The strategy: SME-based, entrepreneurial, long-term
Acquiring, holding and further developing healthy industrial SMEs – that is GESCO AG’s strategy since it was founded in 1989. Our companies manage their operations independently under the umbrella of a slim-line holding company, but with its support. The goal: a strong group of “hidden champions”, market and technology leaders.
Specialising in succession issues in SMEs
There are numerous successful SMEs in Germany which lack a succession plan. It is these companies on which GESCO AG focuses. Be it that the entrepreneur wants to leave the company quickly after the sale, be it that he wants to stay on board and further develop his company together with an industry experienced partner.
Which companies is GESCO AG looking for? How does a transaction like this work? Find out under the heading Company Acquisition.
The new chapter: NEXT LEVEL
In the 30th year of its existence, GESCO has opened a new chapter in the company's history with the NEXT LEVEL strategy.
The aim: to make the GESCO Group fit for the future, to create added value at all levels and to achieve above-average values in terms of sales growth, margin and cash flow.
Portfolio architecture: In addition to the Dörrenberg Group, two other larger companies are to be established as new core holdings. This can take the form of acquisitions or the further development of an existing company. In addition, a group of basic holdings will continue to contribute relevant sales and earnings. This will make the portfolio more balanced and resilient.
Hidden champions: We will develop the Group's companies systematically and sustainably. With programmes for operational excellence, for the active development of market presence and product portfolios as well as for sharpening leadership skills and corporate culture. Ultimately, all companies are hidden champions, or at least recognizably on their way there.
Interview with Ralph Rumberg (CEO) Strategy NEXT LEVEL
Mr Rumberg holds the Executive Board responsibility for the strategic and operational development of all the group’s industrial companies as well as the area of M&A.
The name of the new GESCO strategy is NEXT LEVEL. What is the vision behind it, and what goals are you pursuing?
At its core, we want to advance GESCO to the next level – each individual company and GESCO AG as the holding company, and therefore the Group as a whole. We are pursuing two main goals: First, we want to make our portfolio more balanced and therefore more resilient to economic cycles. As doing so necessarily affects our acquisition activity, we have realigned our M&A approach. Second, we also want to make GESCO a group of true hidden champions. With that aim in mind, we have launched a series of excellence programmes.
What do you understand the term „Hidden Champion“ to mean?
Traits such as a proximity to the market and customers, as well as innovative strength, are important to us. This basis makes it possible for companies to anticipate their customers’ needs. It’s not a question of size. Companies that maintain a leading position in a niche market have usually created high barriers to entry, and that should be reflected in performance.
Are all of the Group’s companies hidden champions?
No, of course not. That was not the motivation behind each and every one of GESCO’s acquisitions. But in the medium term, all of our companies should either be hidden champions or clearly on their way there.
Your plan is to make the portfolio more balanced and resilient. What do you mean by that?
In our portfolio, we have one company – the Dörrenberg Group – that is clearly and significantly larger than the others. Since taking it over in 1996, GESCO AG has acquired a whole host of further SMEs. Yet Dörrenberg has developed fantastically and has grown very dynamically, meaning that its weighting in the portfolio is still high. That’s why we are looking to establish two further major companies with different target markets in addition to Dörrenberg. We call these three subsidiaries anchor investments.
And in addition to these three anchor investments?
That’s where we see a circle of companies we call base investments. They form the broad base of GESCO and make substantial sales and earnings contributions. At the same time, they round off the portfolio and are active in a variety of markets, thereby contributing to diversification, which remains an important aspect.
How do you plan to take the individual companies to their respective next levels?
Our excellence programmes are the main tool for achieving that. I’ve found actively managing corporate processes – systematically, consciously and consistently – to be very beneficial. We transfer methods, tools and expertise that are often commonplace at major corporations to the SME sector in an appropriate form. Major corporations and SMEs each have their specific strengths and weaknesses. We want to get as close as possible to combining the best of both worlds. Our first step is to launch market, product and operative excellence programmes, or MAPEX and OPEX for short.
What to you consider most important?
Ultimately, the path to being a hidden champion starts with the will to be a hidden champion. As so often in life, it’s a question of mindset and attitude, which makes the path to becoming a hidden champion a leadership task. This kind of corporate culture also attracts talents. Who doesn’t want to work at a successful company with a strong team spirit?