Buyers and Builders
00:22:09 · Felix Jander
[00:22:09] S1: I mean, first acquisition is the hardest. That's also why we decided to do it, even though it was a small company. Because then you have a story to tell, right? So it's not only PowerPoint slides that you're going to share with your next seller, but you can tell them, look, talk to this guy. He has always sold to us. He can give you a proof point that we trustworthy guys. We we pay the purchase price, which is also often a fear when people see you first that you can't pay. Yeah. That's that's that's reality that many people apparently don't say they have the money but then they don't. Yeah and so the second and the third acquisition was easier and then after the third acquisition you're already a group of companies and then you can actually visualize your vision of like ah yeah we're going to have some central HR function and some central recruiting and then they're going to help you with recruiting doctors which is a big issue for everyone in the market. The story got tangible and that helped us a lot. To your question, so the first deals we did all equity which I would also in hindsight do exactly the same way. And then we did a debt financing together with a debt fund because so there's two reasons. So first of all, it's speed. So when you do the first deals on equity, then obviously faster than if you negotiate with a bank every single time. And secondly debt funds funds debt or specialty debt is absolutely preferable in my point of view. Yes you might pay like an additional seven eight bips of interest but you can make it a 100% bullet and that's super super helpful when it comes to cash flow because you don't have amortization of the loan over the years. So you can use the cash flow for one or two more acquisitions and that in the end gives you way more IRR than these. Let's total it to 10% interest. And so speed plus debt fund debt is the two reasons and debt funds only start up from a certain size. So you need 2,000,000 to $3,000,000 EBITDA to have such a debt package and that's basically the reason that's also how we did it. So we did I think four to five acquisitions then we did the debt funds financing on the holding and we also did a recap. We got some additional debt for the deals that we already made. The sixth and seventh deal was kind of 100% debt financed, so to say. And that played out pretty well for us.
00:24:38 · Mikk
[00:24:38] S0: Building and growing Arsipa, you were an entrepreneur, you were not an investor. So you and Stefan, something you've said as well, these companies are built operationally. These are the people we are looking for. And so you were the person there. So how was your day to day look like when building all this?
00:24:57 · Felix Jander
[00:24:57] S1: I mean, year one was a lot of M and A to be quite frank. Yeah. So meaning M and A actually it's more kind of sales. Yeah. So you need to sit in the train and travel around and meet everybody in the market. I think in the first year in the first twelve months, we had like, I think seventy eighty on-site meetings. It's a lot when you think about that you have to travel all the time and then for every on-site meeting you need to have like three to four calls up front and it switched once we had like two to three companies like we're the third company that's when we started hiring someone for finance centrally and HR centrally and that's when we actually started building up central functions and what we first did is like creating a central setup so to say. So we consolidated finance using one tool which is called LucaNet. In Germany it's a controlling and consolidation tool which helped us to have like a real time view on cash to have all our finances consolidated but also to track some KPIs based on company level. So that was super important. And with HR what we did is we got all employees into one system called Personio and then we started recruiting centrally for as a service for the subsidiaries. As I mentioned earlier recruiting in our market is super big topic because you don't have many doctors with that specialty in occupational medicine they're rare to find or very old. So you need to be super good at recruiting in order to get the best profiles and that's where we started. Then it got a little bit more entrepreneurial and building it up, building it up. Then let's zoom in again at a status where we were at like 15 companies. There we were like three hundred three fifty employees and we had a team of 15 to 20 employees centrally and the biggest two teams was HR. We had like out of those 20 I think seven eight were recruiting. So in order to recruit the doctors because we needed the doctors to achieve more sales. That's pretty basic. So with every doctor we could take in some more clients and there was a prerequisite for growth. The others were quite evenly split between let's call it a value creation team. They did a lot of pricing initiatives, M and A and finance.
00:27:11 · Felix Jander, Mikk
And then you get like two let's say three employees each and that's also where it got more entrepreneurial so to say and especially with that value creation team there we did like deep dives into every company. So we went to Hildesheim because I mentioned it earlier and did a pricing project there. Or we went to Hamburg and we consolidated three companies together. And those projects that was like the most entrepreneurial work I would say because there we went really into the company. Actually me myself I also went with the value creation team if it was a strategic project into that company And then we spent there every week, like one day and did pricing. [00:27:52] S0: Now you and Stefan, what were the roles, strengths and weaknesses when building all those? Because there were those different phases and there were obviously phases, which you haven't both of you haven't experienced before. So how did you go through this and which time you know that, okay, it's better for you to do this, it's better for you to do that?
00:27:52 · Mikk, Felix Jander
[00:27:52] S0: Now you and Stefan, what were the roles, strengths and weaknesses when building all those? Because there were those different phases and there were obviously phases, which you haven't both of you haven't experienced before. So how did you go through this and which time you know that, okay, it's better for you to do this, it's better for you to do that? [00:28:12] S1: Just to mention in the very beginning I started off with Alex and later on Alex and I split up and Stefan joined. That was kind of also a journey which goes a bit into the direction of your question. Alex and I were still very good friends but we both had to learn that if you're good friends it's not always a match in terms of work. In the midst of the fundraising when we did the term sheet I mentioned earlier that's where we actually split up and Alex remained a shareholder but dropped operationally he dropped out of the company. And then I started looking for co founders. Together with our lead investor with Patrick from Tengelmann, we interviewed candidates. I did like I called up everyone, friend of friends who could potentially be a fit. So also there I had a long list of candidates and then we invited three of them for workshops and Stefan turned out to be a very, very good match. And now he's also a close friend of mine. [00:29:07] S0: But let's stop for a second. How was the process there? You talk here, it's so easy, but how do you actually like?
00:29:13 · Felix Jander
[00:29:13] S1: Yeah, it's tough. It was very tough. Because I mean we're in the midst of negotiations potentially it's a deal killer, right? If the founding team splits up like right in the middle of negotiating in SHA. I see that. Alex and I we communicated very transparently the reasons with all our shareholders. First we decided, then we wrote an email explaining it, and then the next day we called every shareholder or potential shareholder together and explained the situation and why I would stay, why he would drop out and at which terms. So we kind of didn't even negotiate. We just said, look, this is the terms. And then some of them like one or two said, oh, this is a little hot to me. I'm out. But most of them stayed. And so we filled up the funding with people that we had in our waiting list and so it was okay so to say. We're also lucky or it was the right timing in terms of fundraising. I don't know but maybe it was also the communication. Then Alex stayed for I think three more months to have like a smooth handover and Alex and I and Patrick we together got to know those candidates. So what was really important to me with those candidates is that it's a profile that complements me. Meaning what I'm good at is I can go out, can do sales, I can talk to someone, and I needed someone who is more rigid in terms of processes, who's more rigid when it comes to analytics, and so on, who's also more diligent than I am. That's in the end why we decided for Stefan because he had some previous M and A experience. He was at a later stage VC and he was a truly diligent analytic person but also a very good entrepreneur. So we actually didn't do interviews. Did just like one day working together. So we invited those three people and we said, look, let's sit down together for one day and work and then see how it goes. And in the evening we had a dinner with our girlfriends and wives. Yeah. So to also get a feeling for if that would like offer, if it would work on a personal level and and yeah, that's that's how it went. And then we decided for Stefan. I still remember that Patrick said, look, I mean, others are good as well, but Stefan's the only entrepreneur. And that's in the end why we