Good afternoon, Oliver. Congratulations again on the successful sale of your company to VERISK! With more than 40 years of experience in claim management, you have experienced numerous changes in the market. How did you find your way into claim management?
My path into claim management began in my childhood through my family constellation at SV Krug. My father was already a vehicle appraiser. I actually grew up in claim management and was involved in the company early on through vacation jobs. After studying business administration, I was able to gain deeper insights into the business model and the processes which could be improved. I was particularly interested in the newly emerging digitalization, which was still a long way from the claims management industry back then.
My goal was to move away from manual work, such as managing photos and clips, towards well thought-out processes. Thus, I teamed up with two students from Saarbrücken University and we developed a software within a year. This ultimately became the engine for our first Germany-wide product expansion. The next step was to expand our team to further drive growth. Today, we have a team of approximately 145 employees.
Which developments do you expect in the German market within the next five years?
Overall, I see two major drivers that will make change in our industry inevitable in the coming years: the shortage of skilled workers and artificial intelligence (AI). These two factors will mean that claim appraisers will have to work increasingly digital in the future. Instead of relying on traditional HR solutions, the focus will shift to compensation through digital technology in order to bridge the gap between claims triage and settlement. Another important point is regulatory development, particularly at EU level, where AI technology is taking center stage, as well as on the part of BaFin, which supervises the insurance industry. There is also an emerging trend for claim appraisers to increasingly offer entire service ecosystems rather than individual services. In order to remain competitive, there could be a partial consolidation of the market.
What were the driving forces behind the decision to sell SV Krug?
As already mentioned, we have noticed through the development of the German market that more and more ecosystems with full-package offerings have emerged. As a family business, this made competition fiercer. Our aim when taking in a new partner was to position the company for the future in the best possible way. Therefore, in the search for a new partner, it was crucial to find the right synergies. Furthermore, neutrality and independence were key factors for us. The US strategic player ultimately chosen was an independent player who could act neutrally towards the insurers, our customers, and offer us added technological value.
How important was it to you that the company name SV Krug did not disappear after the takeover? After all, the new partner is a strategist and not a financial investor.
In fact, retaining the company name was not really an issue for me during the M&A process. There will be a slight name adjustment in the near future, which is perfectly fine with me. We will continue to deliver high quality products to our customers and that is what really matters.
Why did you choose ox8 Corporate Finance as your M&A / Corporate Finance advisor? How do you evaluate the cooperation?
For me as an entrepreneur, an M&A process is not an everyday business, which is why I needed a sophisticated advisory structure. It was important to me that we felt comfortable working together, as you are only confident to hand over tasks and companies if there is the right level of trust.
Initially, we started with one of the Big 4 companies and explored how they could support us. In the course of the process, however, our tax advisor introduced us to the boutique structure of an M&A advisor via a lawyer, which turned out to be a success factor in the subsequent process
As a medium-sized company, I simply couldn’t identify with the large consulting firms and their far-reaching focus. The personal and specialized support provided by ox8 Corporate Finance was ultimately the success factor. Looking back, there was never a moment when I doubted my decision.
When did you truly realize that you were handing over part of your life’s work to your future partner and how did you deal with it?
For me, the realization only came when we came out from notary. Up until that point, I simply did not have time to deal with the emotional aspects, as the entrepreneurial work and the transaction were the main focus. It was only after the process had been completed that I could really understand that I had handed over a significant part of my life’s work to the new partner.
Looking back on the journey from foundation to sale: What important lessons have you learned as an entrepreneur and what would you do differently today? Are there any specific experiences you would like to share with other founders?
One of the key lessons I have learned is the importance of a company’s core DNA. Reliability and straightforwardness are essential to build a solid and trusting base with customers and employees. These values not only create stability, but also foster long-term relationships, which are indispensable for the success of a company.
It is also important to regularly look outwards in order to broaden your horizons and better understand the market, as it is constantly changing. This makes it possible to offer a focused but in-depth product range that is tailored to the actual needs of customers.
I consider a clear focus on a meaningful and convincing concept and its sustainable establishment to be the key to success. If I were to do anything differently today, it would be to devote even more time and resources to consistently implementing these principles and continuously monitoring the market.
How did you approach your employees to inform them about the sale?
We divided the information process into several steps. At the beginning of the sales process, only a small management team was informed to make sure that operations was not too much distraced from the M&A process.
When it came to announcing the new partner to the entire colleagues, we had to handle the process more like a large corporation, as the buyer has fixed processes and structures. As is the case in life, you are always smarter afterwards. From today’s perspective, I would have made the communication a little more personal in order to continue to reflect the DNA of our family business.
Finally, what advice would you give other founders who are considering selling their business? What steps or considerations do you think are particularly important for a successful exit?
When thinking about selling your business, it is crucial to first understand how you are positioned in the market. You should consider whether you want a financial investor or a strategic partner as a buyer, as this can have a significant impact on you as entrepreneur and company.
Another important aspect is to create a level playing field. During the M&A phase, the operating business must continue to be run efficiently. For us, the M&A process felt much longer than it was because it was a very intense time. Therefore, it is essential to have advisors at your side who can provide comprehensive support.
In addition, the sales process itself gave us more transparency about our own operational processes, which proved to be very valuable in the M&A process.
The communication channel via ox8 with the investors was particularly helpful for us, as it took a huge amount of pressure off me as Managing Director and allowed me to continue to focus on the day-to-day business.
I would not have been able to manage the process on my own. It is important to communicate with investors on an equal footing in order to achieve a good negotiation result.
