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SHORT INTRODUCTION ON MANAGEMENT AND PRIVATE EQUITY TO: January 21, - - PowerPoint PPT Presentation
SHORT INTRODUCTION ON MANAGEMENT AND PRIVATE EQUITY TO: January 21, - - PowerPoint PPT Presentation
SHORT INTRODUCTION ON MANAGEMENT AND PRIVATE EQUITY TO: January 21, 2016 CONTENTS Introduction Remko Jager Summary profile Gilde Private equity history Venture capital, private equity and turnarounds Hands off and hands
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CV REMKO ARNOLD JAGER (1961)
30 YEAR TRACK RECORD IN BANKING AND M&A
Remko Jager (54) Managing Partner Gilde Equity Management Benelux
Education:
- 1984 BSc (Engineering; HTS Tilburg)
- 1991 MBA (Nimbas / Bradford)
- 1993 Amsterdam Institute of Finance
- 1996 ABNAMRO Nijenrode Senior Management Development Course
- 1999 NCD Nijenrode Commissarissen Cyclus
Joined Gilde in 1998
25 years of Dutch Private Equity experience
Background at ABN Amro and ABN Amro Participaties
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SUMMARY PROFILE GILDE EQUITY MANAGEMENT BENELUX
History dating back to 1982. Our team is dedicated to the Benelux mid-market since 1996
EUR 750 million long term funds under management, provided by reputable (inter)national investors as Rabobank, Allianz, Alpinvest and EIB
Invested in more than 50 mid-market buyouts together with entrepreneurial and ambitious management teams
Focus on growth, long term value creating strategy, actively supportive
Independent and partner-owned. Team of 14 professionals, working from offices in Utrecht and Antwerp
DEDICATED TO MANAGEMENT BUYOUTS IN THE BENELUX MID MARKET
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PROUD SHAREHOLDERS OF…
CURRENT AND PAST INVESTMENTS
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2016 1988
Multiple PE booms and crashes Unwinding large diversified conglomerates
1945-1980 1980-2000 2009-current
POST WOII HISTORY OF PRIVATE EQUITY
DIVIDED IN FOUR PHASES
2000-2008
Technology Leverage Economic growth Cheap leverage Operational improvements
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VENTURE CAPITAL, PRIVATE EQUITY AND TURNAROUNDS
ALL IN DIFFERENT PHASES OF THE LIFECYCLE
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HANDS OFF / HANDS ON INVESTORS
DEPENDING ON THE LEVEL OF RESPONSIBILITY AT THE MANAGEMENT TEAM
Hands-off investors
Responsibility in the hands of management; only concerned with macro perspective
Relies on periodic reporting
At worst, management feels that adequate support and coaching is not available and subsequently lack focus and direction
Hands-on investors
Highly involved in the day-to-day activities and decisions of the management team / company to be fully engaged in future success
Pro-active presence who’s continually encouraging and motivating management to promote operations
At worst, the hands-on approach can be seen as constant interference; management feeling not trusted / not ready for the tasks
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ANGLO-SAXON VERSUS RIJNLANDS PE MODEL
SHAREHOLDER VALUE OR STAKEHOLDER VALUE
KEY TAKE-AWAYS ANGLO-SAXON MODEL KEY TAKE-AWAYS RIJNLANDS MODEL
Making money is the motivation – shareholder value
Short-term profitability:
- (i) win-lose,
- (ii) may the best man win
- (iii) you are for or against us
- (iv) eat what you kill
Mindset is: money, power, heroism and usefulness of employees
“The American Dream”
Value creation is the motivation – stakeholder value
Continuity and trust with as keyword satisfaction (shareholders, customers and employees): win-win
Mindset is: craftsmanship, content and dignity of employees, social responsibility
“Shared values”
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VALUE CREATION IN PE
Total value will increase as a result of:
Repayment of bank debts
EBIT(DA) growth
Multiple arbitrage
DEPENDS ON IMPROVEMENT OF PROFITABILITY, DELEVERAGE AND MULTIPLE ARBITRAGE
Equity investment Deleverage EBITDA increase Multiple effect Equity at exit
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HANS BONGARTZ STUDY
Partner at KPMG Corporate Finance. INSEAD Master thesis has been finalized in January 2015
Survey was conducted among 60 senior PE professionals
The leadership capabilities of management are positively affecting corporate performance; 85% of the respondents indicate that over 50% of value creation during the investment period of a portfolio company depends on the quality of management – “Niet de tent, maar de vent”
PSYCHODYNAMICS IN THE INVESTOR – INVESTEE RELATIONSHIP
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% 25% - 50% 50% - 75% 75% - 100%
Percentage of value creation depending on MT
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12 Shareholders Meeting Supervisory (sounding) Board
PARTNERSHIP IN PRACTICE
- Management is responsible for running and controlling the day-to-day business (customer dealings etc.)
- Management / CEO forms statutory board of Newco, proxies will be tailored to the business
- Board regulations provide for certain decisions to be approved by supervisory board / shareholders
- Informal contacts and periodical meetings, to the point monthly reporting to SB and banks (P&L, BS, CF, KPIs)
FACILITATING ENTREPRENEURSHIP, CLEARLY DEFINED ROLES, PROFESSIONAL (INFORMAL) SETTING, GEARED TO FAST DECISION MAKING
Company Management
- Typically 1 to 2 meetings per year
- Approval of annual accounts and e.g. acquisitions and dividends
- Most decisions require simple majority – balance, minority protection through selected super-majority decisions
- SHA: corporate governance, leaver provisions, exit arrangements, good faith declaration, non-compete etc.
- Typically 4 to 6 meetings per year
- Three persons: 1 appointee by Gilde, 1 appointee by management and jointly chosen chairman
- Profiles will be drafted focused on the strategy of the business, i.e. ensuring added-value
- Approval of annual budget and during the year e.g. investments outside budget / above threshold
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MANAGEMENT AND GILDE
Pre-deal
CV
Internal reference checks (e.g. senior employees, direct reports, staff)
External reference checks (e.g. suppliers and clients)
Face-to-face meetings – personality and behaviour
Team dynamics
Capabilities and competences
Entrepreneurship and strategic vision Post-deal
Realization of business plans, 100 days plans, budgets, etc. / company performance
Ability to make decisions
Leadership skills, teambuilding and style
Adaptability to changing market conditions (a/o new phase with PE)
Personnel and customer satisfaction surveys
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POTENTIAL CONTRADICTIONS MANAGEMENT AND PE
Topic Management Private equity Vision and goals/strategy Long-term Short-term Remuneration policy Based on the operation Based on realization of plans Control and entrepreneurship Limited control of PE Maximum needed control Exit strategy Long-term focused / beyond exit Exit focused Management changes Personal interest Company interest
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