Interview Exclusive: Torge Barkholtz Discusses Redefining SME Succession by Means of Operator-Focused Investment Strategies
In the world of private equity, Novastone Partners stands out with its innovative Operator model. This approach, which focuses on the succession of lower middle-market companies, offers a fresh perspective on traditional private equity strategies.
Based in Europe and North America, Novastone Partners is sector-agnostic but cautious, avoiding capital-intensive industries and hyper-growth tech. They shine in business services, MedTech, HealthTech, and engineering.
The selection process for Operators is intense, with around 1% of applicants making it through a seven-stage assessment. These mid-career professionals are recruited to lead the acquisition of a company and step in as CEO post-acquisition.
Novastone Partners supports Operators with a team of over 50 people across legal, M&A, HR, data, and portfolio management. This support structure ensures a smooth transition and sets the stage for growth.
The Operators at Novastone Partners focus on finding companies locally, with someone in Spain looking for a company in Spain, and someone in Poland looking in Poland. This localised approach helps in understanding the nuances of each market and finding the right fit for Novastone's investments.
Torge Barkholtz, a founder who operates at the intersection of entrepreneurship and private equity, co-founded Novastone Partners with Christian Malek. Barkholtz emphasizes that the real differentiator is intent, with operators being driven by experience and empathy, not just financial gains.
Novastone Partners focuses on SMEs with $3m to $10m EBITDA, recurring revenues, and a clear leadership gap. These companies are typically profitable and durable but lack a clear succession plan. Operators are incentivized to stay for the long haul, receiving additional compensation if they reach certain IRR thresholds.
The success of Novastone Partners is not just about making good deals, but also about making good calls. This means considering the risk profile of the company and potential factors like tariffs, regulation, or politics that could affect growth.
The Operator model aims to address private equity's image problems by providing a new generation of ownership and leadership. It also leverages a growing internal data engine, compiled from every operator's sourcing journey, to make informed decisions.
Moreover, Novastone Partners has a unique capacity to marry entrepreneurial drive with institutional scaffolding. This combination allows them to deliver transformation that extends beyond the balance sheet and into company culture, workforce stability, and customer confidence.
Finally, the centralised RAIF fund structure in Luxembourg supports cross-border deals, enabling Novastone Partners to build a new playbook for the generational handover of Europe's business backbone. With 23 acquisitions already closed, and more on the horizon, Novastone Partners is set to make a significant impact in the world of private equity.
[1] Novastone Partners. (n.d.). Novastone Partners. Retrieved from https://www.novastonepartners.com/
[2] Novastone Partners. (2021, March 17). Novastone Partners Raises €200 Million for Its First Fund. Retrieved from https://www.novastonepartners.com/news/novastone-partners-raises-e200-million-for-its-first-fund/
- Novastone Partners' Operator model stands out in private equity, offering a fresh perspective on traditional strategies, focusing on succession of lower middle-market companies.
- Novastone Partners is sector-agnostic but prefers business services, MedTech, HealthTech, and engineering, avoiding capital-intensive industries and hyper-growth technology.
- Operators at Novastone Partners are mid-career professionals, recruited for their experience, and are incentivized to stay for the long haul, receiving additional compensation based on returns.
- The support structure provided by Novastone Partners includes a team of over 50 people across legal, M&A, HR, data, and portfolio management.
- The Operator model aims to address private equity's image problems by providing a new generation of ownership and leadership, leveraging a growing internal data engine.
- Novastone Partners focuses on SMEs with $3m to $10m EBITDA, recurring revenues, and a clear leadership gap, typically profitable and durable but lacking a clear succession plan.
- Novastone Partners has a unique capacity to marry entrepreneurial drive with institutional scaffolding, delivering transformation that extends beyond the balance sheet.
- With the centralised RAIF fund structure in Luxembourg, Novastone Partners is set to make a significant impact in the world of private equity, having already closed 23 acquisitions and more on the horizon.
