This video was made at SEITZ in Langwedel, a BPE portfolio company acquired as part of an MBI in 2015.

Divesting subsidiary companies

Into safe hands

New ”Mittelstand” companies can be created by selling a legally independent subsidiary or carving out an integrated business unit to BPE in a Management Buy-out, Management Buy-in or, the most interesting case, a combination of both methods.

In many cases, the entity has a greater potential to successfully develop as stand-alone company. This is down to the fact that the company can more easily follow a sustainable, long-term strategy as a newly-found independent company, than it could have done as an overlooked part of the parent company. At the same time, jobs and location as the fundamental substance of the newly created company remain secure in the long term.

Management Buy-out

If a suitable and motivated internal management (team) that is additionally interested in becoming entrepreneurially active and discovering the potential of the company is readily available, a participation in the company that employs them is an ideal platform to leverage growth potential.

Furthermore, financial participation by the company’s management increases corporate responsibility, and in turn creates trust among employees, suppliers and customers. As a consequence, financial participation ensures a smooth, yet cautious transition from the corporation to owner-managed independence.

Management Buy-in

The BPE MBI-Initiative comes into play when the existing management team needs to be reinforced or even completely replaced as part of a corporate divestiture or the separation of a company business unit. A complete replacement of a management team can for example take place because the team has to take over other leadership positions or tasks within the divesting corporation.

If external management is necessary to take over the management and/or the entrepreneurial role in the future stand-alone company, BPE can ideally fill this management role from its existing circle of potential MBI-Candidates.

In this case, BPE replaces the previous group management with external entrepreneurs. This ensures that the entrepreneurial spirit, which includes exceptional commitment, a high level of identification with the company and its workforce, and the enormous innovative power and flexibility typical of “Mittelstand” companies, is maintained or even created in the first place.