This video was made at GREIF VELOX in Lübeck, a BPE portfolio company acquired in an MBO in 2018.
Solving succession
Is the chemistry right?
In addition to the pure fundamentals and the economic climate, cultural chemistry plays a decisive role in the choice of the ideal business partner. This applies to the selling entrepreneur, the future management and also to BPE.
A successful partnership is built upon respect and understanding between all parties involved. Considering what is at stake for all parties, the process can become highly emotional. Since a transaction process is inherently long-term in nature, the relationship must be able to withstand crises. Mutual trust and a corporate ethic based on homogeneous values are fundamental to such resilience.
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Corporate Ethic
Openness
and fairness
are the essential guiding formulas that characterise our corporate ethics.
During every decision, it is necessary to determine whether decisive information has been communicated to all involved parties. This is of particular importance concerning the sellers of the business and the incoming management as a future partner to BPE. On top, all relevant information must be passed on in a way that is not too specific or technical, but intelligible for everyone.
Openness is the basis for avoiding conflicts. This applies vis-à-vis the seller in (1) the planning of the takeover strategy, which is the essential basis for the decision-making process, as well as (2) the development of the acquired company. If the agreed upon strategy is strictly adhered to and the highest level of commitment and professionalism is maintained, a negative development may be more acceptable and understandable in a business with inherent risks if full openness dominates the relationship. It is the basis for trust for a respective partner. The same applies in relation to the company’s shareholdings and to be more exact, the partners involved.
Fairness is more difficult to define because it is inherently subjective and perceptions of it can be quite different. Generally speaking however, there is a causal relationship between the first guiding principle “openness” and the second one “fairness”. The understanding of BPE implies clarity in the assertion of one’s own interests without over-benefiting compared to the partner. The yardstick for this is a significant deviation from general market standards without an appropriate compensation. Here the connection with openness becomes clear again.
The aim of BPE’s partnership is to be a trustworthy, predictable partner for all relevant business partners. Business ethics and morals are constant companions in a business that is essentially characterised by trust on the investor side, but also on the seller and management side.
The question “Would I like to explain the reasons for my behaviour or my arguments to all parties concerned?” is always used to objectify the subjective assessment of “fairness”.
Moreover, these principles apply not only to the way in which business is conducted but also, more generally, to the nature of the business that it is conducted in.