Introduction

It’s becoming crucial for smaller companies in distribution with heavy service components to team up with larger groups. This is especially true for those facing the growing expectations of customers and dealing with more complex operations. This article dives into how consolidation creates unprecedented value for the customers. We’ll focus on key factors like improving sales, smart procurement, efficient logistics and creating more sales opportunities. These factors play a vital role in meeting the rising demands of customers and handling the increased complexities of day-to-day operations, making integration and collaboration initiatives successful.

In distribution, where service quality is paramount, small-cap integration strategies take on a specialised dimension. The focus extends beyond traditional synergies to encompass the elevation of service standards and market positioning. As Managing Partner Fabian Kroeher of Winterberg Group AG notes, “In distribution, value creation is not just about scale; it’s about creating a seamless customer experience and unlocking the potential for cross-sales.

I. Sales Excellence: Professionalizing Sales People and Processes

In the realm of sales excellence, leveraging the benefits of integrating smaller entities into a larger group extends beyond efficiency gains. One notable advantage is the heightened attractiveness for sales personnel. As smaller companies join a larger group, the collective strength and resources make the employer more appealing, attracting top-tier sales talent.

Moreover, the integration allows for a more strategic allocation of sales staff. By dividing them into product specialists, each focused on specific offerings, the team becomes more knowledgeable about the products they represent. This specialisation not only enhances the quality of customer interactions but also enables the sales force to provide tailored solutions, showcasing an unprecedented level of expertise in the marketplace. As Fabian Kroeher emphasizes, “Being able to attract top sales talent and having specialists who truly understand the intricacies of our products are integral to delivering a superior customer experience.

II. Procurement Excellence: Sourcing the Best Products Worldwide

A key benefit of operating under a larger entity lies in moving beyond opportunistic product-sourcing approaches and having dedicated personnel focused on identifying and securing the best products. This strategic shift ensures that procurement activities are driven by a more systematic and targeted approach, opening up increased opportunities in the global marketplace.

Additionally, a critical element of this procurement capability is the ability to tackle logistical and regulatory challenges. An integrated group, with its consolidated resources, can navigate complex regulatory landscapes more effectively, ensuring a smoother and more compliant import process.

From a manufacturer’s perspective, collaborations with such integrated groups become more attractive. Dealing with a leading business in a foreign country, rather than managing relationships with multiple small-sized businesses, offers manufacturers a streamlined and efficient partnership.

III. Professional Logistics and Fulfillment

Within the domain of professional logistics and fulfillment, the benefits of integrating smaller entities into a larger group become particularly evident in the creation of unparalleled service levels for end-customers. A pivotal aspect of this enhanced service is the establishment of swift in-house delivery capabilities, which come at no additional cost for the customers.

This achievement is uniquely made possible due to the scale of the integrated business. The larger size enables more efficient routing, allowing for streamlined logistics operations. Consequently, the optimized use of routes contributes to quicker deliveries and, importantly, allows for the absorption of delivery costs without imposing an extra burden on the customers.

IV. Cross-Sales Potential

Cross-sales potential emerges as a distinctive value lever in distribution businesses with value-added services embracing the benefits of integration into a larger group. By integrating companies with complementary product lines or service offerings, the consolidated entity can unlock cross-selling opportunities. This not only expands revenue streams but also reinforces the value proposition for customers.

Challenges and Mitigation Strategies

While the outlined levers contribute to value creation, challenges persist. Managing the transition from diverse sales cultures, aligning procurement processes and integrating logistics networks require careful planning. Fabian Kroeher advises, “The key is a phased approach. Communicate transparently, and build a collaborative culture that values the unique strengths each integrated entity brings.

Conclusion

In the realm of distribution businesses with a high service component, embracing the benefits of integration into a larger group offers a tailored approach to value creation. By emphasizing sales excellence, procurement efficiency, professional logistics and fulfillment, and cross-sales potential, companies can not only achieve economies of scale but also elevate their service standards and market position. As Managing Partner Fabian Kroeher rightly notes, “In distribution, it’s about more than just the numbers; it’s about creating a holistic customer experience that resonates and ensures sustainable growth, also in the B2B space.

The entrepreneurial spirit, a cornerstone of the global economy, has traditionally thrived on personal relationships, handshakes and a keen understanding of local markets. But the tide is turning. A digital tsunami is reshaping the way businesses, particularly small and medium-sized enterprises (SMEs), connect with customers and drive sales. The digitization of sales channels is massively disrupting established distribution and service business models for SMEs. Traditional sales-focused SMEs relying on offline channels struggle to keep up in today’s digital-first world. Meanwhile, born-digital startups are grasping new opportunities presented by innovative online sales and service delivery models.

Winterberg Group, a multi-family office investment firm at the forefront of innovation, foresees this digital disruption as a game-changer for SMEs in distribution and services.

Fabian Kroeher, Co-Founder and Executive Director of Winterberg Group, aptly summarizes the landscape: “The digital revolution is like a seismic shift, and SMEs who adapt will not only survive but thrive.” His words carry the weight of Winterberg’s extensive experience in identifying and supporting high-growth businesses across various sectors. So, how exactly are digital sales channels disrupting the traditional playbook for SMEs in distribution and services?

E-commerce Platforms Level the Playing Field

One of the most disruptive forces has been the rise of e-commerce platforms like Amazon which allow any business to easily set up an online store and reach a global customer base. “Platforms have removed traditional barriers to entry. Now even the smallest operation can theoretically compete globally on a level playing field with large incumbents,” says Fabian Kroeher.

Previously, physical distribution networks, supply chain scale advantages and large marketing budgets gave established players an edge over smaller competitors. Now, SMEs can plug into an existing customer base and fulfillment infrastructure for a small commission. They gain access to advanced digital marketing and analytics tools previously only affordable for big corporations.

This democratization of distribution has been a boon for many entrepreneurs and artisans. However, it has also squeezed margins as competition intensified. Popular categories need to be more supplied with me-too products. Standing out requires heavy investment in search engine optimization, product photography, customer reviews, and other techniques.

Rise of Specialised Marketplaces

Specialised marketplaces focused on niche product categories have further leveled the playing field. Examples include sites like Etsy for crafts and handmade goods or Anthropic for industrial equipment. “These marketplaces allow small businesses to tap into global demand for very specific needs,” says Fabian Kroeher.

For example, a niche equipment manufacturer that previously relied on engineered-to-order sales can now advertise standard models to a global base of potential buyers. This opens new revenue streams while reducing risks associated with custom projects. It also exposes these businesses to international buyers earlier in their growth journey.

Like broad e-commerce platforms, marketplaces provide established sales and fulfillment infrastructure. However, they tend to attract a more qualified type of buyer already searching for that specific product category. Competition also remains relatively specialised rather than cutthroat across all product categories.

Digital Tools Transform Service Industries

Distribution isn’t the only area disrupted – the digitalization of service delivery poses an even more existential threat to traditional offline service providers. Customers now expect a 24/7 digitally-enabled customer experience on their terms. For example, healthcare, legal and financial advisors are embracing telehealth/telemedicine, video conferencing and robo-advisors.

Customers complete paperwork, submit documents and engage with services without ever stepping into a physical branch. Payments move online, and intelligent chatbots handle basic inquiries. Fabian Kroeher of Winterberg Group states, “Service businesses must understand emerging preferences and evolve accordingly. Those clinging to outdated models risk losing ground quickly to born-digital innovators.

Progressive SMEs are developing virtual frontends for traditionally offline services. For instance, local repair shops offer appointment booking, payment and status updates via mobile-responsive websites and apps. Customers gain transparency and control while technicians organize schedules more efficiently. Over time, artificial intelligence and IoT sensors may automate parts of the service process end-to-end.

The Winterberg Group Perspective

Winterberg Group is a multi-family office investment firm that helps SMEs adapt to the changing business landscape. The firm was founded by Fabian Kroeher, who serves as the Co-Founder and Executive Director of Winterberg Group. Winterberg Group provides investment and strategy consulting services to SMEs.

Fabian Kroeher, speaking for Winterberg Group, states, “While digital disruption presents challenges, it also unlocks immense opportunities for SMEs in distribution and services. By embracing new technologies and adapting to changing customer behavior, businesses can not only weather the storm but emerge stronger and more competitive.” Winterberg Group’s commitment to innovation and its support for high-growth ventures positions it as a valuable partner for SMEs navigating the digital transformation.

Final Words

The digital sales revolution is not a fad – it’s a seismic shift reshaping the distribution and services landscape. By embracing the change, riding the waves with agility and leveraging the power of digital channels, SMEs can not only survive but thrive in this exciting new era. “The future belongs to those who are daring enough to dive into the digital tsunami, not those who wait for it to wash over them.”, said Fabian Kroeher.

In the dynamic private equity world, the buy-and-build strategy has emerged as a compelling value creation and portfolio growth approach. This strategy involves acquiring a platform company and expanding its reach and capabilities through strategic acquisitions of complementary businesses. By carefully selecting and integrating these add-on acquisitions, private equity firms can unlock significant synergies, enhance market share and drive exponential growth.

Fabian Kroeher, Co-Founder and Executive Director of Winterberg Group emphasizes this approach’s significance, “Buy-and-build strategies offer a unique opportunity to create value in a controlled and focused manner. By carefully selecting and integrating complementary businesses, we can leverage the strengths of each entity to achieve exponential growth and market dominance.

What is a Buy and Build Strategy?

A buy and build strategy involves a private equity firm acquiring a platform company in a specific industry or market. Then, the firm looks to grow the platform company organically and inorganically through add-on acquisitions of complementary businesses. The aim is to use the earnings and capital of the initial platform investment to purchase additional companies that either expand the platform company’s service offering or geographical reach.

Over time, the portfolio becomes a more sizeable and diversified business by integrating the add-ons. Fabian Kroeher states, “The buy-and-build strategy is a powerful tool for creating value in private equity investments. However, this strategy should be used with caution. The buy-and-build strategy is only appropriate for some businesses or situations. Before employing this strategy, it is critical to consider the risks and benefits carefully.

Benefits of the Buy-and-Build Strategy for Investors

The buy-and-build strategy offers many benefits for private equity investors, making it a highly attractive option in the current investment landscape.

Accelerated Growth.  Unlike organic growth, which can be slow and incremental, the buy-and-build strategy allows for rapid expansion by acquiring companies already established in their respective markets. This accelerated growth can significantly boost returns for investors.

Synergistic Value Creation. Integrating add-on acquisitions can lead to substantial synergies, such as cost savings through economies of scale, revenue enhancement through cross-selling opportunities and increased market power. These synergies can significantly enhance the overall value of the platform company.

Strategic Flexibility. The buy-and-build strategy allows investors to tailor their portfolios to market trends and opportunities. Investors can create a diversified and resilient portfolio by acquiring companies with complementary products, services or geographic reach.

Considerations for Investors

While the buy-and-build strategy presents numerous advantages, investors must consider several factors before adopting this approach.

Integration Challenges. Integrating multiple acquisitions into a cohesive unit can be complex and demanding. Investors must have the expertise and resources to effectively manage this process, ensuring that cultural integration, operational efficiencies and strategic alignment are achieved.

Acquisition Risk. Identifying and successfully executing add-on acquisitions is critical for the success of the buy-and-build strategy. Investors must carefully evaluate potential targets, assess their strategic fit and negotiate favourable terms to minimize risk.

Financial Discipline. The buy-and-build strategy can be capital-intensive, requiring careful financial planning and execution. Investors must ensure they have the necessary funding to support the platform company and potential acquisitions while maintaining a healthy balance sheet.

Benefits of the Buy-and-Build Strategy for Sellers

The buy-and-build strategy can also offer significant benefits for sellers, providing them with attractive exit opportunities and enhanced value realisation.

Premium Valuation. Sellers can often achieve higher valuations when their companies are part of a buy-and-build strategy. This is because the acquirer is not just buying a standalone company but also the potential for future growth and synergies.

Strategic Legacy.  Sellers can take pride in knowing that their company will continue to grow and thrive as part of a larger, more diversified entity. This legacy can be particularly meaningful for founders and entrepreneurs who have invested their heart and soul into building their businesses.

Access to Expertise and Resources. By joining a larger organisation, sellers gain access to the acquirer’s expertise and resources, which can help them accelerate their growth plans and achieve their business objectives.

Considerations for Sellers

Sellers should carefully evaluate the potential acquirer and their buy-and-build strategy before entering into agreements.

Cultural Fit. Sellers should ensure their company’s culture and values align with the acquirer’s. A strong cultural fit can facilitate a smoother integration process and increase the likelihood of long-term success.

Strategic Fit. Sellers should assess whether their company’s products, services and geographic reach complement the acquirer’s existing portfolio. A strong strategic fit will maximize the potential synergies and value-creation opportunities.

Exit Strategy. Sellers should carefully negotiate the terms of their exit, including the timing, valuation and form of payment. A well-defined exit strategy will ensure that their interests are protected and that they reap the full rewards of their investment.

The Role of Winterberg Group in Buy-and-Build Strategies

Winterberg Group, led by Co-Founder and Executive Director Fabian Kroeher, is a leading advisor to private equity firms and sellers executing buy-and-build strategies. With a deep understanding of the buy-and-build landscape and a proven track record of success, Winterberg Group provides comprehensive support throughout the entire investment process, from identifying and evaluating potential platform companies to executing add-on acquisitions and managing post-merger integration. By partnering with Winterberg Group, investors and sellers can access the firm’s deep expertise, extensive experience and proven track record in successfully executing buy-and-build strategies. Winterberg Group’s commitment to value creation and its focus on mitigating risks make it a trusted advisor in the buy-and-build space.

Final Words

Buy-and-build strategies offer a compelling approach for private equity investors seeking to create value in fragmented industries. However, successfully executing these strategies requires careful planning, industry expertise and navigating complex integration challenges. Sellers can also benefit from participating in buy-and-build strategies, gaining access to new markets, capabilities and financial resources while sharing in the value-creation process. By carefully considering the potential benefits and challenges, investors and sellers can make informed decisions about whether a buy-and-build strategy fits their specific goals and circumstances.

Healthcare Holding Schweiz AG, a Leading Swiss Medtech Services and Distribution Group, managed by Winterberg Advisory GmbH, expands Portfolio with Mikrona Group AG acquisition.

 

Baar, Switzerland – November 2023

 

Healthcare Holding Schweiz AG has successfully acquired Mikrona Group AG. Mikrona Group, including its business unit Ortho Walker, expands Healthcare Holding’s offering by the full range of Orthodontic and selected Dental products – including Orthora 200, Europe’s most popular orthodontic treatment unit, LX Master™ Mirror, an innovative dental mirror which includes different types of light and proud winner of the reddot design award 2023, as well as the biggest product offering of orthodontic parts and consumables in Switzerland representing all major international brands. As a founding member of the ICCO (Interdisciplinary Competence Center of Orthodontics) Mikrona Group supports orthodontists, dentists, oral surgeons, speech therapists and other related professionals to further improve treatment and life quality of all patients.

The integration of Mikrona and Ortho Walker into our platform is a major expansion of our offering in Orthodontics and Dental. It underscores our objective to become the undisputed market leader of Medical Product Distribution and Services in Switzerland,” stated Fabian Kroeher, Executive Director of Winterberg.

Healhcare Holding is the next step to continue our successful growth. When Beat Braegger, Lukas Gayler and I bought Mikrona as a succession case in 2014, we would have never dreamed to develop the company that far in Switzerland and internationally. With the support of a financially strong and experienced group, we will continue our success story by not only growing further organically, but also being more aggressive in external growth opportunities. We are all keeping some shares of Mikrona to be part of this exciting development – further, Lukas Gayler will stay on the Mikrona’s Board and I will – of course – stay as the CEO”, explained Fabio Fagagnini, CEO of Mikrona Group AG.

Healthcare Holding’s objective is to become Switzerland’s market leader in Medtech Services and Distribution by professionalizing its industry and offering the world’s best and most innovative products and services to Swiss customers.

About Mikrona

Mikrona, the company founded in 1959 and headquartered in Schlieren, Switzerland, is synonymous with outstanding quality in orthodontic products and devices. Mikrona is a reliable and committed partner for orthodontists, dentists and dental technicians. More than 60 years of experience in this field and the tireless commitment of numerous partners and distributors have led to Mikrona and its products gaining a regular place in renowned orthodontic and dental practices in over 30 countries worldwide.

About Ortho Walker

Ortho Walker is distributing high-end orthodontic products of internationally renowned brands in Swirtzerland since 1988 and is leading the market today, both in volume and in its unparalleled online and offline service offering. Ortho Walker always focused on innovation and continuity, while always prioritizing the distribution and use of the best available products. Therefore, it also offers a large range of trainings for orthodontic professionals.

About Healthcare Holding Schweiz AG

Healthcare Holding Schweiz AG is a prominent player in the Swiss Medtech services and distribution space, dedicated to expanding its portfolio through strategic acquisitions and collaborations. Committed to innovation and customer satisfaction, the company endeavors to set new benchmarks in the healthcare industry through cutting-edge solutions and unparalleled service.

About Winterberg Advisory GmbH

Winterberg Advisory GmbH based in Gruenwald, Germany, manages Private Equity investment funds which are primarily active in Small and Midcap Buy and Build platforms.

About Winterberg Group AG

Winterberg Group AG based in Zug, Switzerland is an independent family office investing in Small and Midcap Private Equity as well as selectively in Ventures, Real Estate and other asset classes.

For media inquiries, please contact galina.derkacheva@winterberg.group

Note to Editors: Please credit Winterberg Group for all references to provided quotes and information.

For further information about Ortho Walker Mikrona Group AG visit www.orthowalker-kieferorthopaedie.ch and for Mikrona Group AG visit www.mikrona.com.

For further information about Winterberg Group AG and Healthcare Holding Schweiz AG, please visit www.winterberg.group

This press release is prepared and distributed by Winterberg Advisory GmbH on behalf of Healthcare Holding Schweiz AG.

Austria is home to a thriving mid- and small-cap private equity market, with Vienna serving as the country’s primary hub for private equity activity. In recent years, there has been a growing interest in Austrian targets from domestic and international investors. This is partly due to the country’s strong economic fundamentals, attractive business environment and favorable regulatory framework for private equity.

Vienna Emerges as a Regional PE Hub

Vienna is home to several leading private equity firms, including Apax Partners, BC Partners, Carlyle Group, EQT Partners and Warburg Pincus. In addition, several smaller, more specialised private equity firms are active in the Austrian market.

As one of the largest financial centers in Central Europe, Vienna offers private equity firms strategic proximity to many attractive investment opportunities across the region,” noted Fabian Kroeher, Co-Founder and Executive Director of Winterberg Group.

German and Swiss private equity investors are also active in Austria. Some of the most notable German private equity firms that invest in Austria include Actis, Aurelius Equity Opportunities, Deutsche Beteiligungsgesellschaft (DBAG), EQT Private Equity and KKR. Some of the most notable Swiss private equity firms that invest in Austria include Capvis, EQT Partners and Partners Group.

German and Swiss Investors Join the Austrian Private Equity Fray

In addition to Vienna’s homegrown private equity firms, a growing contingent of German and Swiss investors has set their sights on Austria. These investors, drawn by Austria’s favorable investment climate and promising deal pipeline, are increasingly pursuing opportunities in the country’s mid- and small-cap private equity segment.

Notable examples of German and Swiss private equity firms active in Austria include Deutsche Private Equity and Capvis Equity Partners. These firms bring a wealth of international experience and a keen understanding of the Austrian market, enabling them to identify and capitalize on attractive investment opportunities.

An Attractive Investment Destination

Aside from its strategic location and highly skilled workforce, several attributes make Austria an appealing environment for private equity:

Stable Economy. As a developed economy in the heart of Europe, Austria has consistently shown solid macroeconomic fundamentals and growth over the long run.

Robust Mid-Market. A deep pipeline of profitable small and mid-sized ‘hidden champions’ operating in specialised industrial niches with excellent long-term prospects exists.

Access to Talent. In addition to local technical and managerial skills, Austria’s educated population, cultural diversity and quality of life attract global talent – an asset for portfolio company growth.

Private Wealth. Austria has one of Europe’s highest concentrations of private wealth per capita. Family-owned Mittelstand businesses represent attractive buyout opportunities as ownership generations change.

Favorable Policy Environment. Austria boasts political stability, developed legal protections for investors and low corporate taxes – a business-friendly regulatory framework.

“M&A Friendly” Culture. Austrian sellers are receptive to private equity partnerships as new value-added owners committed to responsible long-term stewardship of companies.

Reflecting these attributes, private equity deal activity in Austria reached record heights in recent years before the pandemic. And the level of interest from institutional investors remains high.

We expect the Austrian private equity landscape to flourish further in the coming years as more funds are dedicated to capturing the opportunities here,” noted Fabian Kroeher of Winterberg Group.

Winterberg Group: An Emerging Force in Austrian Private Equity

Winterberg Group, a private equity investment firm, is aiming to become the key player in the country’s mid- and small-cap private equity landscape. With a proven track record of success, Winterberg Group has consistently delivered exceptional returns to its investors, establishing itself as a trusted partner for ambitious Austrian companies.

Fabian Kroeher, Co-Founder and Executive Director of Winterberg Group, attributes the firm’s success to its deep understanding of the Austrian market and unwavering commitment to value creation. “We believe that Austria harbors a wealth of untapped potential and we are committed to identifying and supporting companies that can become tomorrow’s industry leaders,” Fabian Kroeher asserts.

Winterberg Group’s investment strategy identifies promising Austrian companies with strong management teams and sustainable competitive advantages. The firm actively partners with these companies, providing them with the capital, expertise and strategic guidance to achieve their full potential.

Winterberg Group’s Vision for the Future of Austrian Private Equity

As Winterberg Group looks towards the future, it remains firmly committed to its mission of driving value creation in the Austrian mid- and small-cap private equity segment. The firm is actively seeking new investment opportunities, recognising the immense potential within Austria’s entrepreneurial landscape.

Fabian Kroeher is confident about the future of Austrian private equity, emphasizing the country’s strong economic fundamentals and burgeoning entrepreneurial spirit. “We are excited to be part of Austria’s private equity journey and we believe that the future holds immense promise for investors and companies alike,” Fabian Kroeher said.

Final Words

Austria’s private equity landscape is poised for continued growth and expansion, driven by a favorable economic environment, a strong pipeline of investment opportunities and increasing investor interest from domestic and international sources.

Winterberg Group is well-positioned to capitalise on these positive trends, leveraging its deep market expertise, hands-on approach and commitment to ESG principles to identify and support promising Austrian companies.

Fabian Kroeher concludes, “We are confident that the Austrian private equity market will continue to thrive, and we are excited to play a leading role in its success.

 

 

 

In the competitive landscape of private equity the processes of budgeting and target setting for portfolio companies transcend mere administrative tasks to become critical elements of strategic management. These processes act as the linchpin for guiding portfolio companies, serving not just as a financial forecast but as a strategic compass pointing the way forward. For management teams these financial plans and goals provide a clear roadmap, directing their efforts and focus towards the attainment of essential financial and operational milestones.

Such budgeting and target setting are not just about maintaining financial health; they are about proactively shaping the future of the company. They compel management to look ahead, to anticipate and prepare for upcoming challenges and opportunities, thereby ensuring that the company not only survives but thrives in the evolving market landscape. Through this rigorous financial planning, companies can align their day-to-day operations with their long-term strategic goals, ensuring a cohesive approach to growth and profitability.

Moreover, these are a tactical tool in the arsenal of private equity firms like us, Winterberg Group. They enable us to instill a performance culture within the portfolio companies, where targets act as motivational benchmarks that energize and drive the entire organisation. With the precision of a well-oiled machine, each segment of the company—from the executive suite to the sales floor—moves in unison towards these common objectives” – said Fabian Kröher, Co-Founder and Executive Director of Winterberg Group.

In essence, the meticulous process of budgeting and target setting is a strategic endeavor, an essential practice that ensures that private equity-owned companies are not only managed with financial acumen but are also steered with visionary leadership. It is this blend of strategy and tactics that makes budgeting and target setting a foundational activity within the realm of private equity, one that carries immense weight in dictating the success and direction of portfolio companies.

SMART Goals

The process of setting targets is not arbitrary; it’s grounded in the SMART framework—Specific, Measurable, Achievable, Relevant and Time-bound. These targets are the beacons that ensure the company’s trajectory is in harmony with its growth strategy and market conditions. They must also dovetail with the overarching investment thesis, fulfilling the broader objectives of the stakeholders involved.

  • This approach begins with Specifity – targets must be clearly defined and articulated, leaving no ambiguity about what is expected.
  • They must be Measurable, possessing quantifiable benchmarks that allow for the tracking of progress and the attainment of goals.
  • Achievability is also paramount; while targets should stretch the capabilities of a company, they must remain within the realm of possibility to maintain motivation and momentum.
  • Relevance is another cornerstone; each target should contribute directly to the company’s strategic growth plans and should reflect current market dynamics, ensuring that the company remains adaptive and competitive.
  • Finally, these targets are Time-bound, framed within a specific timeline to instill a sense of urgency and focus.

Furthermore, these targets are not just internal yardsticks; they are integral to satisfying the expectations of external stakeholders. They must align with the investment thesis under which the portfolio company was acquired, thereby meeting the broader objectives of the investment firm, which could range from financial returns to market expansion, operational improvements, or technological advancements. It’s a harmonious balance between ambitious financial goals and the pragmatic capabilities of the company, all while satisfying the strategic intent of the investors. This delicate alignment ensures that the targets set are not just numbers on a page but are pivotal in steering the portfolio company towards sustainable growth and value creation.

Free Cash Flow to Firm is King

The central tenet of private equity portfolio budgeting is the preeminence of Free Cash Flow to Firm (FCFF), which is essentially the lifeblood of valuation and financial health in this realm. FCFF represents the cash a company generates after accounting for cash outflows to support operations and maintain its capital assets. It’s a crucial indicator of a company’s ability to generate value after fulfilling all operational and investment needs.

In the context of private equity, where exit strategies and return on investment are paramount, understanding and managing FCFF becomes critical. By pinpointing the desired FCFF, we can work backwards to ascertain the level of EBITDA that the company must achieve. This reverse engineering process is not a mere subtraction exercise; it requires a nuanced understanding of all the financial levers that can be adjusted.

These levers include operational efficiency, cost management, revenue growth, working capital adjustments and capital expenditure controls. Each lever has a direct impact on the company’s cash flow and, by extension, its valuation. A granular approach to managing these aspects of the business allows for a more strategic control over the FCFF, ensuring that the company is not only meeting its current financial obligations but is also positioning itself for future growth and profitability.

By focusing on FCFF, private equity firms can better assess the performance and potential of their portfolio companies. This focus helps them to make informed decisions about where to allocate resources, when to make strategic changes and how to drive the company towards financial targets that are not only ambitious but also achievable. It’s a disciplined approach that aligns operational strategies with financial objectives, ensuring that every aspect of the company is working towards the ultimate goal of value creation.

Budgeting is a Firm-Wide exercise

The creation of a robust and reliable budget for a portfolio company begins with the CEO’s in-depth understanding of the organisation’s fixed costs. These are the expenses that do not fluctuate with the level of goods or services produced by the company, such as rent, salaries and insurance. This knowledge is fundamental, as it establishes a financial baseline from which all other budgetary considerations are built. It ensures that the company’s financial framework is grounded in reality, accounting for the inescapable costs of doing business.

Complementing this baseline is the dynamic and intricate work of sales forecasting, a task best performed by those directly engaged with the market—the sales team. Their day-to-day interactions with customers and firsthand experiences with market responses provide a wealth of practical insights. This on-the-ground intelligence is critical for constructing revenue projections that are not only aspirational but also grounded in the practical realities of the market.

However, even with meticulous planning, there may arise a significant gap between the projected EBITDA and the EBITDA necessary to achieve the target FCFF. This discrepancy triggers the need for strategic conversations with the company’s leadership. It’s a scenario that demands a collaborative effort to devise a comprehensive action plan addressing the shortfall. Such a plan might involve identifying and deploying additional resources, which can take various forms depending on the specific needs and circumstances of the company. For instance, investing in new staff may bring fresh expertise and drive operational efficiencies, enhancing productivity. Allocating funds to marketing can amplify the company’s market presence and drive sales growth, while capital expenditures might be directed towards upgrading technology or machinery to improve product quality or expand capacity.

These strategic decisions are not made in isolation; they are part of a continual process of analysis and adaptation. By integrating insights from all levels of the company—from the CEO’s cost-based perspective to the sales team’s revenue-driving strategies—management can develop a balanced and executable plan. This plan not only bridges the EBITDA gap but also propels the company towards achieving its FCFF objectives, ensuring financial stability and value creation for stakeholders.

Crafting the Profit and Loss (P&L) statement begins with a detailed sales forecast, broken down by product and client, ensuring alignment with the company’s strategic vision. Gross Margin comes next, applying current data and assessing whether cost inflation impacts are reflected in the pricing. Scrutiny then shifts to Selling, General and Administrative Expenses (SG&A) to ensure financial prudence and operational efficacy. It’s essential to filter out any non-operational or accounting anomalies that could skew the EBITDA.

An analytical eye must also review the Working Capital dynamics, ensuring that it hovers at an optimum level, whether it necessitates capital infusion or capital recovery. The budget for Investment Cash Flow should meticulously plan for R&D investments or asset divestitures.

A separate set of calculations, conforming to the definitions in acquisition financing agreements, is crucial to maintain covenant compliance.

Budget Rhythms

The cadence with which a company sets its budgetary checkpoints is a strategic decision that must be carefully attuned to the nuances of its operations. Determining whether to evaluate financials on a monthly, quarterly or annual basis is a choice that should consider several factors intrinsic to the company’s operational fabric.

For businesses with a model that experiences rapid fluctuations in revenue or expenses, such as those in the retail or manufacturing sectors where inventory levels and sales can vary significantly from month to month, a monthly budgeting cycle may be prudent. This allows for agile responses to market demands and operational challenges, ensuring that financial performance is tightly managed and corrective actions can be taken swiftly.

Companies in industries with pronounced cyclicality—such as agriculture, where seasons dictate production, or tourism, where certain times of the year yield higher revenues—may find quarterly budgeting more suitable. This interval allows for reflection on performance in relation to these cyclical patterns and strategic planning for the phases ahead.

Alternatively, businesses in more stable industries with predictable cash flows may opt for an annual budgeting process. This longer rhythm suits companies that undertake large, long-term projects, like infrastructure or pharmaceuticals, where milestones are reached over extended periods, and performance is measured against longer-term objectives.

Each budgeting rhythm has its merits and must be synchronized with the business model’s tempo, the industry’s inherent cycles, the volatility in performance and the timing of key projects or milestones. By aligning the budgeting cycle with these factors, a company ensures that it has a realistic and timely overview of its financial health, providing a solid basis for strategic decisions and effective resource allocation throughout the fiscal year.

Final Words

While ambitious targets are laudable, they must remain tethered to reality, challenging yet attainable with concerted effort. Regular performance assessments against the budget illuminate the true financial health of the company, elucidating the underlying causes of variances.

In the event of significant deviations, revisiting the budget is not just advisable; it is a clarion call signaling that strategic realignment may be necessary.

This iterative process of budgeting and target setting is not about crunching the numbers; it’s an honest dialogue between the management and investors about company’s strategy that deepens the understanding of the portfolio company’s business and paves the way for more accurate forecasting in the future.” – said Fabian Kroeher, Co-Founder and Executive Director of Winterberg Group.

Healthcare Holding Schweiz AG, a Leading Swiss Medtech Services and Distribution group, managed by Winterberg Advisory GmbH, expands Portfolio with Winther Medical Acquisition
 
Baar, Switzerland - October, 2023
  Healthcare Holding Schweiz AG has successfully acquired Winther Medical, a major addition to their Buy and Build platform in Swiss Medtech services and distribution and its first asset, Senectovia Medizinaltechnik AG. Specialising in innovative products within the hospital, imaging and emergency services domains, Winther Medical is renowned for its sourcing of top-tier, cutting-edge products from global manufacturers. The comprehensive product range at Winther Medical is distinguished by its superior functionality, reliability, modern design and user-centric approach. Embracing collaborations with hospital staff, the company values and integrates insights from medical professionals to continuously enhance their product range and services. "The integration of Winther Medical into our platform underscores our commitment to delivering significant synergies that will elevate service quality, broaden our product spectrum, and fortify our presence in the realm of hospital and emergency care," stated Fabian Kroeher, Executive Director of Winterberg. "The inclusion of Winther Medical AG within the Healthcare Holding Schweiz AG portfolio is an opportunity to offer cutting-edge solutions and new, innovative products in traumatology, radiology, hospital infection prevention as well as ambulant services and mountain rescue for our customers," noted Torbjörn Winther, CEO of Winther Medical AG. Healthcare Holding Schweiz AG's strategy aligns with their vision of becoming a leading player in the Swiss Medtech services and distribution landscape by continually advancing innovative solutions and enhancing their portfolio to better serve their customers' evolving needs.
About Winther Medical AG
Winther Medical AG is a Swiss distributor to hospitals, imaging and emergency services and focuses on representing innovative premium products.
About Healthcare Holding Schweiz AG
Healthcare Holding Schweiz AG is a prominent player in the Swiss Medtech services and distribution space, dedicated to expanding its portfolio through strategic acquisitions and collaborations. Committed to innovation and customer satisfaction, the company endeavors to set new benchmarks in the healthcare industry through cutting-edge solutions and unparalleled service.
About Winterberg Advisory GmbH
Winterberg Advisory GmbH based in Gruenwald, Germany, manages Private Equity investment funds which are primarily active in Small and Midcap Buy and Build platforms.
About Winterberg Group AG
Winterberg Group AG based in Zug, Switzerland is an independent family office investing in Small and Midcap Private Equity as well as selectively in Ventures, Real Estate and other asset classes. For media inquiries, please contact galina.derkacheva@winterberg.group Note to Editors: Please credit Winterberg Group for all references to provided quotes and information. For further information about Winther Medical AG visit www.winthermedical.ch and for Senectovia Medizinaltechnik AG visit www.senectovia.ch For further information about Winterberg Group AG and Healthcare Holding Schweiz AG, please visit www.winterberg.group This press release is prepared and distributed by Winterberg Advisory GmbH on behalf of Healthcare Holding Schweiz AG.

Switzerland is a global leader in private equity and the mid-cap segment is where the real opportunity lies. Swiss mid-cap companies are typically world-class leaders in their respective industries with strong track records of growth and profitability. They are also well-positioned to benefit from the country’s stable economy, favorable business environment and skilled workforce. One of the leading Swiss mid-cap private equity firms is Winterberg Group. Founded by Fabian Kroeher, Winterberg has quickly established itself as a significant player in the Swiss market. The firm profoundly understands the Swiss mid-cap landscape and has a proven track record of success investing in and growing these businesses.

As one of the leading private equity firms focused on mid-market deals in Switzerland, Winterberg Group focuses on a promising private investment region – Switzerland’s thriving mid-cap companies. According to Fabian Kroeher, Co-Founder and Executive Director of Winterberg Group, there are several competitive advantages fueling opportunities in this private equity niche. “We see Switzerland as one of the most resilient and attractive countries in Europe for mid-cap buyouts given stable regulations supporting businesses, low inflation, available debt financing, and an environment conducive to growth.” said Fabian Kroeher.

Why Mid-Cap Swiss Private Equity?

There are several reasons why mid-cap Swiss private equity is such an attractive investment proposition:

Protecting Local Businesses. Switzerland places a high priority on safeguarding local small and mid-sized businesses. The government realizes these companies are the economy’s lifeblood and a significant source of job creation. As a result, policies are designed to nurture entrepreneurship and minimize risks for business owners. This stable regulatory environment gives Swiss mid-caps better long-term viability than other European nations.

Resilient GDP Growth. Despite facing many of the same global challenges as other countries, Switzerland has consistently shown significantly more substantial GDP numbers year over year. Even during the pandemic, Switzerland only saw a modest decline followed by a rapid rebound. Private equity deals thrive in periods of economic growth. The resilience of the Swiss GDP makes mid-cap companies excellent investment opportunities with more significant upside potential.

Low Inflation Environment. Switzerland has a long track record of keeping inflation rates very modest. This dampening effect stems from a strong currency, limited money printing, and prioritizing fiscal stability. Low and predictable inflation for private equity means better accuracy when modeling future cash flows and return metrics for portfolio companies. It eliminates one source of uncertainty that can throw off financial projections.

Available Debt Financing. The Swiss banking industry is world-renowned for its conservative practices and high standards. This means mid-sized firms have solid access to available debt financing through the local banks. Interest rates are low, and terms are reasonable. Combining a private equity investment with strategic leverage allows buyers to get more enormous company stakes and increase the overall deal size for the same upfront capital. This boosts investment returns.

Strong Swiss Franc. The Swiss franc has long been considered a haven currency. Even during global market turmoil, the franc tends to hold its value or appreciate against currencies like the euro and the US dollar; for private equity investors based in other countries, deals made in Swiss francs provide an added layer of currency diversification and insulation from weakening foreign exchange positions back home. Appreciation of the franc results in valuation boosts for portfolio companies.

Attractive Tax Environment. Tax rates for businesses and individuals are moderate in Switzerland compared to other large Western economies like France or Germany. The tax system also incentivizes entrepreneurial risk-taking and private investment in companies. From a private equity perspective, mid-sized Swiss companies become more profitable investments given the ability to retain more earnings rather than paying them all out in taxes each year. This enhances key metrics like IRRs over the investment period.

Winterberg Group’s Approach

Winterberg Group takes a hands-on approach to investing in mid-cap Swiss companies. The firm works closely with its portfolio companies to develop and implement growth strategies. Winterberg Group also provides its portfolio companies with access to its network of resources and expertise. Winterberg Group focuses on investing in mid-cap companies with strong growth potential. The firm has a proven track record of working closely with management teams to implement value-creation plans. Winterberg is a highly selective investor who typically invests in only a few companies annually. This allows the firm to focus its resources and expertise on helping its portfolio companies succeed.

We believe that mid-cap Swiss companies offer the best combination of growth potential and downside protection,” said Fabian Kroeher, Co-Founder and Executive Director of Winterberg Group. “These companies are typically at a stage of growth where they have a proven track record of profitability but still have significant potential for future growth.

Final Words

Mid-cap Swiss private equity is a compelling asset class for investors seeking attractive returns. Several factors support the sector, including the strong performance of mid-cap Swiss companies, the increasing availability of capital and the growing expertise of Swiss private equity firms.

Winterberg Group is a leading mid-cap Swiss private equity firm with a strong track record of success. The firm’s investment strategy is focused on identifying and investing in well-managed mid-cap Swiss companies with a strong track record of profitability and growth potential. Fabian Kroeher believes that mid-cap Swiss private equity is a particularly attractive investment opportunity at the current time. “The Swiss economy is strong, and the country’s business environment is favorable to private equity investment.”, says Fabian Kroeher.

Munich is one of the most attractive and dynamic cities in Germany, with a strong economy, a vibrant culture and a high quality of life. It is also home to a diverse and thriving private equity scene, with many local and international firms investing in various sectors and stages of the market.

This article will provide an overview of Munich’s private equity landscape, highlighting some key players and the role of Winterberg Group. Winterberg Group is co-founded and led by Fabian Kröher, a seasoned entrepreneur and investor with extensive experience in private equity and venture capital.

What is Private Equity?

Private equity (PE) is a form of alternative investment that involves acquiring equity or debt stakes in private companies, typically to improve their performance, growth and value over time. PE firms usually raise funds from institutional investors, such as pension, insurance, endowments and sovereign wealth funds, and use them to buy out or invest in target companies.

PE firms can invest in various market segments, depending on the target companies’ size, maturity and industry. PE firms can also specialise in certain sectors or industries, such as technology, healthcare, consumer goods, industrials or energy. Some PE firms are generalists that invest across various segments and sectors, while others are focused on specific niches.

Why Munich?

Munich is Bavaria’s capital and largest city, one of the most prosperous and innovative regions in Germany and Europe. Its population is about 1.5 million, with a GDP of about €156 billion. It hosts several multinational corporations, such as BMW, Siemens, Allianz, Munich Re and many small and medium-sized enterprises (SMEs) that are leaders in their fields.

Munich is also a hub for research and education, with several renowned universities and research institutes, such as the Technical University of Munich (TUM), the Ludwig Maximilian University of Munich (LMU) and the Max Planck Society. It has a strong entrepreneurial culture and a vibrant startup ecosystem supported by various incubators, accelerators, networks and events.

Who are the Key Players?

The PE market in Munich is populated by various players, ranging from local specialists to global giants. According to Pitchbook data, more than 100 PE firms are based or active in Munich.

Large-Cap Firms

The large-cap segment of Munich’s private equity scene is characterised by its focus on well-established, high-revenue businesses. These firms tend to invest in sectors like technology, consumer goods and healthcare. Although not many large-cap-focused PE firms are headquartered in Munich, international giants often have a strong presence and make significant investments in the area.

Example Players:

  • EQT: A Swedish private equity firm that manages both private capital and public equity and has a European focus, including Germany.
  • Apax Partners: This firm is headquartered in London but has a global reach and invests in various sectors such as technology, healthcare and consumer goods.
  • Bain Capital: Based in Boston, this firm has a global presence and covers multiple investment segments, from private equity to venture capital and public equity.

Mid-Cap Firms

Mid-cap PE firms in Munich are often specialised in nurturing businesses that have crossed the initial hurdles and are looking for accelerated growth. These firms usually focus on sectors like industrials, consumer goods and healthcare.

Key Players:

  • Paragon Partners: A buyout firm, Paragon Partners invests in established, mid-sized businesses mainly in the industrials, consumer goods and healthcare sectors.
  • Afinum: Specialises in management buyouts and growth capital for medium-sized companies.
  • EMH Partners: Known for its entrepreneurial approach, EMH targets growth-stage companies in tech and other sectors.
  • DPE (Deutsche Private Equity): This growth capital firm targets leading companies in the industrial and technology sectors. They seek out companies with strong market positions, innovative products and services and high growth potential.
  • EMERAM Capital Partners: Specialising in buyouts, EMERAM targets consumer goods and technology companies. They look for companies with strong brands, loyal customers and attractive growth opportunities.

Small-Cap Firms

The small-cap segment in Munich’s PE landscape is rich with firms that focus on the lower mid-market buyout segment or growth capital for early-stage companies. These firms often specialise in niche sectors and look for hidden gems with strong growth prospects.

Key Players:

  • Winterberg: a significant part of our team is based in Grünwald, near Munich, we are sector-agnostic and focus on developing Buy & Build strategies. Our sectors of interest are healthcare and medical technologies, clean technologies (e.g. water, wastewater, waste treatment), testing, inspection and certification, and other fragmented markets.
  • Rigeto: A boutique firm focusing on small-cap investments in technology and service industries.
  • Acton Capital Partners: Focusing on growth capital, Acton Capital Partners targets technology companies in the Internet, mobile, e-commerce, and digital media sectors. They invest in firms with proven business models, scalable platforms, and loyal customers.

What are the Key Trends?

Some of the key trends and tendencies that are shaping the PE landscape in Munich and Germany are:

  • 99% of the PE investors surveyed by PwC plan to invest in digitization in 2023, as they see it as a key driver of value creation and competitive advantage. Digitization can help PE-backed companies improve their operational efficiency, customer experience, innovation and resilience.
  • 77% of the respondents already have an implementable environmental, social and governance (ESG) strategy, as they recognise the importance of ESG factors for their reputation, performance and risk management. ESG can help PE firms align their interests with their stakeholders, such as investors, regulators, employees, customers and society.
  • PE investors who have invested in Germany intend to continue or increase their commitment as they appreciate the German market’s quality, stability and diversity. Munich is a particularly attractive location for international PE investors due to its strong economy, innovation potential and talent pool.
  • Most respondents plan to diversify their investment portfolio in sector, stage, or geography in 2023, seeking to capture new opportunities and mitigate risks. Diversification can help PE firms access new markets, customers and technologies, as well as a hedge against volatility and uncertainty. PE firms also explore new segments and niches within their core sectors or stages, such as impact investing, healthcare services or software-as-a-service (SaaS).

How does Winterberg Group fit into the Picture?

Winterberg Group is a Swiss multi-family office investment firm founded by Fabian Kröher and his partners. Fabian Kröher is a German entrepreneur and investor with over 20 years of experience in private equity and venture capital. He is also the co-founder and executive director of Winterberg Group.

Winterberg Group has a global presence in Europe and emerging markets with offices in Zurich. It invests in various asset classes, such as private equity, venture capital, real estate and public equities. It also offers advisory services to its clients on topics such as wealth management, succession planning and philanthropy.

Winterberg Group has a unique approach to private equity investing that combines strategic vision, operational excellence and social responsibility. It invests in companies with strong growth potential, positive impact and sustainable value. It also supports its portfolio companies with its extensive network of experts, partners and co-investors.

Final Words

Munich is a vibrant city that offers many opportunities for private equity investors looking for quality, innovation and growth. The private equity landscape in Munich is diverse and dynamic, with many local and international players investing in various sectors and stages of the market. The key trends shaping the private equity market in Munich include digitization, ESG, internationalization and diversification.

Winterberg Group is a firm with roots in Germany and a global presence in Europe and emerging markets. It has a unique approach to private equity investing that combines strategic vision, operational excellence and social responsibility. It invests in companies with strong growth potential, positive impact and sustainable value”, says Fabian Kröher.

Switzerland has long been recognised for its quality healthcare system, supported by cutting-edge medical research and superior medical facilities. For businesses operating in the healthcare market, particularly in the medical equipment supply segment, the country offers an environment rife with opportunities.

One strategy that has gained prominence is the Buy & Build strategy—acquiring smaller companies in similar sectors and merging them to create a value-added distributor. This post aims to shed light on how our strategy is aimed to change the Swiss medical equipment supply landscape.

Critical Aspects and Macro Environment of Medical Equipment Supply in Switzerland

Megatrend: Increasing Life Expectancy

Switzerland’s population is aging at a significant rate, positioning it as one of the oldest nations in Europe. A rise of approximately 170,000 citizens aged 65 and above between 2008 and 2020, accounting for about 2% of the total population, underlines the gravity of this demographic shift. This inevitably fuels an elevated demand for healthcare services, including specialised treatment for chronic conditions that often necessitate advanced medical equipment.

Strategic Opportunity:

This escalating need for healthcare services provides an auspicious climate for medical equipment distributors. A Buy & Build strategy is particularly well-suited for swiftly penetrating this burgeoning market, allowing businesses to offer a diversified range of products that cater to the specific needs of an older population.

Hospitals as Key Healthcare Expenditure Stakeholders

Hospitals are the cornerstone of healthcare spending in Switzerland, constituting 36.7% of the country’s total healthcare budget. Notably, nearly 27% of all third-party expenditures by hospitals are directed towards equipment and service providers.

Emphasis on Quality: A Boon for Local Swiss Suppliers and SMEs

Switzerland’s healthcare system places an unambiguous emphasis on quality over cost-effectiveness. This orientation offers an invaluable competitive edge for local suppliers and Small and Medium Enterprises (SMEs), enabling them to focus on delivering premium products without price constraints. Furthermore, Switzerland’s absence from free trade union agreements with the EU establishes formidable barriers to entry for foreign competitors.

Strategic Advantage:

The prioritization of quality, coupled with the trade barriers, function as protective moats around local enterprises, enhancing their prospects in the domestic market.

World-Leading R&D and Innovation Ecosystem

Switzerland is home to some of the world’s most renowned pharmaceutical and medical research institutions. The country’s dedication to innovation offers the medical equipment sector a unique ecosystem for developing cutting-edge products and solutions.

Strategic Opportunity:

Companies with a focus on technological advancement can find ample collaboration opportunities for R&D, thereby staying ahead of the market curve and offering high-value products that meet the rigorous Swiss standards for quality.

Strong Regulatory Framework Ensuring Safety and Quality

Switzerland boasts a robust regulatory framework that underscores safety and quality in healthcare. While stringent, these regulations build consumer trust and raise the overall standard of medical equipment and healthcare services.

Strategic Advantage:

For businesses that can navigate the regulatory landscape, this presents an opportunity to build strong brand equity and consumer trust, serving as a competitive advantage in a market that highly values quality and safety.

The Swiss medical equipment market presents a rich tapestry of opportunities, driven by factors like the aging population, substantial hospital spending, and a focus on quality healthcare. Additional layers of attractiveness come from the country’s innovative R&D environment and stringent, trust-building regulations. Together, these aspects create a fertile ground for employing a Buy & Build strategy, offering promising prospects for enterprises willing to navigate and leverage these complex, yet rewarding, market dynamics.

Key Success Drivers for the Buy & Build in the Swiss Medical Equipment Market

When embarking on a Buy & Build strategy in the Swiss medical equipment supply sector, understanding the essential drivers for success can significantly increase the odds of realising the full potential of your acquisitions. Below are five pivotal factors that should not be overlooked.

Establish a Highly Recurring Revenue Business

  • Long-term Customer Engagement: The aim should be to capture customers along the entire recurring value-chain steps—right from the initial purchase to ongoing services like maintenance, upgrades and subscriptions.
  • Enhanced Customer Experience: Offering a comprehensive range of services and creating a value-added wholesale experience can significantly enhance customer retention and loyalty.

Implication for Buy & Build:

A business model that encourages recurring revenue makes each acquisition more valuable, ensuring a steady income stream while reducing customer churn.

Synergies in Logistics, Costs, Nonconcurrent Clients and Upsell Potential

  • Logistic Hubs: Build on the existing warehouses to create centralised logistic hubs that can serve multiple acquisitions.
  • Cost Reduction: By consolidating management teams into a united headquarters, rental and operational costs can be dramatically reduced.
  • Client Base Expansion: Acquisitions often bring in nonconcurrent clients, offering opportunities to upsell products.

Implication for Buy & Build:

Identifying and leveraging synergies can quickly accelerate the EBITDA, making the entire Buy & Build strategy more lucrative.

Focus on High-Margin Services and Products

  • Specialisation and Expertise: Capture high-margin, value-added aspects of the core business—like rent, sanitization, installation—through specialization or deep product knowledge.
  • Target Market: Focus on high-margin customer segments, such as large hospitals and private practices, which are willing to pay a premium for quality.

Implication for Buy & Build:

Focusing on high-margin products and services can significantly boost profitability, making the Buy & Build strategy not just viable but highly lucrative.

Develop an Asset-Light Business Model

  • Cash Flow: A focus on businesses that require minimal R&D investment can result in strong cash-flow generation.
  • Scalability: Value-added services can be easily scaled across Switzerland without significant investments in new infrastructure.

Implication for Buy & Build:

An asset-light model ensures that the business remains agile and scalable, allowing for quick adjustments to market changes or new acquisition opportunities.

Long-term Protected Business Model

  • Industry Resilience: Medical equipment is an essential industry with low demand elasticity, making it relatively recession-proof.
  • Barriers to Entry: Deep product expertise, CH-Rep credentials and required customer proximity create substantial barriers to entry for new or disruptive players.

Implication for Buy & Build:

A protected business model ensures long-term stability, safeguarding the investments made in the acquisitions and supporting the overall strategy’s sustainability.