Mood barometer at the SuperReturn in Berlin

From my point of view — and I have been atten­ding the Super­Re­turn in Berlin every year for more than ten years now — it was as full as rarely before. You can tell that inves­tors from all over the world are drawn out again, with the goal of meeting like-minded people. But that’s just the quan­ti­ta­tive view of it. What was the quality, i.e. the mood: I had dozens of conver­sa­ti­ons with GPs, LPs and consul­tants and I can say that the mood was nuan­ced and hopeful. Diffe­ren­tia­ted certainly also because the macroe­co­no­mic deve­lo­p­ment as well as the inte­rest rate envi­ron­ment influence the diffe­rent stra­te­gies of the GPs — also depen­ding on the tran­sac­tion size — to diffe­rent degrees. The conclu­sion is that good compa­nies can conti­nue to be sold at high prices, while other invest­ments that are only “OK” or still have impro­ve­ments to make are slower to exit than they were a year ago. The market is in a tran­si­tory phase: ever­yone is more cautious, fund­rai­sing is slower across almost all fund types, and higher inte­rest rates and thus refi­nan­cing costs are redu­cing poten­tial leverage. Offen­sive tran­sac­tion proces­ses are ther­e­fore less common than they were at the begin­ning of 2022.

Howe­ver, a look at the past is also wort­hwhile here: in the past, deals were also imple­men­ted at compa­ra­ble inte­rest rates in private equity and M&A. So I think it will proba­bly take another quar­ter or two to get used to the envi­ron­ment, and then inves­tors’ money will find its way back to the invest­ments. Howe­ver, the issue of rapid value crea­tion through the pure leverage design of the tran­sac­tion is likely to remain chal­len­ging in this context

The opinion is, grosso modo, that almost ever­y­thing in fund­rai­sing conti­nues to take longer. Those who have a successful invest­ment stra­tegy and can also demons­trate perfor­mance will conti­nue to achieve their solid closings, albeit on average after a longer period of time. As an initial “self-funded self-finan­ced GP” we know rather complex fund­rai­sing situa­tions anyway. Having an estab­lished and fami­liar LP base is defi­ni­tely an advan­tage. My feeling from many LP conver­sa­ti­ons is that the LPs also select more and give “new” GPs a chance if exis­ting GP rela­ti­onships no longer run as expec­ted on the perfor­mance side. Another keyword is certainly “Modern Private Equity” which, in my defi­ni­tion, is charac­te­ri­zed among other things by the fact that the GP deals more deeply with the issues of lasting value crea­tion in the port­fo­lio compa­nies and more consciously not only designs busi­ness deve­lo­p­ment stra­te­gies for the invest­ments, but also ensu­res an imple­men­ta­tion that is sustainable. We are convin­ced that, with this in mind, it always makes a great deal of sense to recruit appro­priate profes­sio­nals to the port­fo­lio compa­nies on a perma­nent basis, rather than just brin­ging consul­tants on board for the short term.

Sustaina­bi­lity has always been an important compo­nent in the German SME sector. The entre­pre­neurs just didn’t know until recently that the whole thing would go under the term “ESG” (envi­ron­men­tal, social and gover­nance). The “S” and “G” have always been abso­lute value drivers for entre­pre­neurs and inves­tors alike. The “E” is also a home run for asset light compa­nies — our sweet spot — as the holdings gene­rally have few envi­ron­men­tally impactful acti­vi­ties and alre­ady meet the vast majo­rity of the crite­ria. For us, sustaina­bi­lity is unders­tood as a uniform, compre­hen­sive 360-degree process that we want to exem­plify as an inves­tor. In this way, we serve as a role model for entre­pre­neurs and want to convey the ESG under­stan­ding and its logic to the entire orga­niza­tion. For many of our port­fo­lio compa­nies, it also brings a direct compe­ti­tive advan­tage to address sustaina­bi­lity issues inten­si­vely and at an early stage and to commu­ni­cate this clearly to custo­mers. In order to track this on a fact-based basis, we have helped all compa­nies to imple­ment a conti­nuous ESG assess­ment in order to evaluate the asso­cia­ted impro­ve­ments on a quar­terly basis. The inte­gra­tion of these targets into the GF compen­sa­tion is a logi­cal compo­nent here. We have placed the topic at manage­ment level and, as of this year, have also hired a Head of ESG, who, with an eye on the invest­ment team and ESG, is the perfect link in the imple­men­ta­tion of sustaina­bi­lity goals.

About Chris­toph Kauter

With 25 years of busi­ness expe­ri­ence, Chris­toph is a seaso­ned expert in private equity, invest­ment, M&A, stra­tegy and busi­ness deve­lo­p­ment. He has held board posi­ti­ons at private equity firms since 2008 and has a proven track record in the acqui­si­tion, opera­tio­nal deve­lo­p­ment and exit of dozens of mid-sized compa­nies in the DACH region. Since foun­ding Beyond, he has estab­lished the company as a renow­ned and active GP in the German-spea­king asset-light segment in the lower mid-cap range, with insti­tu­tio­nal inves­tors as LPs in their funds.