2 Minutes Read By Dr. Stefan Sambol

Private Equity Funds as Drivers of Digitalisation

#Private Equities & Investors#Transaction Advisory

Many German companies are struggling with the digitalisation process. Private equity (PE) companies now always conduct digital due diligence tests as part of their due diligence processes in order to evaluate the associated potential for value creation. How does that actually happen in practice?

The last ten years have shown that digitalisation is one of the primary value drivers for the corporate equity story. For that reason, continuing the development and strengthening of the digital assets of their portfolio companies is very attractive to private equity (PE) companies in the sense of a positive equity story. We see that these kinds of investors have a powerful mood of optimism.

 

Why Private Equity Funds Are Becoming Important for Digitalising Medium-Sized Businesses

Because of their broad, cross-industry experience, PEs have been quicker than many other companies to understand the opportunities of digital markets and the risks introduced by this process if investments are not made consistently and quickly in programs to increase digital value. It’s important to always map out the digital aspect in M&A transactions in a very clear manner – this should be a core component of commercial due diligence. Many private equity fund companies have developed their own digital teams for this, which then implement programs for increasing the value of portfolios together with digital consulting firms. In this dynamic environment, investors are digitalizing their own DNA and giving this to their portfolio companies. By doing so, private equity firms are becoming pioneers who are lending decisive motivation to traditional medium-sized businesses. The limiting factors are not so much money as much as they are time and opportunities to find and employ the right digital talents in the organisation thanks to the investors’ readiness to invest in digitalisation.

How to Start Digital Transformation Within Companies

A good start into digitalisation is the analysis of the digital maturity, with focus on the company, the market and the competitors. On that basis, a programme for increasing digital value can be developed, including the business case and milestones, followed immediately by the implementation of the programme – because the digital competition has no mercy on losses of time.

At OMMAX, the implementation process concentrates on the company’s various departments and is based on 30 proven concepts for digitalisation (such as digitalising the value creation, the products, the marketing channels, the data utilisation and the analysis processes as well as the development of a digital organisation). Thanks to our database with more than 100 million data points from transactions and implementation consulting, we can make decisions based on the data and precisely determine the maturity and the potential for the development of a company. It is crucial not to think short-term when doing this, but rather across investment cycles and durable lifetimes.

 

Strategy and Implementation From a Single Source

Since OMMAX consultants do not just advise customers (private equity firms as well as B2B and B2C companies) strategically, but also provide seamless service during the implementation phase, we can quickly react to new trends and adjust strategies. Our approach is to avoid unreliable plans and to develop serious, sustainable solutions that achieve initial success within three to six months. Doing this creates trust and shared success, which is important for implementing projects that are more complex. Several customers have been trusting us for three generations of owners, which has allowed all OMMAX teams to have a significant share of the company’s success stories in the fields of transaction consulting, digital strategy and digital execution.

 

B2B E-commerce on the Rise

The e-commerce market and B2B service business models are very dynamic at this time. We currently see annual growth rates in these industries of 40 to 60 per cent. Industry representatives are among those who have benefited from the Corona crisis.

This also causes strong movements in the transaction market since many private equity companies would now like to sell their assets to earn a profit. E-commerce is no longer restricted to the B2C market – the B2B e-commerce market is also gaining increasing significance. Many companies can no longer advertise their products at trade shows, and self-service portals, digital marketing platforms and approaching customers digitally, including appointment scheduling and simple digital communications, have become vital.

 

OMMAX Services for Private Equity Companies:

Learn more about digital due diligence and our services for investors.

By Dr. Stefan Sambol

Contact an expert

Do you want to know more about our experience in transaction advisory? Get in touch!

Doctor using smartphone

Industry Insights

AI in healthcare: How generative AI unlocks new use cases

With the advent of generative AI, the healthcare sector is beginning to change and take advantage of this new technology. But how exactly can AI [...]

Industry Insights

Omnichannel Strategy: Hurdles and Success Factors

Omnichannel aims to provide a seamless customer experience across all channels, blending physical and digital worlds. While technology has advanced [...]

Industry Insights

ESG in Private Equity: From Duty Fulfillment to Value Driver

Environmental, Social, and Governance (ESG) considerations have significantly evolved in the private equity landscape. Once viewed as a compliance [...]

Industry Insights

AI in Marketing: Trends in online search

The utilization of Artificial Intelligence (AI) is leaving an indelible mark across various business functions, with digital marketing, especially [...]

MG Motor cars

Case Studies

The MG Motor Case

OMMAX assisted MG Motor with their launch into the German market by establishing a digital go-to-market and lead-generation strategy and implementing [...]

Case Studies

The Evidia Case

Evidia is the leading radiation medicine group in Germany. Formed in 2021 from the merger of Meine Radiologie Holding and blikk Holding, the new [...]

Case Studies

The TISSO Case

TISSO Naturprodukte specializes in the development and production of high-quality natural nutritional supplements. Founded in 1999, TISSO's range [...]

Case Studies

The Sana Kliniken Case

Sana Kliniken AG is Germany’s largest independent clinic-/ healthcare provider. From prevention to outpatient and inpatient care, rehabilitation, [...]

Sign Up for the Newsletter

Development and Execution of a Customized Digital Growth Strategy