Changing the shareholder structure

Risks and opportunities

A change in the shareholder structure often heralds a new era. However, such a change can also significantly weaken both a company’s ability to act and its financial strength. Both situations can be avoided by choosing the right financing solution.

The benefits

of partnering with VR Equitypartner

A flexible partner

To ensure that your company (and your investment) are not adversely affected by shareholder changes, we can offer you a variety of options depending on your needs: an equity interest, mezzanine financing or syndicated equity and debt.

We have your company’s interests at heart

We can help you and your company to navigate shareholder changes without a negative impact on day-to-day operations. We can give you access to our network of experienced executives and secure financial headroom for your company.

Realizing growth
together

We can support your plans for growth both financially and strategically, drawing on the extensive experience gained from many years of partnering with growing businesses. Should you wish, our team of experienced professionals can also assist in operational matters.

Changes in shareholder structure - what you need to know

Why the change?

 

The reasons why shareholders dispose of holdings are very varied:


A shareholder has reached a cut-off age stipulated in the articles of association; a shareholder wants to realize the value of their investment for financial reasons; the views of the shareholders with regards to strategic development are too divergent; not all shareholders are able to fund a financial injection that the company needs but dilution is not an option - and many more such reasons.


Matters become more complicated when the changes in ownership are the result of a conflict.


What are the potential consequences of a change in shareholder structure?

 

Changes to the shareholder structure can impact business operations. When active shareholders exit, this often creates a hole at management level. There is also a risk of losing valuable contacts, client relationships and informal expertise. If the shareholder changes are the result of conflict, this can paralyze the company for a long period. In a situation like this, it is even more important to seek professional support to mediate between the conflicting positions.

 

On the other hand, if a passive shareholder exits a company, the effect this has is largely dependent on who the successor is. Does the new shareholder hold similar views on dividends, investments and further capital injections? This will play a role in whether the new shareholder structure improves or strains liquidity or the company’s overall financial stability.

Who should succeed the departing shareholder?

 

First off, the exiting shareholder needs to find a successor - and buyer - for their holding. This could be the company per se - in that it pays out the shareholder and cancels the shares. This has the benefit that the remaining shareholders increase their holdings with corresponding higher shares in the profit and equity value. That said, the buyout of a shareholder using company funds can impact the company’s financial position. For this reason, this option should only be considered by companies that are well funded and have no plans for major investments.

 

A similar option would be to distribute the shares - either in equal parts or proportionally based on their existing holdings. In this case, the shareholders and not the company would finance the purchase. Should a shareholder - be it for financial or other reasons - not acquire their alloted share, this is then shared out among the remaining shareholders.

 

Both of the above options have the benefit of protecting the company from the “unknown quantity” of a new shareholder – and all that this entails in terms of strategic uncertainty. On the other hand, it also means that no fresh ideas or new momentum are brought in. And that financial resources are more limited than before.

The door is opened to a new shareholder ...

In many instances, a new shareholder follows - either a private investor, an operating company or a financial investor. With any change in the shareholder structure, the existing shareholders should always try to base their choice on factors that reflect the company’s best interests.


With this in mind, the following four aspects should be considered,
among other things:

  • whether the investor can consider a minority shareholding
  • if there is a common understanding of strategy/future development?
  • ability to support the plans for growth - through a network of contacts, own know-how, financial resources, etc.
  • possible negative consequences of a new shareholder - for example, loss of reputation, incompatibility with corporate culture or benefits for competitors

The last aspect, in particular, causes some shareholders to shrink back from considering an operating business (irrespective of antitrust issues).
There are usually grave concerns that important know-how will be transferred away or that the company will be swallowed up.

Private investors, on the other hand, are more likely
to be an option for smaller businesses or minority holdings, given their limited financial resources - for the most part, at least.


Are increasingly seen as an attractive option when companies are faced with changes to the shareholder base (see text Succession planning). However, it is important to find the right partner (see text Equity Investors: the selection criteria) - VR Equitypartner is one of the few investors that also considers minority shareholdings.


Changes to shareholder structure - our conclusion:

 

A change in ownership offers a company the opportunity to reposition itself for growth and stability in the future. A minority shareholding held by VR Equitypartner can give your company the right performance-oriented support.

Your contact

Team Bavaria

+49 69 710 476 – 316

Team Frankfurt

 

+49 69 710 476 – 212

Team West


+49 251 788 789-10

Your contact

 

For further details our contacts are available here.

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From Münster central railway station:

About 10 minutes by taxi.

Public transport offers various options from the central railway station. Either take the bus line 7 direction Kriegerweg, the number 15 bus line direction Albachten, or the bus line 16 direction Mecklenbeck. The bus station is „DZ Hyp/IHK“ whichever route you take. From here, cross the Weseler Strasse, and the Sentmaringer Weg is diagonally opposite. Immediately left is VR Equitypartner GmbH located.

By car:

Coming from the A1 and A43, at the Münster-Süd motorway junction take the B51 and then the B219 (Weseler Strasse) in the direction of Münster city centre. After the second major junction, turn off after just 400 m on the right into the Sentmaringer Weg. VR Equitypartner GmbH can be found immediately on the left.

Frankfurt

VR Equitypartner GmbH
Platz der Republik
60265 Frankfurt am Main

 

Entrance:

Cityhaus I
Platz der Republik 6
Entrance via Friedrich-Ebert-Anlage

 

From Frankfurt Airport:

Take the A5 towards Frankfurt to Westkreuz Frankfurt. Follow signs towards Frankfurter Westkreuz and Messe. From there, drive into Friedrich-Ebert-Anlage and follow the arrows on the map.
Parking is available in the public car park “Westend” in Savignystraße.

On request, we are happy to reserve one of our visitor parking spaces in Cityhaus I for you.

The entrance is in Erlenstraße.

 

With public transport:

Take S-Bahn line S8 or S9 (towards Frankfurt Hbf., Offenbach or Hanau) and you will arrive directly at the main station (Hauptbahnhof).

U-Bahn line U4 or U5 – Station Frankfurt(Main) Hbf.

It then takes around 5 minutes on foot from the station to VR Equitypartner.

Tram lines 11, 16, 17, 21 – Platz der Republik stop.

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CV

  • Managing Director of VR Equitypartner GmbH
  • Responsible for Risk-/Portfoliomanagement, Value management, Accounting, Controlling, HR, Legal, Data protection, Revision, IT and Operations
  • Until merger he had been Managing Director of DZ Equity Partner since 2010
  • Before: Group Head and Vice Head of Division for Structured Financing with focus on acquisition financing (credit)
  • Apprenticeship at Dresdner Bank AG, Wiesbaden, Business administration Studies at the University of Passau and Managerial and Administrative Studies at Aston University Birmingham with “Diplom-Kaufmann” final qualification (MBA equivalent)

CV

  • Managing Director of VR Equitypartner GmbH
  • Responsible for acquisition and development of direct investments and mezzanine financing projects
  • Joined DZ Equity Partner as Investmentmanager in 2006
  • Since 2008 Member of the Executive Board and since 2013 Authorised Representative
  • Before: Procurist and Certified Accountant at PricewaterhouseCoopers
  • Final qualification: Diplom-Kaufmann (MBA equivalent), Business administration degree at the University of Mannheim