As part of our MU Thought Leadership Articles, I had an interesting conversation with Florian Feddeck. Florian Feddeck is Chief Digital Officer at Private Assets SE & Co. KGaA in Hamburg, an investment company specialising in corporate investments in special situations. He has more than ten years of experience in restructuring companies and relies on innovative management techniques and digitalisation as key tools for optimising companies and their processes. Florian Feddeck has kindly taken the time to share his experience on an important topic with us: The takeover of companies in special situations and the optimisation of processes and the selection of suitable managers.
Florian Feddeck: We invest in companies that either have no succession plan in place, are being carved out of a group or are being sold by a private equity fund as a secondary buy-out. Irrespective of these three scenarios, we work closely with the company in every investment, because we invest smart money. This means that we don't just invest money, but also get to work with our own entrepreneurs and contribute our experience in management, process optimisation and digitalisation. The sector plays a subordinate role as long as we see potential for a turnaround. We only avoid companies whose entire market environment is difficult.
Florian: First of all, it must be emphasised that this is an economic crisis in Germany, which is currently at the bottom of Europe in terms of economic growth. In principle, this means that we have a greater choice of takeover candidates. We inherently have a toolbox for crises and are, if you like, opportunistic by nature. We recognise opportunities where others only see the crisis. The rise in interest rates is a problem because it makes financing more difficult.
Florian: As such cases usually involve a life's work, the associated emotions and purchase price expectations often do not correspond to the actual value of the company. This emotionality is not so common in carve-outs or secondary buy-outs, but it cannot be completely ruled out even in the case of groups or funds.
Florian: For me, digitalisation is primarily a tool for operational improvement. If I can hardly get certain employees due to the shortage of skilled labour, then it makes sense to streamline processes. This increases efficiency and I need fewer of the people I can't find on the market anyway. The key is to first define the process and then digitalise it. Another aspect of digitalisation is the sensible structuring and use of data in order to make better decisions. And last but not least, it's also about scrutinising the business model and thinking digitally. When I became a partner and Managing Director of Procast Guss GmbH in 2019, customers had to wait too long for an offer when they enquired. Thanks to the digital support of the calculation, they now go out much faster.
Florian: No, that is not our basic approach. However, managers are a bit like coaches in football clubs. If the team is playing badly, the coach is usually replaced. This is often correct, but it is no guarantee of success. When it comes to investments, we are rarely experts in the industry. Although I studied mechanical engineering, I had little to do with casting technology until I joined Procast Guss. In the companies, the experts are usually at the second and third management level. They can often be made fit for higher tasks through appropriate coaching. The changes on the personnel market mean that it is not so easy to find someone new for management positions.
Florian Feddeck: Above all, a hands-on mentality is important. Managers should get to work and find solutions instead of discussing problems forever and postponing decisions. The ability to think in terms of processes is just as important as a high generalist quality. The best investment manager can handle purchasing, production, sales, finance and human resources. And 80 per cent of the necessary knowledge is sufficient, as he can call on specialists for the detailed work.
Florian: We have started to conduct individual interviews for important positions. This means that CEO Sven Dübbers, COO Philip Borbély and I each speak to a candidate separately. Only when each of us has had our interview do the three of us exchange ideas. Skills are undoubtedly relevant, but the trust component is very important in our business. The personality should fit into the team, and it helps enormously to ask yourself a simple question: Would I give this person the keys to my car and trust them with it? Only if all three of us are of the opinion that a candidate is a good fit will they be taken on. This takes a little more time, both on our part and on the candidate's part, but it pays off.
Florian: In principle, I am always in favour of replacing natural stupidity with artificial intelligence. Basically, our search process consists of building a matrix with which the requirements of a position can be compared with the skills and abilities of the candidates in order to select the most suitable one after a review. In this respect, I would trust an AI to do this. However, I doubt that a subjective component such as trust can really be assessed better by an artificial intelligence than by me. Systematising the selection process by applying their science-based methodology instead of going on gut feeling is what Mercuri Urval's professional support in executive search does for us. After all, it's all about finding the right executive for the job. And with their, science-based, precisely tailored, quality-assured, and ethical solutions and global network, Mercuri Urval helps us to find suitable candidates for positions of responsibility. After all, our biggest problem nowadays is finding someone suitable in the first place. And not finding the supposedly best candidate from a large selection with the help of an AI.
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