Ottobock Owner: “We are ready for the IPO, we are just waiting for the right environment”. Hans Georg Näder has repurchased the 20 percent stake held by investor EQT in Ottobock. In the interview, he explains why he continues to strive for a stock market listing and what he has learned after seven years with the investor.
The prosthetics manufacturer Ottobock is now back in 100 percent ownership of the Näder family. The 105-year-old family enterprise announced this on Thursday evening. It has taken out a total of 1.1 billion euros in loans from credit funds to buy out the financial investor EQT, which has been involved since 2017.
The investor had already wanted to exit with its 20 percent stake a year ago, but the environment for an IPO had been too poor. Since then, Näder had been looking for a new investor and was even willing to give up another ten percent.
However, when no one was found to take over the shares at the price demanded by EQT, the 62-year-old entrepreneur decided to buy back the shares with his Näder Holding. In an interview with Handelsblatt, the owner and Ottobock CEO Oliver Jakobi explain what they now intend to do.
Mr Näder, how does it feel to have complete control over Ottobock again?
Hans Georg Näder: My feelings are no different than before; I also had control over the company with 80 percent. But now we have the timing of a possible IPO in our hands – and are no longer dependent on a junior partner.
Last summer, you announced that you would give up another ten percent to a potential investor. Why have you changed your mind about these plans?
Näder: The idea had arisen in discussions with our investor EQT because we initially thought that 30 percent would be more attractive for a private equity investor than 20 percent.
But even then, no one took the bait; how do you explain that?
Näder: Ottobock will continue its growth course and is a highly attractive investment, but in last year’s scenarios, where the IPO market was virtually closed, private equity firms think three times before entering into a minority stake.
Biographies of Hans Georg Näder and Oliver Jakobi
The Entrepreneur
62-year-old Hans Georg Näder studied business administration in Erlangen and joined the family business after various internships abroad in France, the USA and Australia. He led the company from 1990 to 2017. The father of two daughters is now Chairman of the Board of Directors at Ottobock and Managing Partner of the Näder Holding above it. His daughter Georgia heads the French business.
The Manager
55-year-old Oliver Jakobi has spent his entire professional life at Ottobock. He started his training as an industrial clerk at the family company and worked his way up. From 2007 to 2009, he completed his Executive Master of Business Administration at the Center for Corporate Management (ZFU) in Switzerland. Until 2021, he was responsible for the Eastern Europe, Middle East and Africa business. Since 2020, he has been Sales Director and, since December 2022, additionally CEO of Ottobock.
The Company
Ottobock was founded 105 years ago and has specialised in prosthetics and other aids for people with mobility impairments. According to the company, sales grew to 1.5 billion euros in 2023, and profit was 280 million euros. Today, around 9,000 employees work for the company. Since 2018, the business model has been expanded to include exoskeletons that facilitate work processes. Since 1988, Ottobock has supported the Paralympic Games with its technical expertise.
Then you had to provide the proof yourself that you believe in the company?
Näder: From our side, we would have also committed ourselves again to a financial investor for five to seven years. After all, an investor would not have wanted to make an exit earlier either. We want to do the IPO when the framework conditions are right. And that will be much earlier. I would not plan that if I had doubts about the company.
“I know what the company is worth”
One could also say that you have now chosen the third-best solution because the IPO and investor engagements did not work out. What do you say to that?
Näder: You have to ask EQT that. We at Ottobock believe it was the best solution because we now have full control and full freedom. I suggested buying back the 20 percent myself. I know what the company is worth and what potential Ottobock has.
Do you have an explanation for why you could not motivate any family office to invest?
Näder: That was not because of Ottobock. The interested parties were there and diverse. EQT was the owner of the 20 percent stake. At the same time, in 2023, the markets were still in the post-Covid phase and influenced by the multiple crises and the war in Ukraine.
But the demand for prosthetics, as problematic as it sounds, increases with wars …
Oliver Jakobi: Wars are not a business for us during wartime; we invest in infrastructure and training in Ukraine and currently earn nothing there. Also, after the earthquake in Turkey, we donated through our foundation, as we did for the children in Gaza.
You want to continue investing in Ukraine but also still supply Russia. Will that remain the case?
Jakobi: We do not plan to withdraw from Russia, but we have clearly limited ourselves to our existing business; we only supply the civilian population and follow our humanitarian mission; we do not participate in veteran care.
You have made two transactions, firstly the repurchase of the 20 percent from EQT. And secondly, you have concluded a credit fund transaction of 1.1 billion euros at the family level with Carlyle, KKR, Hayfin and MacQuarie. How peacefully can you sleep with this debt burden?
Näder: I sleep well for my age.
Ottobock recently generated sales of 1.5 billion euros
Nevertheless, 1.1 billion euros of fresh debt with 1.5 billion euros in sales is a lot.
Näder: Wait a minute, it’s not Ottobock that has the PIK instrument (Payment in Kind, the interest is not due until the end of the contract term, editor’s note), but the Näder Holding, above the operating company. The operating business is completely independent of this. We are deeply relaxed about the future, no matter what the weather is like for investors. We have profitable growth, a top team and are IPO-ready.
There are rumours circulating of figures between 440 and 630 million that EQT is said to have paid for the 20 percent in Ottobock at the time. What is correct?
Näder: We have agreed to remain silent on each occasion.
Is the 1.1 billion euros in debt the largest loan in the company’s history?
Näder: It’s not a loan in Ottobock’s corporate history, but in the family’s history. And yes, it’s a large sum, but I have known the company for 40 years, Oliver Jakobi has been with us for 30 years. I am very confident. My parents lost everything through the invasion of the Soviets; we bought back our old plant in Thuringia from the Treuhand. Now we are buying back the shares from EQT. One thing is firmly anchored in our family: we have entrepreneurial courage and only take manageable risks.
The interest you will have to pay for the PIK loan will not be due until the end of the term, but several sources say it is apparently more than ten percent. This can hardly be managed without the proceeds from an IPO. What alternatives are you planning?
Näder: We have not communicated the term and interest rate of the PIK loan and will not comment on them. In addition to an IPO, there is always the possibility of a strategic partner joining. But my plan is to take our company to the capital markets. That’s where the companies are, like Coloplast, Straumann, Phonak and Zeiss, which invest a lot in research and development. The Board of Directors also confirms me in this view.
You have to replace the two EQT representatives on both the Board of Directors and the Supervisory Board of the SE. Who will follow you on the respective bodies?
Näder: I don’t know that yet, but what I do know is that if I have a question, I can always call my ex-partners. After all, we have three DAX or ex-DAX CEOs on the Board of Directors with Stefan Heidenreich, Michael Kaschke and Joachim Kreuzburg, and a top-class Supervisory Board. They advise us and are deeply involved. They will also advise us with regard to the IPO.
“I am an entrepreneur and truffle pig for innovation and future topics”
EQT has professionalised Ottobock. How do you ensure that you do not fall back into old patterns?
Näder: When we decided in 2017 to bring in a top investor with EQT, it was a fitness programme for the company: we doubled the result, significantly increased sales. Management and owners have learned a lot, for example, how to look at profitability from an investor’s point of view, namely at free cash flow. We will not change anything about the processes and reporting. We have settled in. I myself am not operationally active; I am an entrepreneur and truffle pig for innovation and future topics.
What were the biggest pain points on the way to being ready for the stock market?
Näder: The transition to the accounting standard was quite a feat, but we now have everything in our toolbox, such as ESG reporting (reporting on environment, social and corporate governance, editor’s note).
In the future, there will be more companies that outgrow the entrepreneurial families. What advice would you give to entrepreneurs who, like you in 2017, were overwhelmed by the company?
Näder: I was not overwhelmed. But I had the feeling that I wanted to bring a fitness trainer on board on the way to the IPO.
What specifically made Ottobock fit?
Näder: Many medium-sized companies like us come from a product-centred world. Now we have created a user-centred ecosystem and introduced a customer relationship management system. At the product level, investors can do little, but in the financial organisation they can contribute a great deal, such as the transition to the accounting standard or the development of key performance indicators.
What would be your advice to family entrepreneurs who are considering involving investors?
Näder: A good private equity firm can really help SMEs. Especially when they have exceeded a certain size, it can really create value if the company is moving towards capital markets or generational change or even a sale. I would do it again and again.
Even if there was sometimes a dispute?
Näder: There was no dispute, but of course we also fought out issues. We never took the investment agreement out of the cupboard.
Like the resignation of Oliver Scheel as CEO right at the beginning of your partnership with EQT?
Näder: Yes, that didn’t fit culturally and in the end we agreed.
Jakobi: From Ottobock’s point of view, I would like to add that we now have such calibres on the Board of Directors of a medium-sized company who not only come four times a year but also assist with advice and action. That is really good for Ottobock.
Would you not have got the three board members without EQT?
Näder: I approached Mr Kaschke and Mr Kreuzburg, Mr Heidenreich came from EQT. But professionalism in the company also attracts professional board members.
What should one look out for when searching for a private equity investor?
Näder: I had acquired my knowledge management for 35 years through reading newspapers. I never had a co-pilot; I had to acquire my knowledge empirically. Now, through EQT and the industry experts on the Board of Directors, we have a professional cockpit, especially for major strategic decisions.
“In 2017, EQT with a lively exchange fit well with us”
But how do you find the right investor for the respective situation?
Näder: My recommendation: as a family entrepreneur, take a very close look at the person who will be your partner for a limited time. It depends on the person and what successes they have already achieved. In 2017, EQT with a lively exchange fit well with us as a family business because our processes improved as a result, we were able to handle a total of 30 acquisitions and advanced customer centricity. In ten years, for example, KKR or Carlyle could be perfect partners.
Now you are choosing the path via credit funds, why?
Näder: A PIK note is the right instrument for my family and the transition we are in.
If you do go public one day, how many shares would you want to give up then?
Näder: We’ll see about that.
Apart from financing growth, what other advantage would an IPO have for the company itself?
Näder: We are oriented towards research-intensive companies like Zeiss, and the stock market helps with growth financing there.
Would those be the exoskeletons that help people at work and with which you significantly increase the number of potential users?
Näder: Yes, that too; we currently have a big project running at IKEA. But also through artificial intelligence, we will be able to show realistic movement sequences of people with prosthetics. Neuro-orthopaedics in particular is a field of the future.
As a German family company that is more than 100 years old, is active internationally and aims to go public, you should have your history, especially during the Nazi era, reviewed by independent scholars. Birkenstock has just done that. Will you commission this?
Näder: We have already reappraised our history twice and would also have no problem having it examined once again by independent scholars in the run-up to the IPO.
Many entrepreneurs are dissatisfied with Germany as a business location, are you too?
Näder: The skilled workers, the engineers, the SMEs are excellent, but the current politics … oh dear, poor Germany.
Have you actually rejoined the CDU in the meantime?
Näder: I almost feel compelled to.