Acquiring, holding and further developing healthy industrial SMEs – that is GESCO AG’s strategy. 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.
Which companies is GESCO AG looking for? How does a transaction like this work? Find out under the heading Company Acquisition.
There are numerous successful SMEs in Germany which lack a succession plan. It is these companies on which GESCO AG focuses.
As part of a succession plan, we generally acquire 100 percent of the shares. However we do not pursue an exit strategy directed at the subsequent sale of the company. It is precisely this long-term
focus that many entrepreneurs wish for, as they want to see their life’s work in good hands.
If the company CEO wishes to retire after the sale, GESCO installs new management in consultation with the former. If the new management proves successful, they take on a 10 to 20 percent share in the company they manage. In this way the entrepreneurial components and a balance between the interests of all those involved are safeguarded: both management and GESCO AG as the majority shareholder are equally committed to the company’s long-term interests.
In order to remain successful in the long term, healthy finances are required. This includes strong equity, adequate liquidity and a manageable level of net bank debt. This applies to GESCO AG, and likewise to its subsidiaries.
Operational independence of the companies was and is an integral part of our strategy. Managing directors are responsible for day-to-day business. Purchasing, personnel and accounting are also within their remit. The holding company provides support in the form of controlling, coaching and consulting. Group issues such as cash pooling, group transfer prices or group contributions are strictly avoided.
Each company acts autonomously, but at the same time benefits from sharing experience and the transfer of know-how and best practice within the Group.
Well-managed SMEs have crucial strengths: streamlined decision-making, intimacy with the market, employees who identify well with the company, and the capacity to innovate. The result is convincing technical solutions that delight customers and create long-term loyalty.
Along with these traditional strengths, there is also a typical set of weaknesses to be found at SMEs: most technically educated founders or proprietors seldom focus sufficiently on financing issues. Strategy development can sometimes also fall victim to the demands of day-to-day business. Where there is a need, we address these matters, offer support and develop approaches for optimisation with the managing directors.
Much as we are convinced of the power of entrepreneurship, it is equally clear today that there are limits to the model of the sole decision-maker. Globalisation and digitisation have radically redefined the framework for business models. The pace of technological development is rapid. Complexity has increased significantly. This is the result of market developments, but also the multitude of regulations, from compliance and environmental regulations to matters of accounting and financing. Dealing with it all is both a question of management capacity, and also an economic issue. Margins must be high enough for an SME to even “afford” to meet all these requirements in the first place.
In view of all these challenges, it makes sense now more than ever for SMEs to be a part of a strong group, for entrepreneurs to abandon their isolated status, network and learn from each other. This is how collaboration has always been working under the GESCO model.