Thomas Duteil, Co-founder & Partner at TRAJAN Capital, shed valuable light on private equity in European SMEs when he spoke in the Principality at the invitation of Edmond de Rothschild Monaco.
Why was TRAJAN CAPITAL invited to Monaco?
We specialise in the transfer of capital and management, with people at the heart of our investment strategy. More and more working people and entrepreneurs are moving to Monaco because of the country's security and stability. But wherever they are, transmission problems exist, which is why we come to offer them solutions.
Can you explain what the transfer of SMEs involves and why TRAJAN CAPITAL has specialised in this area?
Private equity involves investing in unlisted companies. This can include companies at different stages of development, from creation to maturity. We chose the transfer sector, which is less competitive, because it offers significant opportunities for value creation.
The transfer of SMEs involves the sale of these businesses, which are often based on the solid expertise of their managers. The founder-entrepreneurs then seek to secure their assets and pass on the operational baton. We can guarantee the continuity of the business and the continuity of their teams, who will then be involved in a new growth project.
What are the advantages of the SME transfer market?
It's a growth market in Europe, because of the ageing of managers and the need to guarantee the long-term future of their companies. SMEs have strong growth potential, which we can exploit by structuring them, internationalising them, digitalising them and making acquisitions - sometimes of competing companies! What's more, this unlisted market allows us to acquire companies at reasonable prices.
How do you approach this market?
Our approach is to go against the grain,
we first select quality entrepreneurs and then look for SMEs to acquire. We invest in European companies with sales of at least €10 million and EBITDA of at least €2 million, and a proven business model, with the aim of building and developing these companies over the long term by relying on the entrepreneurial energy of the buyer. We focus on companies with strong growth potential in terms of commercial development, digitalisation, organic growth and acquisitions. We know the entrepreneurs we propose to head the companies we buy: we have seen them operate and react for an average of 15 months, and sometimes much longer.
I'd like to emphasise that the founders of the companies we buy remain shareholders, holding around 20% of the capital, so we can benefit from their expertise and secure the transfer. We also strive to promote sustainable and responsible business practices in all our operations.
To support the development of our strategy, we have entered into a partnership with the Edmond de Rothschild Group in 2019. As a result, we benefit from the support of the Edmond de Rothschild Private Equity platform which, with over €4 billion in assets under management, is one of Europe's leading private equity investors.
What are your investment objectives in this sector?
Our aim is to make investments that generate more than three times our initial investment. We have already achieved excellent results with our first investment, which returned five times its stake in three years. We are aiming to achieve similar results with our next investments.
In conclusion, what can you say about the SME transfer market and the role of the entrepreneur in this process?
The SME transfer market offers many opportunities for investors to create value, provided they know how to approach it effectively. At TRAJAN Capital, we believe in the power of the entrepreneur and work closely with them to make profitable and sustainable investments. By placing the entrepreneur at the heart of the process, we ensure the successful transfer and development of the businesses we acquire.
