“Private equity needs interimers”

At the most recent private equity forum in NRW, Germany, one thing became abundantly clear: The temporary employment business is booming. According to expert Dr. Ulrich Lehmann, this means many new opportunities for interim managers.

Ulrich Lehmann ist Experte für das Private Equity-Geschäft.

Dr. Lehmann, you have been active in the private equity business for many years. At the beginning of the new millennium the existing business model was under critique in Germany. What is the view on the industry nowadays?

Private equity investments have meanwhile established themselves as a successful business model in Germany. Not only for investor, but for companies as well. The former reputation for being financial locusts, has abated. Meanwhile, private equity investments are welcome, because they are good for business. Private equity is not about taking companies apart, but rather helping them fulfil their potential, and thus, make them more valuable. Many known domestic companies like Grohe, Stada and Hugo Boss has been bought by private investors in the past years.

In January you took part in the Private Equity Forum NRW. As an expert, how do you assess the continued boom in the industry?

Wolfgang Lubert (2. v. l.), Vorsitzender des Private Equity Forums NRW.

Wolfgang Lubert (2. v. l.), Vorsitzender des Private Equity Forums NRW.

It is a fact that increasing numbers of competitors are fighting for good deals in the market. The investment potential is relatively stable, there are however only a certain number of companies with top performance potential. This increases the positive evaluations of those companies significantly. Big money is present in the industry as private equity funds are a popular form of investment due to the manageable risk and the significant returns. Current data from the private equity forum NRW shows that there are around 570 billion euros worldwide in these funds, that have yet to be invested. In comparison, In Germany participation funds invested a record 5 billion euros in the past year. From the perspective of an interim manager I can say that this industry will provide interim managers a lot of new opportunities in the coming years.

Why are interim managers in demand in the private equity industry?

Aktuelle Zahlen des Private-Equity-Forums NRW zeigen, dass in sämtlichen Private-Equity-Fonds weltweit derzeit 570 Milliarden Euro liegen, die noch nicht investiert sind.

Dr. Ulrich Lehmann

Profit multipliers, which play a role in determining purchasing price, are currently at a record high; at the forum event in Düsseldorf a factor of 12.5 was mentioned. To be able to sell such companies for a profit and to increase their value, high performance is required in the operative business. A specific know-how of price optimization in sales, supplier reduction, reduction of complexity, and increased production efficiency. Interim managers are ideal for these positions because they have the fitting experience and are able to demonstrate success. Contrary to interim managers, private equity investors make a cold start into a new company. Interim managers are used to implementing measure from day one. The pressure of the ‘100 Day’ program is part of the everyday experience of every interim manager.

Several private equity firms have in house consultancies at their disposal, especially for the supervision of their own departments. Was does that mean for the opportunities of interim managers?

It is true that large scale companies such as Kohlberg Kravis Roberts & Co. (KKR) have their own consultants. They have recognized that it is expedient to provide operational support to the portfolio companies. Due to the increasing number of private equity deals the demand for consultants in on the rise. For smaller private equity firms, interim managers are worth their weight in gold as they can be utilized in projects as well as in operative roles. Interim managers who are interested in this field can use events such as the private equity forum NRW to meet key figures in the industry and establish new contacts.

Fotos: Hanne Engwald / Private-Equity-Forum NRW.
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