Home/The Investor Series/Episode 10
Episode 10 The Investor Series
Markus Zejermann and Mirco Iwan on the family businesses with no obvious buyer
Markus Zejermann and Mirco Iwan, Managing Partners of Valerna, on family business succession in the German Mittelstand: why owners avoid trade buyers and private equity, how a 50/50 team of investors and former CEOs works with sellers, the 2 to 10 million EBITDA businesses they target, and why they acquire to grow.
The mandate
Succession capital for the German Mittelstand
Valerna is a Germany centric mid market investor focused on family business succession. Thousands of German companies are in their second, third or fourth generation and still run by the founding family. The businesses have runway, but the owners are ageing, there may be nobody in the family to take over, and neither a trade buyer nor private equity feels like the right answer. Valerna works deal by deal as an independent sponsor, with a team that is half investors and half former CEOs.
businesses they buy
of a target
former CEOs
change a business
We don’t want to run the company, but we want to be at the coffee machine.Mirco Iwan, Valerna
Key takeaways
How Valerna works
Why owners struggle to sell, who Valerna is, what it buys and what happens after closing.
Why owners get stuck
Many family owners do not want a trade buyer, because the name on the door disappears and loyal employees become numbers in a synergy model. Private equity is often no better a fit: the business may not be ready for it, or the owner may simply not like its reputation and ways of working, a view that is still common in parts of the Mittelstand. Valerna positions itself as neither, describing the team as succession focused entrepreneurs and investors.
Half investor, half operator
Markus moved from Germany to London about 20 years ago, started at Bain & Company and has since co led the German activities of several pan European mid market funds. Mirco began at Lufthansa, working on the integration of Swiss, and spent the last 15 years as a CEO, operating partner and portfolio manager for private equity funds and larger family offices. Most German investors come from investment or banking backgrounds. Sellers notice the difference, because Valerna speaks their language and asks different questions from the first meeting.
Commercial diligence first
Target businesses have 10 to 100 million in revenue and typically 2 to 10 million in EBITDA, from 20 or 30 employees up to a few thousand in sectors like facilities management. Diligence starts from the inside out: who the customers are, what makes the business special, why it wins and what the product pipeline looks like. Financial, accounting and legal work comes later, once there is conviction and a transformation plan already broadly aligned with the seller, who often keeps some upside through a vendor loan, an earn out or a reinvestment.
Acquire to grow
Valerna says it buys to grow, not for efficiency or financial engineering. The toolkit covers add on acquisitions, digitising, rethinking processes with AI, modernising management and investing in sales capacity. As Markus puts it, owners often have great ideas they would implement if they were ten years younger, and Valerna aims to be those ten years younger, with the capital to act. The plan is two to three investments at this scale, each run hard over three to five years, and a bigger firm with the same approach in a handful of years.
Their closing note: people are harder to replace than ever, and Mirco argues private equity has to treat employees as the most important resource a German business has. For anyone who wants to follow the deal by deal route, there is a growing community of independent sponsors in London and Munich, and Markus and Mirco welcome anyone who wants to join it. Both are on LinkedIn.
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