As of last December, Lutz Berger, a co-founder of Zittau based Digades GmbH, can rest easy again: With the help of DZ Equity Partner (Frankfurt), he has taken over the majority of his wireless communication company. Rather than coordinate several associates with differing interests, he can now fully focus on developing this mid-sized business.Fast growth, different ideas
The entire process wasn’t always very easy, as Lutz Berger carefully remarks. Together with six colleagues, the graduate engineer had founded Digades GmbH in 1991. The company started out as a small firm of consulting engineers specialised in digital and analogue circuit design. Meanwhile, the enterprise has turned into one of the largest employers in the economically underdeveloped region around Zittau (close to the Polish and Czech borders). Currently, the company employs a staff of 123 people and – amongst other things - produces intelligent remote controls for vehicle heaters and infotainment systems, for use by the motor industry, as well as components for tyre pressure control systems and wireless systems for heating and room temperature control.
Already shortly after the company was founded, the number of partners was reduced to four. From 1996 onwards, managing director Berger and his associates held 25 percent of the company shares, each. However, as Digades grew further, their ideas about the future course of the company and the need for investments drifted apart, considerably. "All of this hasn’t made our day to day business any easier”, Berger remarks. Eventually, a joint decision was taken to tackle "profound changes” in their partnership structure.
A fair and transparent solution
Right from the beginning, Berger had shown an interest in taking over the company shares from his co-founders. "I have always considered myself as an entrepreneur", the engineer emphasises. In order to keep pricing fair and transparent, the four associates commissioned a third party to arrange the bidding process for Digades. This is how the company came into contact with several financial investors. "Even though the entire process took about a year, it quickly became obvious that the result would turn out as some form of private equity solution", Berger recounts. He had also looked at a 100 percent funding through loans, however, banks told him that his transaction volume was "definitely too high".
His main bank, Volksbank Löbau-Zittau, brought Berger into contact with the co-operative DZ Equity Partner GmbH (DZEP). "This is where we came full circle: The initial credit we used for founding Digades had been supplied by Volksbank, too", Berger recollects. DZ Equity acquired nearly a quarter of the company shares – enabling Berger to buy out his partners. The contract gave him the option to take over the company entirely, after seven years, at the latest.
A clear brain for growth
"It is most likely that Lutz Berger will take over the company completely, in one of the following years ", Alexander Roßbach claims, DZEP’s investment director in charge of the Digades account. Digades is considered "a prime example for process- and production quality" and remains a first-grade supplier to the automotive industry. One of the reasons for this success is that Berger runs his business with "operational excellence" and "clear-cut standards", Roßbach praises. Berger himself sees things slightly more reserved: In the first instance, Digades needs to follow a "definite course of growth", which he may now control more or less by himself. "And with the changes made, my brain has been cleared for this", Digades’ managing director points out.