SHORT INTRODUCTION ON MANAGEMENT AND PRIVATE EQUITY TO: January 21, - PowerPoint PPT Presentation

SHORT INTRODUCTION ON MANAGEMENT AND PRIVATE EQUITY TO: January 21, 2016

CONTENTS Introduction Remko Jager  Summary profile Gilde  Private equity history  Venture capital, private equity and turnarounds  Hands off and hands on investors  Anglo-Saxon or Rijnlands PE model  Value creation in PE  Study Hans Bongartz (KPMG / INSEAD)  Partnership in practice  Management and Gilde  Potential contradictions management and PE  2

CV REMKO ARNOLD JAGER (1961) 30 YEAR TRACK RECORD IN BANKING AND M&A Remko Jager (54) Managing Partner Gilde Equity Management Benelux Education:  1984 BSc (Engineering; HTS Tilburg) • 1991 MBA (Nimbas / Bradford) • 1993 Amsterdam Institute of Finance • 1996 ABNAMRO Nijenrode Senior Management Development Course • 1999 NCD Nijenrode Commissarissen Cyclus • Joined Gilde in 1998  25 years of Dutch Private Equity experience  Background at ABN Amro and ABN Amro Participaties  3

SUMMARY PROFILE GILDE EQUITY MANAGEMENT BENELUX DEDICATED TO MANAGEMENT BUYOUTS IN THE BENELUX MID MARKET History dating back to 1982. Our team is dedicated to the Benelux mid-market since 1996  EUR 750 million long term funds under management, provided by reputable (inter)national investors as  Rabobank, Allianz, Alpinvest and EIB Invested in more than 50 mid-market buyouts together with entrepreneurial and ambitious management  teams Focus on growth, long term value creating strategy, actively supportive  Independent and partner-owned. Team of 14 professionals, working from offices in Utrecht and Antwerp  4

PROUD SHAREHOLDERS OF… CURRENT AND PAST INVESTMENTS 5

POST WOII HISTORY OF PRIVATE EQUITY DIVIDED IN FOUR PHASES 2016 2009-current 2000-2008 1980-2000 1945-1980 1988  Operational  Economic improvements  Technology  Unwinding large growth Multiple PE booms and crashes  Leverage diversified  Cheap leverage conglomerates 6

VENTURE CAPITAL, PRIVATE EQUITY AND TURNAROUNDS ALL IN DIFFERENT PHASES OF THE LIFECYCLE 7

HANDS OFF / HANDS ON INVESTORS DEPENDING ON THE LEVEL OF RESPONSIBILITY AT THE MANAGEMENT TEAM Hands-off investors Responsibility in the hands of management; only concerned with macro perspective  Relies on periodic reporting  At worst, management feels that adequate support and coaching is not available and  subsequently lack focus and direction Hands-on investors Highly involved in the day-to-day activities and decisions of the management team /  company to be fully engaged in future success Pro- active presence who’s continually encouraging and motivating management to  promote operations At worst, the hands-on approach can be seen as constant interference; management  feeling not trusted / not ready for the tasks 8

ANGLO-SAXON VERSUS RIJNLANDS PE MODEL SHAREHOLDER VALUE OR STAKEHOLDER VALUE KEY TAKE-AWAYS ANGLO-SAXON MODEL KEY TAKE-AWAYS RIJNLANDS MODEL Value creation is the motivation – stakeholder value Making money is the motivation – shareholder value   Continuity and trust with as keyword satisfaction Short-term profitability:   (shareholders, customers and employees): win-win (i) win-lose, • Mindset is: craftsmanship, content and dignity of (ii) may the best man win  • employees, social responsibility (iii) you are for or against us • (iv) eat what you kill “Shared values” •  Mindset is: money, power, heroism and usefulness of  employees “The American Dream”  9

VALUE CREATION IN PE DEPENDS ON IMPROVEMENT OF PROFITABILITY, DELEVERAGE AND MULTIPLE ARBITRAGE Multiple Equity Deleverage EBITDA Equity effect investment increase at exit Total value will increase as a result of: Repayment of bank debts  EBIT(DA) growth  Multiple arbitrage  10

HANS BONGARTZ STUDY PSYCHODYNAMICS IN THE INVESTOR – INVESTEE RELATIONSHIP Partner at KPMG Corporate Finance. INSEAD Master thesis has been finalized in January 2015  Survey was conducted among 60 senior PE professionals  The leadership capabilities of management are positively affecting corporate performance; 85% of the  respondents indicate that over 50% of value creation during the investment period of a portfolio company depends on the quality of management – “ Niet de tent, maar de vent” Percentage of value creation depending on MT 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% 25% - 50% 50% - 75% 75% - 100% 11

PARTNERSHIP IN PRACTICE FACILITATING ENTREPRENEURSHIP, CLEARLY DEFINED ROLES, PROFESSIONAL (INFORMAL) SETTING, GEARED TO FAST DECISION MAKING Management is responsible for running and controlling the day-to-day business (customer dealings etc.) • Management / CEO forms statutory board of Newco, proxies will be tailored to the business • Company Management Board regulations provide for certain decisions to be approved by supervisory board / shareholders • Informal contacts and periodical meetings, to the point monthly reporting to SB and banks (P&L, BS, CF, KPIs) • Typically 4 to 6 meetings per year • Supervisory Three persons: 1 appointee by Gilde, 1 appointee by management and jointly chosen chairman • (sounding) Profiles will be drafted focused on the strategy of the business, i.e. ensuring added-value • Board Approval of annual budget and during the year e.g. investments outside budget / above threshold • Typically 1 to 2 meetings per year • Approval of annual accounts and e.g. acquisitions and dividends • Shareholders Meeting Most decisions require simple majority – balance, minority protection through selected super-majority decisions • SHA: corporate governance, leaver provisions, exit arrangements, good faith declaration, non-compete etc. • 12

MANAGEMENT AND GILDE Pre-deal Post-deal CV Realization of business plans, 100   days plans, budgets, etc. / company Internal reference checks (e.g. senior  performance employees, direct reports, staff) Ability to make decisions  External reference checks (e.g. suppliers  and clients) Leadership skills, teambuilding and  style Face-to-face meetings – personality and  behaviour Adaptability to changing market  conditions (a/o new phase with PE) Team dynamics  Personnel and customer satisfaction  Capabilities and competences  surveys Entrepreneurship and strategic vision  13

POTENTIAL CONTRADICTIONS MANAGEMENT AND PE Topic Management Private equity Vision and goals/strategy Long-term Short-term Remuneration policy Based on the operation Based on realization of plans Control and entrepreneurship Limited control of PE Maximum needed control Exit strategy Long-term focused / Exit focused beyond exit Management changes Personal interest Company interest 14

THANK YOU FOR YOUR ATTENTION! Gilde Equity Management Benelux Newtonlaan 91 3584 BP Utrecht Phone +31.30.2192.542 15