you know value So for example, everything is kind of a return on time So you need to very much and balance on how the founders spent their time and and what kind of creates value in in an exit and we've kind of learned that these very young ambitious people in their firties are in a perfect age where they have some experience so they have some presence when When they speak to to sellers, but at the same time they still have this energy to go out there and meet people 24/7 Whereas in the more traditional private equity sense they probably look for more experienced people a bit older that of course more experience in a certain industry and and they're better Managers potentially, but they're not in the train 24/7 meeting people So we've kind of learned that this there's a there's a trade-off between experience and energy and for our specific Model energy at least at the beginning of our journey is the is the more important one and You know we've learned that you don't need to Capture all the value in in the journey of when you build a roll-up initially, but you can build synergies You can optimize assets, but it's also okay to leave some value creation for the next owner and We've learned very much that it's a business about people I mean that everyone kind of says it's a people's business so it feels a bit like cheap to say it and but Especially at this time when everyone talks about AI and how much value you can lift with AI I think people forget that it's not about the technology. It's really about the distribution and the the mindset and psychology of people and working with people Exciting them for your journey taking them on board with you Is your downside protection because effectively just buying customers and people and To also limit the speeds at which you do a roll-up to kind of not have this alienation between a headquarter and and and different entities It's also a big learning in the end for us at the speed of growth for a roll-up is not defined by by capital And or by kind of headquarter talent But through the psychology of these people how fast can you actually implement change management? How fast can you create a cultural identification with a new company and and I think the demands of integration i.e You buy a lot of companies that are not just owned by the same person But are actually integrated into something that works as a whole Are are increasing and debt again puts the burden on this kind of change management or increases the burden on on or hurdle to to change management Now has your view changed when it comes to holding periods and the time horizon when it comes to investments because What I mean is There is this Being this fund manager versus maybe being this What is the right way to put it corporate form conglomerates where you Yeah compound for decades. What is your view has a changed over time? You're still young. I would say I don't have a specific view and And it hasn't changed that much I understand that you know the power of compounding is the eighth world wonder um how we see it a little bit you know I want to focus on what we're good at why are we good at we're good and finding these entrepreneurs young driven people that work in the long tail of companies creative vision create a kind of um some professionalized System of a company that then can be further professional professionalized later on and we are the right investors to kind of support you in that early journey And so the first four to five years when we have these small companies that are Sometimes super under the most times super under digitized and so much ready to capture and this is what we build our processes for I'm of the opinion that once you reach a certain size And the processes need to be different. I mean everyone who did startup investments knows you have like a startup Then you have like a CHA startup eventually have a scale up the nature of the company nature how you do business changes and I just think there are others who can support better in a next stage of a company at least To where we are today So for me having a kind of change in the shareholder structure to have someone in the cap table then that can build this process and has done it before And kind of helps the company enter the next level of professionalization makes sense to everyone and um So I I wouldn't I don't disagree with the power of compounding but in our model I think it makes sense to have a change of ownership at least where we stand today You can obviously always evolve in different directions Um to have someone else for the next step of professionalization You're working so closely with the operator so here I'm trying to Compare being an investor versus being a being an operator And really the difference between Inside a machine being inside the machine versus being responsible for the machine itself Where do you see the biggest Difference or or disconnect between investors and operators and what does each side consistently maybe on the estimate about the others job And I think the difference in incentives is much stronger in in venture capital than it is in in what we do you know in venture you have to strong portfolio logic And where you need to have an outlier return And otherwise it's not really worth your time So you always push the founders to have that outlier case while when you're a founder you know having a 5 million euros or 1 million euro or exits even is, can be life changing. So that creates a bit of an asymmetry in incentives. And I think in our case, that is not as strong given that we as a fund we want to have no writers. And so we want to return money in every single investment that we back and we will fight like lions that every single one of our investments will return money indeed. So there's no case where we have a drop of founder because that's part of the philosophy and also of the portfolio logic. Having said that, I think as with everything in life, everyone underestimates from each other the complexities of the detail. So I think as an investor, I'm obviously through the experience very sensibilized towards it. But I think these conversations that you have with the sellers, the patience you need to have to lead these conversations as the individual stories that play a role, you will never overestimate that because there's so many. And as long as you don't do it as an operator, you don't feel really for every story what could be the blockers. I have a board meeting. There has been a company that we've been discussing with six months. I'm like, what's going on? How can we bring this to closure? But then it could be that the owner had dinner with a friend of his and a horse. And that person then said, hey, have you considered this and that? And then they sleep by the button, then they don't want to do it. Or the daughter of the owner said, hey, that maybe I do want to take over the company after all, maybe when I finished my studies could kill the deal or prolong it. So these kind of details and to work, it requires from an operator is, I think, chronically can only be underestimated. Vice versa, I think, I don't own the execution in the platforms, but I own the design of these processes. So I'm speaking to all our investments, trying to understand how they've done things, why they've done it that way, which tools they've used, how did they use the tools, basically centralized the learning and then build the best in class process. And that also takes so much time and just getting to learnings, it's never prior to A for a company to share with us, but we obviously enforce it, given the mutual benefit to everyone. And then building out this process and these learnings and making sure it's really our opinion that this is the best way to do it also takes a lot of time. And I think that is probably also underestimated. Now you being this so-called designer and at the same time building for exit, you mentioned doing this three, four, five-year sprint of consolidating a market. So, and you, again, having this great experience of doing it successfully, looking back at this experience or experiences, what decisions were actually made on the early days? So you know that when this day comes, we are actually ready and prepared for a larger private equity to come in, whether it's growth with equity selling 100%, but you know you're ready. - So first, I want to say, you know, designed for exit. We are a fund, we want to exit. And I don't want to create the impression that what we do is like, you know, we just push them together and fast and let's go and sell it at whatever cost. Like, I think there's a world, especially with these companies that have so much value creation possible where yes, we designed for exit. Yes, our journeys are quick, but we are never quicker than we can excite to people for us. I mentioned that earlier. And one of the metrics that we use is that our groups are always net, net profitable. So the subsidiaries will always cover the cost of the headquarter and we will never have a headquarter that is as big that they would eat the profits of the subsidiaries. If you want to grow insanely quick, that's probably not going to work out. And same for depth. So we don't take depth levels where we have to feeling that if something just goes slightly wrong, the company, because the covenants are so tight, the companies is taken away from us. But we rather take lower levels of depth and it makes sense anyways, because the psychology of people, again, is the limiting factor. And where we also have some grieving space for times that may be not as shiny as we all want them to be. And at scale, we think that is the best risk return. Now having said that, designing or when do we know that your exit ready, I think it's hard to generalize. It depends on market momentum. It depends obviously what companies in their life cycle generally saying, we think you need to have crossed at least 10 million of EBITDA. And you need to show that you have built a functioning system in itself that can be the centerpiece for further growth. And that is all magic code word for it is integration. And that is the foundation for any exit. And then also designing for an obviously an outline multiple, everything else is on top. I wanted to ask this because I had a private equity GP of a BE fund on a show a half a year ago, Kajda Oveska, they buy companies in Northern Europe. And he said that the mistake he sees constantly smaller private equity firms making is just squeezing everything out from this opportunity and then trying to sell what they've done and what they see works extremely well is they live quite a lot of upside for the next buyer. And by doing that, they've been debuting many great outcomes. I mean, I'm happy I've said it before in the podcast where you didn't prompt me towards this answer where I said we do leave value creation for the next one. And everything is a return and time. So I fully agree with that. If we do diligence and one core point is the equity story of the next owner. So you don't need to diligence like, hey, can I get a company to go to 10, 15, 20 million ever done? And is there enough? And so on. What is the story of the next person? And they obviously want to see what you've done. They want to have it as easy as possible. And integration is kind of the foundation for that. But they also want to see that you have synergy potential. And of course, I can tell the story of synergies. But to give the story gravitas, I also want to have done it. But I don't need to do it in all of them because you leave value creation for the next owner. And that's also how you achieve outlier multiples. And that's also how you have enough space or time space. The wrong word, time for the founders to actually spend time on integration and M&A. So it's all a balance of where you spend your time and leaving value for the next owner is 100% crucial to the entire journey. So I fully agree. Now, you as an investor, I want to come back to this finding those people, but maybe more specifically, talking to those people. And when it comes to building trust, reputation, credibility. Because I mean, some people enter the buy and build world with built interest. There's true family, maybe networks, maybe institutional credentials. But then there is a lot of people who have none of that. And I was one of them, I was a lifelong salesperson. So what is your date when someone's listening and late 20s, early 30s? At the same time, they know how the game works. They are happy to cry and happy to work hard. What do you believe? What is some of the most effective ways on earning credibility and trust and then having a firm like yours to back them? You know, I'm so much into the kind of human game, as I mentioned before, I don't look-- don't look as alive, but I prioritize a conversation 10 times over a background. So for us, you could always reach out to us, we speak. And if you have great energy, and you know, you have like very analytical thinking and have a clear vision on how you want to do something, what you want to do and why you want to do it. And it doesn't mean that you need to have an industry thesis kind of lined up. But it's like, hey, I'm looking for-- like, I want to do a roll-up. This is why I want to do it. I think this is super important. I've already looked into the market. And these are my opinions. Like, what do you think? And just having a smart discussion goes a long way. So per se, there's nothing that you need to do from a background perspective. I do think that some do-making experience helps. It just makes you especially at the beginning much quicker. If you're in 20, beginning 30, I think it's on the young side of things. I would probably recommend you whatever your background before is to maybe go, you know, as a funders associate, or M&A associate, or whatever, in a roll-up, no matter who it is backed by, whether it's an entrepreneur or a roll-up or feedback roll-up to kind of learn what really works well to then take these learnings into your own journey. I think it's probably the most effective way to also be interesting for investors. But I think interesting-- be interesting to investors should always be a secondary motivator. The primary motivator should be, like, how can I really build a successful company? And um. or a roll-up in our specific case. And seeing what works is always a good idea and then doing that for two, three, four years and then maybe starting when you're 34, 35 is probably good advice for where I stand. - Before we hit record today, you said obviously you're extremely busy, a lot is going on. But for some reason you coming on the show, I heard about you and your story, I think like seven, eight months ago. So in order for you to attract those special individuals, you have to become more public. So what is your view when it comes to what are you going to share and what are you maybe keeping private? Where will be the line and where is the line? - So yeah, and becoming more public by also speaking to you today, which to me is an obligation. So I'd rather not be more public just because I'm not a character that wants to be in the somewhat public light. But obviously showing presence in ecosystem, spreading the word on what we're doing is extremely important to kind of be on the radar for for founders and people who want to do this kind of roll-ups. So that's why I'm becoming more public. Generally speaking, I'm a huge believer in execution. It's not rocket science what we do. So I would say especially comparing ourselves to traditional private equity, we're more open and more sharing. We syndicate our investments often with co-investors, not always, but often, we're just looking at a new deal. We have a co-investor asking like, "Hey guys, we have our CEO. We haven't really had a strong view on this." Do you, like what did your DTC and we're happy to share? So I'm a strong believer in excellence and execution. So we are relatively speaking, more open and happy to share. And I mean, as a concrete example, I mentioned even Academy before these people, they don't have to take money effectively from us. We still happy to share and support them. I strongly believe the kind of positive value contribution to the ecosystem. And I think there's so much to be built. And I also don't mind competition because I think the potential is so huge and kind of educating the market. I think there's rather positive synergy by having bit more competition. So generally speaking, I'm more open than I guess many of our private equity peers having sat that. I mean, I don't want to, you know, like I don't need to print on my forehead on what we do. But it's also not a state secret. - Now, thanks to this account, thanks to Twitter. I see just so many young and talented professionals are leaving large firms to build something, to build a roll up. So, but many of them, after a few years of searching or having an unsuccessful deal, they go back to where they were before if they can. So again, extremely competitive. Can you maybe add something here, what you have seen? Which could be some of the reasons, which those folks maybe not succeed. Is it just that they're giving, gave up too early? They ran out of money, savings. Is there something else? What you've seen? - So you know, giving up too early, and you actually asked a question before about luck, which I think I didn't really answer. I think, you know, luck is part of every journey. You need to just be lucky that you have to find the right company in the right time. But if you try often enough, luck will come your way. I think it's hard to kind of say, generally, oh, you guys don't try hard enough. And I'm in no position to judge that. You can do a, you know, a search face, if you want, in a search for terminology for two years. And it doesn't work. It doesn't mean that you didn't do well enough. You can also just have been unlucky. The three companies that you found, in every case, the seller decided last minute to not sell for any random reason that is outside your control. And then it fails three times. And then you're out of money and you need to go back to a job. I think that's just the reality of life. And I don't think that I could generalize and say people don't try hard enough. I don't know how to put this. This will be controversial anyways. But I mean, I want to empower people to obviously be entrepreneurial and fight for their own luck. But at the same time, I also see many people that want to be an entrepreneur for somewhat the wrong reasons. You know, it's like, hey, I want to be my own boss. I don't want anyone to tell me what to do. And I also see cases of people who, in their character, maybe shouldn't be an entrepreneur, still want to do their own journey. And I don't think not kind of being made, like if you're not wired to be an entrepreneur, it's not good or not bad. Like, you can do whatever you want. And every journey is respectful in itself. But I would just ask the tell people to be kind of reflected on yourself on what you're good at and what you're willing to give. If you're successful as an entrepreneur, it won't be easy. It will take all your time, it will take all your energy. It is risky, you will sleep badly. It is just a recipe to it. Any entrepreneur who has just a chill time is probably at least in our definition of financial returns, not successful enough. And again, that doesn't mean bad or good. It just needs to, you need to make sure what you prioritize for. And if you enter any sort of entrepreneur journey, just be aware of how it will impact also your private life and what it will take from you. - It's July, 2026. If we sat down 10 years from now, what would have to happen for you to say, haven't been exactly the investment firm you hoped for? You hoped to build. - Yes, and so traditionally in private equity, people start with small funds. They invested in the ones that are successful, they raise a follow-up fund where they have a bigger fund. And then they have to deploy these funds. And given that the fund is bigger, they typically then buy bigger companies. The advantage for them is you get more fees because it's percentage on the capital you manage. The disadvantage is for investors because the larger the companies that you already buy at entry, the more expensive they are to buy and the lower your returns are. And however, investing into these various more companies as we do, as mentioned multiple times in this call, it just takes a lot of time, it takes a lot of effort, it takes a lot of energy. So what we strive to build is we will never go upmarket as an investment firm. We will also want to build bigger funds further down the line. We don't want to grow like crazy, but we want to forever keep the same capital efficiency by buying the same size of businesses. And our fund size will always be determined by us thinking or analyzing how much capital can we deploy efficiently with kind of the capabilities and resources we have. And to answer the question in 10 years from now, if we've managed to scale in size, but have as I just outlined, have the state kind of loyal or the state true to ourselves in buying these more businesses, returning funds four to five times, which is our goal, having built that operating system, these processes that I've mentioned, to enable incredible entrepreneurs to do these rollups at scale I'll be extremely happy and that's our goal in vision. - Now seeing the current market and the amount of AAA plus people coming to you, do you wish you'd have more capital to deploy at this moment or you are exactly where you want to be at this stage? - And I'm exactly where I want to be at this stage. We not deploy more capital in that efficient manner that we want to do. I would like to have more ability to pay people because I need more resources and because there's so much to be effectively rebuilding this ecosystem from zero from a debt perspective, but also all these processes. And so I would love to have more people that I can run this show quicker. Brexit, we're also hiring a principle with a private equity background German speaking. So, reach out to us. But I don't want more capital, I want more resources so I can build this operating system to then also deploy more capital in the future. - Flywheel. - Flywheel, that is everything. - Okay, Frederic, this was great fun. Thanks a lot for sharing this journey. I want to have you come back on the show very soon because a lot is changing and you are busy. So let's do it again in a very near future but thanks a lot for coming to the show today. - We'd love that and thanks for having me again.