Already in the eighties, studies had highlighted the positive effect of individual and attentive service and support on the development of shareholdings. In their comparative effectiveness, simple investor supervision from supervisory or advisory boards is clearly inferior to a targeted engagement of experienced managers. Especially as the portfolio manager responsible does not have the time to devote to a single shareholding, this issue is outsourced. It is essential to give the company an additional perspective.
In particular, banks with investment interests in companies often choose to appoint a representative, who actively supports the company without intervention in management affairs.
In practice it is increasingly apparent, that even well-run medium-sized companies with high business potential require management support in the short or medium term. In this way it is possible to create quickly and sustainably optimal conditions for sustained growth in corporate value. In such a case, if requested, I would provide the necessary management know-how in consultation with all parties concerned.
Where necessary, business know-how (controlling, financial planning, balance sheet structure etc.) and additional resources (network) are incorporated into the shareholding commitment.
The aim is to support the shareholding company not only from a financial but also from a commercial point of view. This serves to secure return expectations. Moreover, the investor thus extends his own role beyond the standard quarterly consultations.
I view myself as a genuine sparring partner for management and company during the entire shareholding period of my investing client. For example this can relate to the analysis and discussions regarding company development. In this way the management is assisted in important strategic and operative positioning. The day-to-day company business remains unaffected. The basis is regular and transparent communication of information between company and investor.
Standard instruments used in shareholding/equity management include:
- Regular reporting
- Drafring quarterly reports
- Representation on company supervisory committee
- Support in controlling, tax optimisation and bookkeeping
- Support in management activities
- Support in marketing, financing and controlling
- Support in structuring further financing rounds
- Support in market-oriented activities
- Acquisition of initial business through long-standing market contacts
- Support in building up distribution structures in foreign markets
- Assistance in acquisition of management staff
- Cultivation of international contact to companies and institutions
- Assistance with process optimisation
ASPECTS AND BACKGROUND
If there is an iminent succession regulation in the shareholding company, it is recommended to give the situation special consideration. It is not unusual that well-situated companies with high business potential can be difficult to sell, as certain conditions are unfeasible. This includes, for example, an accounting policy, which was solely tax-oriented in the past. Also where the opportunities for tax optimisation are often not utilized sufficiently, e.g. through transfer of company head office or change of owner’s residence.
The remuneration is dependent on the size of the company, work input and reporting involved.
Where legal advice is required, transition-manager works closely with appropriately experienced law firms.