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INVESTMENT PHILOSOPHY

OUR MISSION STATEMENT

Stock exchange-listed Deutsche Beteiligungs AG invests in well-positioned mid-sized companies with potential for growth.

For many years, we have focused on industrial business models in selected sectors. With our experience, expertise and equity, we support our portfolio companies in implementing their sustainable, value-creating corporate strategies.

Our entrepreneurial approach to investing has made us a sought-after investment partner in the German-speaking world. We have achieved superior performance over many years – for our portfolio companies as well as for our shareholders and investors.

OUR INVESTMENT STRATEGY

Deutsche Beteiligungs AG provides equity and is a hands-on partner. With the long experience of our investment team, our in-depth knowledge of key sectors of Germany’s Mittelstand and our network, we support our portfolio companies in exploiting their potential. To that end, we pursue an entrepreneurial approach: we give the leeway needed for them to successfully accomplish their strategic development. We believe that the value of our portfolio companies will increase particularly when they remain well-positioned beyond the time of our investment.

Different situations could be occasions for an investment by DBAG:

  • a succession solution in a family-owned business
  • split-offs of peripheral activities from large corporations
  • a sale from the portfolio of another financial investor
  • a capital requirement to fund a company’s growth

Correspondingly, an investment can involve equity or equity-like instruments, taking either majority or minority positions. The first three financing situations mentioned above will usually be structured as majority acquisitions. Growth financing, on the other hand, is made by way of a minority interest or by providing equity-like funding.

OUR INVESTMENT CRITERIA

Our focus is on investments in companies with an enterprise value of between 50 and 250 million euros, i.e. companies at the upper end of the mid-market segment.

Geographically, we concentrate on companies domiciled – or whose business is centred – in the German-speaking countries (Germany, Austria and Switzerland region). Any of our investments outside this region, for example in northern Italy, are exclusively in the sectors in which we have many years of investment experience.

We attach importance to entrepreneurially-driven management teams that are able to realise the agreed objectives. The companies that are a good fit for our investment universe are also characterised by leadership positions in their (possibly small) markets, strong innovative capacity and future-viable products. The business models of these companies are also aimed at reaping the benefits from the key structural trends in their respective sectors.

Germany is home to many mid-market companies. Deutsche Beteiligungs AG has always had investments in the mechanical and plant engineering sector, in the automotive supply industry, in industrial service providers, as well as in industrial component manufacturers, a segment that has also included IndustryTech companies for some time now – i.e. companies whose products provide the basis for automation, robotics and digitalisation. For a few years now, companies with mature and attractive business models that match our investment criteria have also been found increasingly in new fast-growing sectors, such as broadband telecommunications, the software industry and the healthcare sector. The founders of these companies have also opened up more to financial investors over the last few years.

Potential portfolio companies have proven business models. They tap their development potential more fully when they expand their strategic position or improve operational processes, for example. A leading market position is important, as are an experienced management team, innovative power and future-viable products. This approach excludes investments in early-stage companies with unproven business models, or companies with a strong restructuring need.

OUR PROPOSITION

Exercising entrepreneurial scope and accepting personal responsibility in building a company’s value – Deutsche Beteiligungs AG offers that opportunity to board members, executives and other experienced managerial staff. Drawing on our broad experience and knowledge, we are committed to being a responsible and reliable partner for management buyouts (MBOs) – the acquisition of a company in partnership with its management. The same applies to management buy-ins (MBIs), in which a company is acquired by external managers with the support of a financial investor.

In both instances – MBOs and MBIs – corporate concepts are needed to further develop a company. The challenges involved may encompass improving a company’s strategic position and operational performance. Frequently, the concepts will include making add-on acquisitions to grow the acquired company inorganically. In addition to equity, Deutsche Beteiligungs AG offers its portfolio companies the experience it has gained during more than 300 transactions in the German mid-market segment. Over the years, we have built an extensive network of entrepreneurs and industrial experts. Our investment partners benefit from that network when members of our investment team or one of our industrial experts take a seat on their supervisory board or advisory council.

Board members, managers and, in certain instances, other senior executives personally invest in an MBO or MBI. They profit directly from a company’s positive development, while also sharing in the risks.

Companies change, and certain divisions may no longer be at the top of an organisation’s agenda after a strategic realignment; others can develop from a core business to a peripheral activity. Frequently, one appropriate solution is spinning off such divisions or divesting subsidiaries that are no longer part of a company’s core activities.

In such situations, short decision-taking lines, financial strength and an impressive track record make us a sound, dependable partner to vendors. Deutsche Beteiligungs AG is known for its outstanding reliability. Our large investment team is able to mobilise the necessary resources to quickly implement a spin-off or the sale of a business entity. Our market leadership position, the transparency that comes from our public listing and our longstanding market presence make us a trustworthy and esteemed buyer and new owner for employees and customers alike.

Germany is a nation of family-run businesses. They are considered the backbone of the German economy. Many are passed on from generation to generation. However, a successor from the family is not always available when a transition is imminent in the ownership base or, for that matter, in the company’s senior management as well.

Deutsche Beteiligungs AG is firmly rooted in Germany’s Mittelstand. We well understand and share the values that drive this important branch of the economy. Particularly for that reason, DBAG and its advised DBAG funds regularly finance the transition of family businesses to a new ownership base, for instance, through a management buyout. The founding families often remain invested when the succession issue is addressed through a financial investor, thereby profiting from the company’s positive development and ensuring continuity.

Seizing market opportunities is paramount for profitable growth. Yet it takes capital to develop innovative products, enter new markets or make strategic acquisitions that expand a company’s portfolio or geographical presence. Deutsche Beteiligungs AG provides the capital for many such situations – either by way of a direct investment or by equity-like instruments. We have been operating in Germany’s Mittelstand for more than 50 years and are very familiar with the financing requirements of growing mid-sized companies. Our extensive network of industrial experts is accessible for growth financings as well.

Growth financings in the form of a minority investment can also enable a change in a portfolio company’s ownership base. Moreover, additional equity can help to restructure balance sheets. That creates entrepreneurial scope.

We offer a trusting partnership to companies wanting to retain control and develop their businesses with our support. We invest for a defined growth phase of up to ten years and, during that period, share rewards as well as risks.

 

EXAMPLE
MANAGEMENT BUYOUT

BROETJE-AUTOMATION
MECHANICAL AND PLANT ENGINEERING

EXAMPLE
GROWTH FINANCING

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