“Last year alone, we took a closer look at about 50 companies that were potential acquisition targets,” said Alexander Preußner, founder and managing director of NGC Nachfolgekapital in Munich. His company is benefiting from the succession vacuum that is affecting the entire SME sector in Germany. The Institute for SME Research (IfM) estimates that between 2022 and 2026, approximately 190,000 companies will be up for transfer because the owners are retiring or wish to step down for personal reasons (e.g., illness) but at the same time wish to see their businesses continue.
Without a structured succession plan, many of these businesses will have to close. This means employees will lose their jobs, supplier and customer contracts will be terminated, and the valuable knowledge of all those involved will be lost.
Seven succession arrangements in small and medium-sized enterprises (SMEs) since 2019
Since 2019, Alexander Preußner and his investment firm, NGC Nachfolgekapital, have implemented seven succession solutions in which companies were successfully handed over to the next generation of entrepreneurs. The acquired companies come from a wide variety of industries: a software company for CNC woodworking machines, a vocational school for communication design, twopest control service providers², a facility managementcompany³, and a distributor of cable protection. Some of these were family-owned businesses without an internal successor. In addition, two growth investments were made in the education and refrigeration technology sectors.
A Slightly Different Approach to Succession Planning
NGC Nachfolgekapital GmbH focuses primarily on owner-managed small and medium-sized enterprises, particularly those with proven business models whose annual revenues range from one to twenty-five million euros. In such situations in particular, the capital needed to buy out the founders is often lacking for an internal succession solution. On the other hand, traditional financial investors are generally not an option for most entrepreneurs, as they are committed to the long-term continuation of their life’s work and reject short-term optimization at the expense of employees who have often been with the company for many years.
This is precisely where Alexander Preußner and his team come in. “We want to carry on the life’s work, just as a family member would—even if there is currently no family member available to take over or if that family member’s professional interests are focused on other pursuits.”
NGC Nachfolgekapital offers customized succession solutions developed in collaboration with the company owners and the future management team. “We have permanent capital and are interested in long-term, sustainable investments in small and medium-sized enterprises; we see ourselves as co-entrepreneurs rather than mere investors, ” says Preußner. With this long-term perspective, he has earned the trust of business owners in the succession cases he has completed to date. Unlike traditional financial investors, his investment firm takes the time necessary to develop and implement change processes. According to Preußner, for NGC Nachfolgekapital , “the strategic and operational further development of the business model is the top priority.”
How employees, the company, and the entrepreneur benefit from a successful succession solution, as illustrated by the example of direkt cnc-systeme GmbH
With this approach, he also earned the trust of Jürgen Blessing, who had previously spent nearly three decades building one of Germany’s leading software companies for CNC machines in wood, plastic, and aluminum manufacturing. As managing director, he transferred his company, direkt cnc-systeme GmbH, to Alexander Preußner’s NGC in the spring of 2021. The process, from initial contact to the signing of the purchase agreement, took only about six months. “I wanted a buyer who would value my life’s work and further develop it with sensible investments and ideas to tap into new business areas,” says Blessing, who, at the age of 54, wanted to ensure the company’s continued existence without seeing himself or his children at the helm.
Following the sale, he and his co-founder, Jürgen Sorg, will initially remain on the management board alongside their successor for another year and a half to support the transition process with their experience. Afterward, they will join the company’s advisory board. “For me, it’s the perfect partnership,” says Blessing, who was impressed by how professionally the NGC team handled the sale process. He was also impressed that the new managing director, Franz Xaver Völkl, introduced himself to him in person very early on. His hopes for the company’s future have been fulfilled so far: Five new jobs have been created at direkt cnc-systeme GmbH. Revenue has increased by more than 20 percent. “Thanks to the input of the new generation, the company has been strategically elevated to a whole new level, ” says Blessing.
NGC’s Success Factors for Long-Term Business Succession
As a general rule, NGC Nachfolgekapital relies on comparatively young and highly motivated managing directors from its own network for succession solutions; these individuals focus entirely on the respective portfolio company to lay the foundation for sustainable growth. They receive support from the investment company’s advisory board, which has many years of management experience and expertise across various industrial sectors. As in the case of Jürgen Blessing, the original owners of the companies often remain on board as advisors. “With their experience, we can successfully shape the company’s long-term future together, ” says Alexander Preußner, adding , “Most of them really enjoy continuing to support us on a part-time basis and watching the further development of their life’s work from the sidelines.”
When necessary, business processes are streamlined with a fresh perspective by introducing new systems with supporting software programs, as well as sales or pricing structures. For NGC, the primary focus is on long-term business sustainability rather than short-term profit. To date, a total of 40 new jobs have been created in the portfolio companies, with average revenue growth of nearly 12 percent per year. “Our primary goal is to successfully carry on a life’s work while aligning the interests of employees, entrepreneurs, and investors,” says Preußner.
The anchor investor in his company is MEDIQON Group AG, which counts internationally renowned university foundations—such as the Massachusetts Institute of Technology (MIT)—among its financial backers. This gives Preußner access to capital commitments in the high double-digit millions to shape the future of his companies. “This independence allows us to inject additional capital into the companies at any time to invest in technology, acquisitions, or regional and international expansion,” concludes Preußner, because, as previously noted:
“The diversity of small and medium-sized enterprises and the associated success stories of entrepreneurs make our daily work both exciting and rewarding.”
Sources
1) www.nachfolge-kapital.com
2) www.bastex.de and www.calmund-r.de
3) www.gelford.de
