Why Buy-and-Build Is One of the Best Investment Opportunities | Frederik Brandis Interview

Aven backs buy-and-build founders before private equity will

Aven Capital Partners is a bet that the best buy-and-build founders are being underserved. The teams Brandis liked refused private equity money because a fund's roll-up would make them managers, and they raised from family offices whose backers never studied the journeys. Aven works with them from day zero, holds money back until there is a thesis and targets under letter of intent, and stays in business services where AI is a productivity gain rather than a disruption.

Takeaways

• Roll-up founders reject PE money to stay founders. Brandis saw strong buy-and-build teams turn down traditional private equity because a fund's roll-up would make them managers executing someone else's strategy. They raised from family offices and wealthy individuals instead, and none of those backers studied the journeys they were funding.
• Buy-and-build is the best risk-return bet. Buy-and-build has existed for decades and remains early, with thousands of verticals left to consolidate. Brandis calls it probably the most attractive risk-return opportunity for someone in their mid-30s, the ideal age, and says the market badly underestimates how hard roll-ups are.
• Roll-up speed is capped by people's psychology. Integration speed is capped by how fast a group implements change management and builds cultural identification with the new company, not by capital or headquarters talent. Aven limits the pace so no alienation grows between headquarters and the acquired entities.
• Aven designs for exit from the start. Aven keeps groups net-net profitable and takes lower debt than levels where tight covenants could cost it the company. It wants at least 10m euros of EBITDA and a functioning integrated system before selling, and aims for no write-offs.
• Builders should work inside a roll-up first. Brandis suggests two, three or four years inside an existing roll-up before starting one at 34 or 35. He had no roll-up experience before Arsipa, and says a clear view on why you want to do it matters more than any particular background.
• Aven will never move upmarket. Funds can grow over time, but Aven will keep buying the same size of business to preserve capital efficiency, with fund size set by how much it can deploy well. Brandis targets four to five times returns and is where he wants to be now.

How Aven selects and backs founders

• Brandis does not screen on background. Hit rates from investment banking, private equity and consulting are not significantly higher, and a short conversation tells him more than a CV.
• High drive and belief to succeed through adversity, plus high empathy and emotional intelligence. Rigor and attention to detail matter too.