Private equity helps protect the wealth of family businesses

More than 3,000 small and medium-sized companies, most of them family-owned, have chosen private equity (PE) in Spain to welcome investment funds as partners providing financial resources aimed at reinforcing their growth, competitiveness and management capabilities, among other objectives.

Francisco Gómez Zubeldia, Chief Executive Officer of Diana Capital, explored this and other insights during the recent Diálogos Dinero conference organised by La Vanguardia.

During the event, Gómez-Zubeldia stated that Diana Capital mainly focuses on growth capital strategies, as opposed to other PE models such as venture capital or leveraged buyouts with controlling stakes.

The Diana Capital executive presented several success stories from the PE firm that have contributed to the growth and internationalisation of Spain’s productive fabric, such as Gransolar, a leading company in the photovoltaic market.

In this company, Diana Capital supported a phase of strong international expansion, while in Grupo Lappí, in addition to organic growth, Diana Capital promoted sector consolidation operations to turn it into a leading Iberian player.

At Diana Capital, he said, we invest in family businesses with much lower leverage than the rest of the private equity industry. Instead, we provide significant support to improve corporate governance and help turn businesses into companies.

It may sound like the same thing, but it is not. Many family businesses begin as a business venture and, in order to grow, they need to become companies with the appropriate management structures and professional rigour.

Francisco Gómez-Zubeldía is clear and categorical about the advantages of his model: Every family business with a growth project should turn to PE.

We, as PE firms, he says, are the only investors who commit to remaining in the companies we invest in for a specific period of time. In the rest of the investment world, nobody takes on those types of long-term commitments. PE funds are reliable temporary partners who manage third-party capital and are obliged to return it.

The management companies responsible for PE funds are usually owned by the managers themselves and also include other partners. Andbank, for example, is one of Diana Capital’s partners and is also an investor in its latest fund.

The team managing these funds invests its own money alongside the rest of the investors. The model is highly regulated and has become a driver of progress, enabling family businesses to grow and diversify while reducing risk in an increasingly competitive world, whether by expanding the company’s activity or acquiring other businesses.

If you would like to access more information, please refer to the full article published by La Vanguardia.