Agefi Luxembourg - janvier 2025

AGEFI Luxembourg 22 Janvier 2025 Fonds d’investissement AYDO secures significant funding and opens Tech & Innovation Hub in Luxembourg A YDO, a leading techno- logy-driven company re- volutionizing the structured products investment industry, proudly announces the successful completion of its latest funding round. The round was led by prestigious inves- tors, including the Digital Tech Fund (managed by Expon Capi- tal), VAeX Capital, and mem- bers of the Luxembourg Business Angel Network (LBAN). This milestone positions AYDO to ad- vance its mission of unlocking the full potential of structured products through cutting-edge technology. The funding will accelerate the deve- lopment of SHAPE, AYDO’s proprie- tary operating system designed to modernize and optimize structured product investments. Structured products, a trillion-dollar market projected to reach $1 trillion annually by 2029, hold immense po- tential but remain hindered by outda- ted, manual processes. AYDO is deter- mined to transform this landscape by equipping sellers, investors, and advi- sors with powerful tools to achieve unprecedented levels of performance. To support its ambitious vision, AYDO is excited to announce the opening of its Tech & Innovation Hub in Luxembourg. The new hub cements AYDO’s presence in the Grand Duchy, which it has long re- garded as a natural home for expan- sion due to its vibrant fintech ecosystem and strong foundations in wealth management. "Luxembourg offers an unparalleled environment for growth and innova- tion," said Arthur Teixeira, Co-foun- der of AYDO. "Its reputation as a resilient hub for wealth management, combined with a stable economic and political environment, perfectly aligns with the long-term nature of our pro- ject. The ease of access to decision-ma- kers and the availability of highly skilled international tech talent has made Luxembourg the ideal choice for our expansion. We are also proud to be a member of the Luxembourg House of Fintech (LHoFT), which has been instrumental in supporting our journey." AYDO’s Luxembourg office will drive the development of SHAPE, capitali- zing on the region’s forwardthinking approach to fintech and leveraging its role as a hub for wealth management innovation. "We are immensely proud of this fun- draising achievement," Teixeira added. "It not only reflects the confi- dence of top-tier institutional inves- tors and industry leaders in our vision but also underscores the dedication of our operational team, who have cho- sen to invest alongside them." AYDO is nowpoised to lead a transfor- mative shift in the structured products industry, empowering stakeholders to realize the true potential of these in- vestments. l. to r.: Pierre-Yves B RETON , Jordan S FEZ &Arthur T EIXEIRA , Founding partnersAYDO F amily-ownedbusinesses form the backbone of the global eco- nomy, significantly contributing to local economies (GDP) and em- ployment. However, they often en- counter critical challenges during generational transitions, such as leader- ship gaps, financial constraints, and conflicting visions among stakeholders. Private equity (PE) firms are re- cognized as being instru- mental in addressing these challenges and faci- litating successful succes- sionplanning. Succession is a critical moment in a family business. Within the next decade, nearly 40% of European family-owned businesses anticipate a transition in leadership or ownership, yet only 30% have established formal succession plans. In certain geographic landscapes, family businesses generate around 50% of global GDP and provide over 70% of jobs. According to the United Nations Conference on Trade and Development (UNCTAD), family- ownedbusinesses (1) contribute toover 70%of global GDP and account for approximately 60%of global employment. A well-planned transition is critical not only for the business but also for the economy. On the other hand, market intelligence shows that family-owned businesses remain a major focus for PEfirms, particularly in the context of generational transitions. These dynamics highlight the growing need for strategic planning to ensure both business continuity and economic stability. Converging Interests Stakeholder Alignment and Leadership Transition Support Private equityfirmsplayanessential role inensuring stakeholderalignment,wheredifferingvisionsforthe future can often lead to conflict. By acting as neutral mediators, PE firms help resolve disputes, guiding family members through challenges and helping themreachaconsensusthatbenefitsthebusiness.Ad- ditionally, theywork closelywith families todevelop long-termstrategiesthatalignwiththefamily’slegacy andvalues. During leadership transitions, private equity firms providevitalsupporttoensurethecontinuedsuccess and stability of family-ownedbusinesses. They assist in identifying and training potential successors, whether fromwithin the family or externally, to en- surethatthebusinesshasstrongleadershipforthefu- ture. Furthermore, they facilitate gradual handovers, allowing retiring leaders to mentor and guide new management during the transitionprocess. This approach not only helps preserve the business’s continuitybut also ensures that thenewleadership is well-preparedtotakeontheresponsibilitiesandchal- lengesoftherole.Throughthissupport,PEfirmshelp ensure a smooth transition that honors both the busi- ness’s heritage and its future potential. Strategic Expertise and Financial Support Privateequityfirmsofferinvaluablestrategicsupport to family-owned businesses, especially during times of transition. They develop and implement detailed successionroadmapsthatcatertotheuniqueneedsof retiringfamilymembers,incomingleaders,andother stakeholders. These plans ensure a seamless transfer of leadership while addressing potential challenges. In addition to succession planning, PE firms often bringinseasonedmanagementteamsorworkalong- side existing leaders. This professional management drives growth dur- ing critical transition periods, ensuring continuity and long-term success. They also establish robust governance structures, such as advisory boards and well-defined decision-making processes. These frameworks promote clarity, accountability, and professionalism, enabling the business to navigate complexities and seize future opportunities. Private equity firms bring in the funds needed to ramp up operations, expand into new markets, launch newproducts, and adopt the latest technolo- gies.Theseinvestmentsallowbusinessestostaycom- petitiveandevolvewithout losingsight of their roots. Additionally, they play a key role in helping family- owned businesses manage transitions and grow. Through the partial and full acquisition of the busi- ness, PE firms give retiring family members the chance to turn their years of hardwork into financial security. This provides a smoothway for founders to step back while ensuring the business has the re- sources tomove forward. Ultimately, PE firms help reduce the risks that can make succession daunting for the next generation. Withtheirfinancialstrengthandexperience,theypro- vide stability and confidence, making it easier for younger family members or internal successors to take the reins andguide the company into the future. Modernization andLegacyPreservation Private equity firms are instrumental in balancing modernizationwiththepreservationoffamily-owned businesses’ legacies. They recognize the significance ofmaintainingtheuniquebrandandculturalidentity that have driven success. This approach ensures that the essence of the business is safeguarded even as changes are implemented. Simultaneously, PE firms invest in innovative transformations such asdigitalization,productdiversification, and process modernization. These in- vestmentsenhancethebusiness’scom- petitiveness, ensuring it remains relevant in a rapidly evolvingmarket while retaining its core identity. This strategic approach enables family businesses togrowandadapt tonew challenges, all while honoring the values that have contributed to their success. While the convergence be- tween private equity firms and family-owned businesses pres- ents numerous opportunities for growth and continuity, it is impor- tant to acknowledge that this collab- oration also comes with its challenges. Beyond the shared goals of modernization, legacy preservation, and stake- holder alignment, there are complexities that can arise during the process. These challenges can in- clude navigating differing visions, managing fam- ily dynamics, and balancing the demands of growth with the preservation of cultural values. Recognizing andaddressing these hurdles is crucial for ensuring a successful partnership that achieves both short-term objectives and long-term sustain- ability. Governance Challenges, Financial and Key Consid- erations The collaboration between private equity firms and family-owned businesses also comes with several challenges that need tobe carefullymanaged. One of the first things to consider is cultural fit. It’s crucial to ensure that thePEfirmshares the family’svisionand values tomaintainharmony throughout thepartner- ship. If there is a significant cultural mismatch, it can create tensions and negatively impact the long-term success of the business. Case Study: A notable example of private equity in- volvement is a heritage footwear brand. Founded in the mid-20th century and managed by a family, the brand faced financial difficulties in the early 2000s, leading to the sale of amajority stake to a private eq- uityfirminthemid-2010s.Undernewownership,the brand expanded globally, embraced digital transfor- mation,andachievedsignificantgrowth,culminating in amulti-billion-dollar valuationduring its IPOon a major stock exchange. In contrast, the story of a prestigious champagne house illustrates different challenges. Established in the 18th century, it was acquired by an international private equity firm in the mid-2000s. This generated concerns over potential conflicts between profit-dri- ven strategies and preserving cultural heritage.After a brief period, the firm sold the business back to its original family owners. These examples highlight the varied outcomes of private equity involvement, shaped by factors such as cultural alignment, strategic priorities, and long- termvision. Another keychallenge is control and influence. Fam- ilyownersoftenworryaboutlosingdecision-making powerafteraPEinvestment,especiallywhentheyare used to having complete control over their business. This shift can lead to friction, as familymembersmay feel sidelined incritical decisions that affect the future of the company. The high expectations for growth may alsopose challenges. PE firms typically seek strong returns, which may pressure businesses to prioritize rapid growth over thepreservationoftheirlegacy.Thiscancreateacon- flict between expanding quickly to meet the in- vestor’s goals and maintaining the values that have made the business successful. Governance issues can also complicate matters. Many family businesses lack formal governance structures, which makes navigating complex processes like succession more difficult. Without clear governance inplace, it can lead to internal con- flicts and inefficiencies. Financial concerns are another important aspect. About 18%of family business leaders rely on selling their companies to fund retirement, but only 20-30% of businesses for sale find buyers, according to Forbes. (2) ThismakesthedecisiontosellorseekPEin- vestment a difficult one for family owners, as they mustcarefullyweighthepotentialfinancialoutcomes. Finally, exit strategies are a critical point of attention to ensure convergence of interests. PE firms should ensure that these are carefully understood to make sure that the need for growth and investment dura- tion align with the desire to preserve the heritage of the business. Conclusion Private equity firms play a pivotal role as transfor- mative partners in succession planning for family- owned businesses. By combining strategic vision, financial resources, and operational expertise, PE firms enable these enterprises to navigate genera- tional transitions effectively. Without the involve- ment of PE, many of these transitions might not occur due to a lack of preparation, financial means, or even willingness on the part of the family to ad- dress such changes. Thispartnershipoftencreates a “win-win” scenario: families benefit from the expertise and funding needed to modernize and expand their businesses, whilePEfirms achieve their goals of drivinggrowth and profitability. While challenges such as cultural alignment and thebalanceof control remain, the col- laboration between PE firms and family businesses has proven to facilitate sustainable growth, preserve legacies, and set the stage for long-term success, en- suring the continuation of these businesses for gen- erations to come. Laurent CAPOLAGHI, Partner, Private Equity Leader Aude de ROQUANCOURT, Partner, Accounting Compliance and Reporting EY Luxembourg 1)Fairedesentreprisesfamilialesunoutildedéveloppementdu- rable|ONUcommerceetdéveloppement(CNUCED) 2) Succession d’entreprise : le moteur méconnu de la croissance desentreprises-ForbesFrance Family-Owned Businesses: The Role of Private Equity in Succession Planning