Buyers and Builders
00:35:43 · Felix Jander
[00:35:43] S1: Sure, sure. I mean, just to put it into right perspective, right? I mean, was I was working together with Warburg for like nine more months, so to say. But then as of beginning twenty five, I'm only a board member, right? So as I'm not operational anymore. But back from the days that I was working personally with Warburg Pincus, I felt it was very inspiring. So I was sparring a lot with Dirk, Dirk Wessner. He's a former chairman of Compu Group or a CEO, sorry. And he's now the chairman of the Arsipa board. And he also was a member of the board of directors at Deutsche Telekom. So he's a senior very experienced guy. Which was new for me as an entrepreneur to work with someone like this very personal on a day to day basis so to say. I like to have the sparring and I think you make some bolder decisions when it comes to putting strings because you also need to because it's a different scale there's a lot more money at stake yeah so you need to be bold in your decisions. So we did larger acquisitions. We did some very bold move when it comes to going into that software play and enrolling out that software and automating processes and the likes. Yeah, so that's that's I think what changed for me that you that you work more professional, that you take some different decisions, that you spar with different people. But in the end, it's still the same people on the ground. The nurses and the doctors, those haven't changed much. And I think it's also important for the future of Arsipa that we keep that in mind. That we keep in mind, it's still a group of companies from its origin. A heritage from its origin. So there has been this one founder in Hillersheim who started that company twenty years back in time. Somewhat this still needs to be part of the DNA of Arsipa while it still is a good thing that it's becoming a corporate company. It's the right way we're going there and as long as we keep these two things in mind it's going perfectly well.
00:37:46 · Mikk, Felix Jander
[00:37:46] S0: Anything else you'd like to add? Maybe what comes to mind? You mentioned you becoming at this private equity firm together, you guys becoming more bold. Is there anything else you would like to add which was like obvious it's obvious now, but it wasn't obvious before? [00:38:03] S1: We hired better people. [00:38:05] S0: Yeah. Mhmm. [00:38:06] S1: So you you know, you remember the story with the Ibis Hotel, yeah, in the €6? Yeah. So you were very cheap in some ways. Unfortunately also when it came to some hires that we probably shouldn't have done. That being said I think those are the main topics that come to mind. I think we were bolder in some strategic decisions and acquisitions and also in hiring. We hired better profiles and obviously also the brand Warburg Pincus helped. Just to give you one hint, yeah, we still had no coffee machine in the office when we exited because we were so frugal. We had like just this filter coffee and then at some point I think in 2025 there's now a proper espresso machine. [00:38:53] S0: The folks listening who might reach out to you in the future looking to raise capital from you, do you expect them to have this same type of mentality?
00:38:53 · Mikk, Felix Jander
[00:38:53] S0: The folks listening who might reach out to you in the future looking to raise capital from you, do you expect them to have this same type of mentality? [00:39:03] S1: Somewhat yes. Yeah. I mean, they don't have to be frugal, but I think it comes along with entrepreneurship that the euro is always better spent in your company than in everything else. Yeah. And we wanted to grow and build a company or a group of companies and so we felt it's it's simply didn't feel important to us. Yeah. To have like the the nicest espresso machine. We felt like this money is better invested in hiring another intern or this money is better invested in in in doing this and that with that company. Yeah. So... And I think that the mindset is super important, especially the first two to three years because that differentiates true entrepreneurship from just some private equity guy who wants to gain money doing a roll up. Yeah. And but you need true entrepreneurs if you want to be successful. It's not enough if you're just buying those companies and put them together and then sell them. Nobody's going to buy that. So you need an entrepreneur in order to build those processes, order to deliver those synergies and those value creation effects because otherwise private equity firms are not interested anymore.
00:40:08 · Mikk, Felix Jander
[00:40:08] S0: Now before let's talk about this area of before selling. I want to talk about the integration and the culture part. You giving like a sort of masterclass of I don't want you to teach. I want you to do what you did and what you experienced. And in that way, hopefully this being helpful for folks listening, because you've seen a lot that not too many people have been to do that. So when it comes to integration, building culture, what would you say? [00:40:39] S1: I mean, takeaway is start early. So we start with a second or third deal, right? And you should start right away with the first deal. So as soon as you've done the first deal start your integration when it comes to don't hesitate to change the text advisor at day one. I see many roll ups that hesitate to change the text advisor and then [00:40:59] S0: they are like Oh yeah,
00:41:00 · Felix Jander
[00:41:00] S1: but maybe it's better if we do it in half your time or twelve months. No, don't wait. Do it right away. Tell the owners transparently in the process, Look, it is part of the game. There's going to be some changes and they're going to take it. And if they don't take it, then you shouldn't buy them because then they're going to be trouble in the future. So very first learning is just start with the first deal and with the integration. And second learning is I think you need a culture does both. You need a holding that is very fast, young, very startup y in a way. But you also need people that respect this kind of heritage and that there's people that build up these companies for twenty years. So you don't need Berlin startup guys coming to that company and then knowing it all. You need people who respect that and who also show that respect but then still manage to change things. And I think that's a thin line which is very important. I think one learning that we had it's very important so a bit later in the journey not with the first company but maybe with company four or five you need to start value creation. You don't need to do it all like really focus on one thing and get that right. So I some of my investments, I see they want to do it all. They want to centralize procurement then they want to centralize disposition of let's say like handyman. They want to change the ERP and then they want to do something with marketing and they want to do something with sales. That's not going to work. You should focus on let's have one KPI and let's say my KPI is I want to achieve 10% growth per year and then take one or two very simple measures but execute them super well so that you can see the effects at least with some companies at the exit. That's really important that you let's make an example. We with Arsipa We started in year three doing pricing projects because we saw these guys, they haven't changed pricing with some customers for twenty years. So where the market price for an occupational health practitioner was at like €180 per hour, they still charge like €90. Obviously there's a gap that you can increase the price to. Maybe you don't have to increase it to the 180. You can tell the customer, look, you get a discount of 20 percent and you still have a €70 plus in terms of margin.
00:43:30 · Felix Jander, Mikk
So that was our lighthouse case and in hindsight we probably should have put more resources on that, more energy. We did that with two or three companies so we could show some effects at the exit but it's even more powerful if you can show it on a group EBITDA level and you can show like look here these 10% they come from pricing. That's cool. That's learning number three. Build up your lighthouse cases and don't boil the ocean, don't do it all. Focus. I think it's the fourth or fifth point now is don't start having a burn rate because I see some people that take this advice too serious and then they do too much in terms of integration and then they start hiring a CTO and a Chief Product Officer after the first company. That's also not the right pace. Because then you end up in the VC type risk profile. So yes, please hire those people earlier and do some investment. But investment means like two FTE for six months and not 10 for one year. Yeah. So just to get perspective right because then you end up in such a VC case again. [00:44:37] S0: I have written down a few things here. One, you mentioned pricing, and I'll add you a few more. One is what you mentioned before is marketing, then there is sales, and then there is customer support. Maybe you can share something on each if something comes to mind. And maybe how long do you focus on this one thing to just to give a perspective to just see the hopefully improvements when making those changes?