Value creation in the construction industry

Why is the whole complex of value creation particularly important in the construction sector?

Many companies in the construction and construction supply industry are living in a golden age in which demand is outstripping supply - and has been for more than 10 years. The result of this boom is reactive business models with a strong product focus. Many companies do not have a targeted, KPI-driven market approach, and a high level of financial transparency on a product, project or customer basis is also rare. This is where private equity can make a significant contribution to professionalisation and make profitable use of the company's own wealth of experience. These issues should be addressed in the first 150 days in particular before embarking on an aggressive buy & build approach.

What are the opportunities and risks in the first 150 days after the takeover?

We often observe that there are strong performers in the second and third management levels who want to take advantage of the new ownership structure to actively contribute to the transformation of the company. It therefore makes sense to define the strategy and the associated measures clearly and comprehensibly very quickly after the takeover and to implement them pragmatically. Clear risks are the excessive demands placed on an organisation that has historically not focused on "efficiency" and the excessive complexity caused by add-on acquisitions that are made too quickly. As a result, the profitability potential threatens to evaporate right at the beginning of the equity story.

How can investors proceed with value creation concepts in the construction and construction supply industry?

In addition to the bankable report, we believe that the commercial due diligence should already focus on the strategic potential and the equity story. Thanks to our background in the construction industry, we try to get to the relevant levels of analysis for investors and management very quickly and in depth in order to conduct joint strategy workshops during the process. These then form the basis for further strategy workshops after the closing and help to quickly pick up speed after the transaction. External sparring partners are particularly useful in the construction and construction supply industry, as they can continue to support the implementation with the company's individual teams in order to ensure sustainability in achieving the intended effects. Fast sprints in the implementation can help the individual teams to keep to the specified timeframes. In the construction industry in particular, ESG - especially E and G - is becoming increasingly important and primarily offers an opportunity for differentiation and price optimisation in many sub-segments and should therefore at least be considered in strategy implementation.