The acquisition of thriving asset management boutique Entrepreneur Partners by a holding company previously inactive in Switzerland set the ball rolling. How this novel partnership came about is revealed in an interview with finews.com.
Mr. Ganz, you have built a thriving company with your partners over the past few years. Has the journey come to an end for the founders with the sale of Entrepreneur Partners?
Oliver Ganz: Not at all. We always had the ambition to think ahead and anticipate developments in the market. Now we also wanted to open the next chapter for Entrepreneur Partners at an early stage.
One reason for this was that the shareholder base has broadened over the past 15 years. As the value of the company increased with its growth, it became increasingly difficult for younger people to take a stake in the company.
That's how you came to talk to Cinerius.
Daniel T. Mueller: Exactly. When Cinerius first contacted us, we told them we weren't interested in a new shareholder. But the conversation triggered a thought process for us and we concluded that with Cinerius Financial Partners we could simplify our shareholder structure while maintaining our independence in the long term. This step would not have been necessary yet. But in the next 10 years or so, a succession plan would have been on the agenda.
«It does not feel like we are selling the company»
We are now facing a change in the shareholder structure. But it doesn't feel as if we are selling the company. As founders, we will remain closely associated with the company for the next few years and our customer relationships will not be affected.
Why did you decide to shake hands with Cinerius?
Ganz: In addition to simplifying the shareholder structure, Cinerius convinced us with its strategy of bringing together various independent asset managers, but still allowing them to operate independently on the market and retain their entrepreneurial freedom. The fact that such structures work can be seen in the USA. There, there are similar associations in which the affiliated firms all still operate independently.
Mueller: In addition, the independent asset management industry is facing major tasks in areas such as IT and digitization. If these investments are shouldered jointly, we can act from a position of strength.
Mr. Lieber, there is lots of talk in Switzerland about consolidation among independent asset managers. But little is happening.
Christoph Lieber: Consolidation has probably failed to materialize so far because each company has its origins, culture, and business model that is often not easy to combine. In addition, a management buyout is often financially impossible for the younger employees of an independent asset manager.
«We want to do most of the next transactions in Switzerland»
On the buying side, banks are usually ruled out as driving forces. On the other hand, independent asset managers have mostly set up their businesses after a career in banking and are not looking to return to the fold of a bank with inflexible control structures. Clients who have chosen an independent asset manager are also not looking for proximity to a bank.
Is this where the Cinerius model comes in?
Lieber: Correct, Cinerius is a holding company with majority stakes of at least 75 percent in the partner companies. However, these remain independent in terms of license, name, business model, investment strategy, and acting persons.
The added value in the network comes primarily from offering our partner companies an integrated, convenient IT platform to digitize complex and resource-intensive business processes. In addition, we offer support in the recruitment and administration of personnel, in sales, marketing, communications, and regulatory issues.
So far, Cinerius has acquired exclusively in Germany. To what extent can the services required there also be transferred to Switzerland?
Lieber: There are certain country-specific differences. But they are not so great that centralized services would not be worthwhile. Moreover, we want to carry out the majority of the next transactions in Switzerland.
«Many will reach retirement age in the next ten years»
Ganz: For Entrepreneur Partners with their investment products, the distribution channel to Germany is almost more exciting than synergies from being part of a network. But it is reassuring to know that we can always draw on a pool of expertise.
Is this deal now setting in motion a wave of consolidation in Switzerland?
Mueller: The fact that Cinerius is buying Entrepreneur Partners, one of the larger independent asset managers, is likely to trigger a new dynamic in Switzerland.
In any case, it is clear that with the transition from self-regulation to the Finma world, many independent asset managers are facing new operational challenges. In addition, many will reach retirement age in the next ten years and will therefore want to arrange their succession.
Why did Entrepreneurs Partner decide against acting as a consolidator in the market itself?
Mueller: After being founded in 2008, we obtained Finma regulation on our initiative as early as 2013. This would have allowed Entrepreneur Partners to act as a consolidator in the industry. However, we were often either too unequal a partner or interested parties did not want to lose their independence with a transaction.
«Independent asset managers have gained enormous credibility»
Ganz: Exactly. Cinerius is not a competitor and, as a holding company for companies of a certain size and structure, can offer much more flexible services and, because of its financial strength, is also more likely to be able to implement larger deals.
Six German and one Swiss asset manager are now united under the Cinerius umbrella. Does this strong focus on the German market create new opportunities for Entrepreneur Partners?
Mueller: For Entrepreneur Partners, the German market is more or less a greenfield, because we have neither a local representative nor a distribution license for fund distribution in Germany. We will therefore check with the existing Cinerius partners whether we can win them as local distribution partners.
Ganz: Either way, the German market will remain more of a supplement, because we continue to see good growth opportunities in Switzerland for years to come.
Conversely, what new elements does Entrepreneur Partners bring to Cinerius?
Lieber: As a strong partner company, Entrepreneur Partners is an asset for Cinerius and has a signal effect. This could also convince other independent asset managers in Switzerland, with whom we are already in contact.
So you also believe that the Swiss market is on the verge of a shake-up?
Lieber: Yes, the time is now ripe. In addition to the Corona pandemic and the Ukraine war, the driving forces could also be the end of a stock market boom that has lasted for years. In addition, a certain sense of reality has set in among owners about valuation.
The asset managers who have just successfully passed the Finma licensing process are underlining their desire to be independent, aren't they?
Lieber: That's true. But obtaining the license is only one thing; maintaining the license also ties up considerable resources. I would therefore not be surprised if new forms of cooperation are soon sought and the number of independent asset managers is significantly reduced over the next five years.
So it's less about a shakeout than a reorganization of the market?
Ganz: Exactly. Independent asset managers have gained enormous confidence in recent years. However, due to new requirements such as regulation and compliance, these companies also have to cover services that are not part of their core competencies. In these areas, the companies are now reorganizing.
How will your customers react to the new ownership structure?
Ganz: For our customers, their independence mustn't be affected by the new structure. It is crucial that investment decisions are made independently, as before, and that the advisors with whom customers have had a long-standing relationship remain on board.
But with the sale, you are giving up entrepreneurial freedom.
Ganz: Not at all. Cinerius is set up as a holding company and thrives on investing in companies that are well-managed and can develop independently. That's why Cinerius will also stay out of the day-to-day business.
«The cooperation with the main shareholder Summit is a stroke of luck»
Lieber: Our ambition is to find good companies. In these engagements, we by no means want to turn people with entrepreneurial blood into employees. On the contrary, in cooperation with the founders, we support it when previous employees become even more entrepreneurially involved in the company.
In the background of Cinerius is the American Summit Partners, a representative from the private equity sector. What are the long-term plans with this owner?
Lieber: The cooperation with our main shareholder Summit is a stroke of luck for Cinerius. Summit carries and supports our model of independent asset managers under one holding umbrella, and more and more asset managers are recognizing the advantages of this model. We want to capitalize on this momentum.
Oliver Ganz co-founded Zurich-based Entrepreneur Partners with Daniel T. Mueller in 2008. Before that, he worked for Credit Suisse for over 20 years in various roles, initially in the operations organization, later in commercial lending, and most recently as head of the Entrepreneur desk in Private Banking.
Daniel T. Mueller has been working in banking for more than 25 years, mainly in investment advisory and asset management. For ten years he worked in various functions for Credit Suisse in Private Banking, most recently as Chief Investment Officer of the Entrepreneur Desk Central Switzerland.
Christoph Lieber has many years of experience in international wealth management. He was the founder and CEO of renowned national and international wealth managers and banks and worked for many years in various countries in a leading position for UBS. In 2021 he founded Cinerius Financial Partners AG together with Gregor Korte and Summit.
