Profile: Markus Gyssler, EMERAM Capital Partners

The Drawdown (TDD): You joined Emeram 10 years ago, how did the move come about?

Markus Gyssler (MG): The firm’s founders, Christian Näther, Kai Köppen, Kai Obring and I had already known each other for quite some time when Emeram approached me 10 years ago for the role of CFO. At the time I was working as an independent consultant, and I was excited about the opportunity because on the one hand, this segment of the German economy was practically untouched by private capital, and on the other hand, I knew the three founders would make an excellent team.

Their strategy and the private equity industry in general intrigued me because of the variety and challenges. What finally convinced me was their vision for the firm and how they worked together as a team. The three had known each other and worked together for a long time. They saw the benefit of bringing in a CFO in the early days of the company, which was unconventional at the time but testifies to their foresight to recognise that the expectations of our industry would only grow.

TDD: How has your role changed during the last decade?

MG: It is worth looking at this in the context of the firm’s history. We reached our first closing very quickly and as a result had to build up and expand our operational structure, and in parallel, conduct daily business. At the same time, we had to serve a global and constantly growing investor base.

The founders’ approach was to first define a clear positioning of the company and to set up and grow Emeram’s operational structure accordingly from the get-go. Each process was to be clearly defined now, optimised where necessary, and later expanded with dedicated personnel. This strategy enabled us to consolidate our identity as a company. Your identity is the tip of your spear – everything else aligns with it. If it’s not clearly defined, it will lead to friction, which can hinder the operation from successfully taking off.

As the company grew and required more division of labour, we hired a finance and HR director, and gradually expanded the back-office support.

As regulation increased, so did the number of corresponding reports and disclosures. Additional requirements such as AML and KYC were constantly improved, obviously meaning more work for finance professionals. Consequently, other firms also woke up to the need for a CFO in private equity, but there were not that many of us around.

Since then, the amount of formal regulation, but also information requests from LPs regarding all aspects of our business, has led to investor relations becoming increasingly sophisticated. Financial reporting has become much more complex and demanding. New forms of dedicated reporting have also emerged, such as ESG.

I welcome these developments, as they ensure that business is done properly. And topics such as working with an AIFM or using the marketing passport have led to further division of labour so that individuals are able to channel the highest expertise.

TDD: You started out as CFO and are now an investment partner and COO. How do you stay on top of your duties?

MG: I was part of the deal teams and sat on the board of Officium and Matrix42, two portfolio companies which we have exited very successfully. As a matter of firm policy, in addition to doing their deal work, every partner has a focus such as strategy, portfolio management, origination, etc. I am no exception to this, although one could say I did it in reverse. By convention, a colleague would join the investment team and then develop their focus area, whereas I came in because of my expertise and then joined the partnership and investment team.

Emeram’s structure, which I’ve explained earlier, enables me to successfully manage my roles. The founders’ approach has made our internal operations extremely robust, which allows me to detach myself from hands-on work because the support function is strong and broad. This in turn makes it easier for me to participate in our investment activities, given my background mainly in tech and software deals.

My involvement in the firm’s dealmaking enhanced my capabilities as a COO, and I think it is important for this role to be actively involved. Investor relations are a significant part of our remit and I can communicate our position to the LPs much more clearly as I have first-hand and on-the-ground knowledge of our investments.

TDD: Given Emeram’s strong focus on setting up internal processes, how is the firm addressing generational transition?

MG: Succession is a topic we face head-on. We partners have committed to staying in the business for another decade. During this period, we will gradually work on our succession and its implementation at Emeram. We currently have a great team in-house with lots of superior talents, and it is part of our policy to support our younger colleagues throughout their career via formal training and continuously increasing deal responsibilities.

We believe in in-house succession and aim to provide our people with the chance to lead the company when we no longer do so. This way, our LPs can be sure that the firm will always be managed in the way they have come to know, which we believe is the basis for long-term success.

TDD: Let’s shorten the timespan from 10 years to one – what do the next 12 months look like for you?

MG: Three main themes, in my view, will dominate the coming year: First, a growing number of LPs need to be onboarded and managed in close cooperation with our Luxembourg AIFM. Our finance director handles this to a large extent but I am also involved whenever needed.

Second, because of our strategic position as a firm, Emeram has a strong deal pipeline, which constantly leads to internal competition on which deals receive final approval. In all of our three focus sectors – tech/software, value-added services and non-discretionary consumer – there are many good opportunities out there. As a member of the investment team, it is part of my job to help find the best ones.

Third, we have three investments in Emeram Fund I that we will eventually exit. Against the backdrop of the current macroeconomic environment, it is important to be vigilant and, if necessary, consider holding onto them until the time is right. Since we only invest in market leaders, we have created a comfortable position for us and our investors, as all of our companies have been performing very well throughout the past, and we have the choice, but not the pressure, to sell when the right opportunity is there. In the past two years, which were difficult for many, we have completed six very successful exits, and we see that as proof that our investment strategy works.

DIGITAL EXPERIENCE

Before coming to private equity, Gyssler earned his stripes in the digital industries. He shares with The Drawdown how this has prepared him for his current role: “A large part of my duties includes data management, reporting, handling our CRM during fundraising, etc… My previous experience from the digital industries is incredibly useful, as I have a strong familiarity with the relevant tools and do not have to rely extensively on external consultants.”

But it goes further than that, says Gyssler: “It also supports communication with management teams. Tech and software companies are a cornerstone of our investment strategy, and I have the expertise and experience to meet their tech and software managers on a professional eye level, both when we’re still deal sourcing but also after we have partnered with them. This in turn, adds to the benefit for our LPs.”