Students provide proof of strategy

If you are a Masters in Financial Management student and you want to know what private equity is really all about, what better organisation could you choose to gain experience with than Gimv? When our chair partner Gimv came looking for two students to analyse their investment portfolio as an in-company project, Glenn Velle and Elynn Verhoeven didn’t have to think twice.

Sources of value creation

With a good 37 years of experience in private equity and venture capital, about 50 portfolio businesses, 1.6 billion euros of assets managed and 4 branches in Belgium, Germany, France and the Netherlands, Gimv is one of the most important listed investment companies in Belgium.

Kristof Vande Capelle - Gimv“We are organised around four specialised investment platforms: Connected Consumer, Health & Care, Smart Industries and Sustainable Cities,” Gimv’s CFO, Kristof Vande Capelle, tells us. “Within these themes or sectors, we invest in growth companies that we support in their transformation into market leaders, so that we can sell them in due time at added value. With successful investments, in other words, there is a period of value creation between getting on board and the time of our exit. Broadly speaking, that value is created in three ways: by growing the turnover and/or margin, by reducing debts and thanks to the multiple effect*. It is up to Elynn and Glenn to analyse the dossiers we have sold in recent years, to find out where the added value we have gained came from.”

Number crunching in practice

Elynn and Glenn got stuck into the numbers, under the watchful eye of Business Controllers Els De Cock and Karolien Fieremans. “I should point out that we weren’t just blundering around in the dark,” Glenn clarifies. “We began by setting up a theoretical framework that we then used to analyse the data from the various deals. In each case, we looked at the point when Gimv invested, how their participation evolved and the time of sale.”

Elynn Verhoeven“Yes, but the exercise was a bit different to anything we had done in corporate finance lessons,” Elynn believes. “In class we were given all the data we needed and it was up to us to apply the right formulae. Here we had to start by figuring out how exactly the deals were structured; the data wasn’t right there in front of us. That made it much more complex, but really interesting. And it was an incredibly rich learning experience to see all the different kind of deals alongside each other in practice.”

Time management and focus

Glenn Velle“You always learn most by doing something in practice, if you ask me,” Glenn concurs. “In that sense, an in-company project like this is the perfect preparation for your professional life. We learned a huge amount in just a couple of months.” Like what? “Time management,” Elynn replies. “As Glenn said, we didn’t just jump in blindly: we drew up a plan with deadlines. That meant we were finished in good time and we were still able to fine-tune our report.”

“Because the devil is in the detail!” Glenn nods. “But you also need to know when you are best off restricting yourself to the essentials. We had 15 minutes to present our report, so it had to get straight to the point. Kristof had really impressed that on us.”

Unanimously positive

Elynn and Glenn agree that the added value of an in-company project like this one for a master’s programme is not so much in writing a report as in the entire experience, and they have both come away from it with only positive memories. “Gimv looked after us so well. There was a great atmosphere and we were immediately made to feel part of the group,” Elynn recalls. “I also really enjoyed our weekly meetings with Kristof: they gave us a fascinating insight into the daily life of a CFO.”

“You also make valuable contacts during an in-company project like this”, Glenn adds. “The private equity community in Belgium is not that big, but thanks to this project I immediately got to know the right people.”

What did Kristof think about working with the students? “Very good, even better than expected! Elynn and Glenn were enormously motivated to do their work well, and they succeeded. They took a very methodical, meticulous approach. They were strong on content as well: that was clear from our conversations. Communication was easy and it was a pleasure to see how fast they integrated themselves into the team.”

Hard evidence

Kristof is satisfied with the cooperation, and his expectations for the results of the analysis have also been met. “The core of our strategy is creating value through growth. There’s a reason why our company motto is Building leading companies. Reducing debts and counting on multiple effects are ways of creating value that we cannot really consider as achievements. We aim to create sustainable value through turnover and margin growth. It was clear from the analysis that in the dossiers we have sold in the past few years, more than 90% of added value is due to growth. That was excellent news, although of course it didn’t come as a complete surprise,” he laughs. “All the same, it is nice when the figures confirm our strategic choice. We have already used the results in external communications to support our strategy and will continue to do so: Gimv does not just claim to create value through growth: it has hard evidence to support that claim. And finally, we plan to keep updating the results of the analysis regularly with more recent exits.”

Go for it!

Gimv and Vlerick are no strangers to each other. Besides having a chair at the school, Gimv also has a lot of Vlerick graduates among its employees. That made it almost an obvious choice for Gimv to join forces with Vlerick for the project, but Kristof would recommend it to anyone: “On the condition that the project is clearly defined. There is obviously no point getting students to join your daily activities for three months: that would cost too much time and energy on both sides. But if you have a specific project and you are looking for enthusiastic, highly educated workers, I’d say: go for it! It’s very simple: our own employees are hard at work on their everyday tasks and too busy to take on a project like this. If it weren’t for Elynn and Glenn, our portfolio still wouldn’t have been analysed!”

* A multiple effect occurs if the buyer is prepared to pay a higher multiple, e.g. 7 x EBITDA, than that at which the seller initially invested, e.g. 5 x EBITDA.

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