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Oakley’s interest in the DACH region is underpinned by the attractive fundamentals of the market: a stable economy, strong consumer confidence, a highly fragmented market with an entrepreneurial backbone, and a large number of quality, founder-led businesses.
05 May 21

When Oakley was looking to invest in WindStar Medical last autumn, it came with a strong sense of déjà vu for Partners Ralf Schremper and Sascha Günther, who, prior to joining Oakley, had worked on ProSiebenSat.1’s earlier acquisition of the company.

Through this connection, Oakley was already familiar with WindStar’s management and truly understood the company’s business model and position as Germany’s leading over-the-counter healthcare company. The Oakley Team’s deep knowledge of the region played a vital role in alerting Oakley to an underlying shift in consumer preferences and demographic trends, driving long-term structural growth in Germany’s consumer health market and fuelling WindStar’s growth potential.

Armed with these detailed insights, its existing relationship with management, expertise in the DACH region and experience in supporting portfolio management teams, Oakley demonstrated that it was the right partner to drive revenue growth, innovation and digitalisation, resulting in a successful deal.

This is just one example of where Oakley has deployed its proven sourcing model to its advantage to uncover one of the numerous attractive investment opportunities for private equity in the DACH region – a region that is rapidly maturing and has huge growth potential.

Oakley’s interest in the DACH region is underpinned by the attractive fundamentals of the market: a stable economy, strong consumer confidence, a highly fragmented market with an entrepreneurial backbone, and a large number of quality, founder-led businesses. Though the private equity industry in the DACH region, much like the rest of Europe, was challenged by the global pandemic in 2020 as investors focused on their portfolios and halted investment activity, deal flow has already rebounded strongly and the pipeline of opportunities remains strong.

With so many high-quality, entrepreneurial businesses taking advantage of the prospects in the region, now is an opportune time for private equity firms to deploy local expertise to capitalise on these favourable market conditions. However, the strength and volume of these opportunities is encouraging increasing competition for the best assets, which are commanding premium prices, particularly in sectors that have proven more defensive to recent events, such as healthcare and software. The question, then, is how to prevail in such a promising and popular region?

Entrepreneurial businesses are often looking for a private equity partner that is the right cultural fit. In the DACH region, as elsewhere, it is vital for private equity firms to leverage local expertise and experience, regional connections and sector specialism to differentiate themselves and unearth the best opportunities at attractive prices. Oakley’s appreciation of the region’s cultural nuances and market structure is therefore a necessary building block. However, the best founder-led businesses also want to work with a reliable partner with an impeccable reputation and a history of aligning its interests with entrepreneurs.

Over the years, Oakley has built such a reputation in the DACH region via repeated successful investments and through its extensive network of local founders it has worked with previously. These long-established entrepreneur relationships are crucial in providing Oakley with deal origination advantages. This network of business founders not only delivers extensive sector knowledge, but is also able to champion Oakley amongst its own networks, facilitating introductions that crystallise into new partnerships and thus spark a new cycle of opportunity.

These relationships are symbiotic: entrepreneurs can trust that Oakley understands their needs and the specific requirements for developing their businesses into market leaders. And in turn, local industry connections provide Oakley with access to vital market intelligence creating information asymmetry which can be leveraged to gain an edge over competitors when sourcing further deals.

Take, for example, Oakley’s 2019 acquisition of Wishcard Technologies (previously Seven Miles), the leading consumer technology company in the gift voucher and B2B gift card sector. Oakley’s local knowledge of the DACH region and B2B consumer demand helped it to identify a business with a distinctive model which may not have been traditionally attractive to a private equity backer. But in terms of origination, this was a classic Oakley deal. Wishcard was a founder-owned business set up by two impressive serial entrepreneurs, Tom Schröder and Valentin Schütt, who both have a strong track record of founding, growing and selling successful businesses. Oakley leveraged its local network to facilitate a bi-lateral discussion with the founders, proving itself to be the right partner with the right expertise to support the business through the next stage of its development.

Oakley’s expertise has helped to grow the business into a household name, professionalising the company and expanding the digitalisation of the product. Its multi-brand vouchers are redeemable at over 500 different outlets and over 90% of vouchers are currently redeemed online, underscoring the business’ strong technological capabilities. Even with the market uncertainty caused by the pandemic, Wishcard’s voucher sales growth is up over 100% year-on-year, proving that tech-led consumer businesses can be incredibly resilient if focused on the right channels and opportunities.

Despite the challenging backdrop, Oakley’s DACH portfolio which includes businesses such as WebPros, Contabo and 7NXT, continues to perform strongly. Oakley is now seeing more proprietary deal opportunities in the region than ever before, largely thanks to its heritage and regional expertise.

The slowdown in activity during the pandemic has been relatively limited versus prior downturns such as the Global Financial Crisis and there are considerable opportunities ahead for skilled operators and investors. To gain an edge over competitors you must prove that you are able to do things differently, exploit new opportunities and stay ahead of the competition. At Oakley, this mindset is deeply embedded, along with profound empathy with entrepreneurs, which has provided a solid foundation from which to build on the firm’s successful record of investing in the DACH region.

Oakley’s interest in the DACH region is underpinned by the attractive fundamentals of the market: a stable economy, strong consumer confidence, a highly fragmented market with an entrepreneurial backbone, and a large number of quality, founder-led businesses.

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