Interview Tomas Simons – Managing Partner Waterland Private Equity

Waterland Private Equity is a European investment company founded in 1999 that focuses on supporting growing companies. The company invests in medium-sized companies in various sectors, including healthcare, technology, media, and so on. Waterland provides not only capital, but also operational support and strategic guidance to its portfolio companies to maximize their growth potential. In this interview, we asked Tomas Simons questions about his college days, about Waterland Private Equity and some tips for students.

Can you tell us who you are?

I’m Tomas Simons, I studied International Business and Corporate Finance in Tilburg. I also took courses for an MPhil at CentER and in between I did an exchange to Canada and Spain. I published a few papers from my thesis.

Besides that, I have been a student assistant for 20 hours a week, sometimes I helped with practical lectures, and I also did numerous sorts of data registration for research to support professors. I was also on a council with professors, which was about the curriculum. I was also a member of a student organization for which I organized a trip.

After college, I started working at McKinsey. I worked there for a total of 7 years, one year of that being an MBA at INSEAD, which is not unusual to do at McKinsey. At McKinsey I worked in the Sydney office, among others, but when I came back, I thought it would be fun to work in private equity for a change. Those research studies I mentioned were all about private equity. In the early 2000s this was not a term al lot people knew, that’s different now. But that interest has always been there for me. I started at a private equity firm called H2, which were more turnarounds. Later, I started looking a little further and proceeded my career here at Waterland. I am working here for 12 years now. I am responsible for this office together with my fellow partners and in addition I am responsible for the Irish office, a couple of activities in Denmark and I am also head of ESG. Fortunately, we have very smart managers on our portfolio companies.

How has your experience at McKinsey helped your current role?

The great thing about strategy consultant firms in general, not just at McKinsey, is that they give you a very good problem-solving skillset. It’s a good training ground for your further professional life and, in addition, they provide you with a very good network. They also call you alumnus. I know the community very well and I can always see them and contact them easily. That’s a tremendously nice group to be a part of. So, on different levels it gives you a good preparation for business skills like for example for private equity. But to get into private equity there are several roads you could take. Investment banking is another background that you see a lot and some guys and gals do it right out of college, of course that’s also possible.

What are the most important lessons you learned during your college years?

I don’t think what I’m about to say makes me popular, but a lot of people think getting 6’s as grades was enough. That’s possible, that depends on your ambitions, but at McKinsey you don’t get in if you have a 6 GPA. I also understand that not everyone has the same ambitions, and it doesn’t come easily to everyone, but the idea that you had to be satisfied with a 6’s was not something I could relate to. But in the end, a study is also just a study. You learn all kinds of things there, but you will have to learn them all over again when you go to work. I remember when I got out of college I thought, “Now I know a lot,” but I realized after one day that I had to start all over again. So, I wouldn’t get too much out of it. In the end, you have to develop yourself and become a broadly rounded person with fun interests and lots of experiences along the way, because that will ultimately benefit you more. So go abroad again, go do something fun again, because before you know it, study time will be over. Above all, try to find something that binds you, bite into it develop fun things around it.

How many offices do you have around the world?

We are only in Europe, and there we have 11 offices. If you look within the Dutch private equity funds, the funds originally from the Netherlands, Waterland is one of the largest. This is mainly because of our strategic focus on Europe. We now have over 200 employees of which 110 are investment staff and the rest mid and back office, support. We have 14.5 billion euros under management.  Last year we raised 4 billion. And just in numbers, you’re talking about 85 portfolio companies throughout Europe, of which there are about 25 in the Netherlands. A few familiar ones, for you; Loetje, Easytoys, Partou (child care), but we are mostly in B2B services.

Our platforms (companies), as we call it, are mostly in Europe. Often in the countries where we have offices as well such that we are close to them. But it could be possible that those companies invest in America. Portfolio companies also have investments in the US. For example, one of the portfolio companies from Denmark, which I’m working with now train dressage horses. Actually, many Olympic dressage horses come from that company and they also have a big business in the US.

How does Waterland distinguish itself from all other private equity firms?

Waterland is known in the investor world for just having a very clear single focus on buy-and-build strategies. You start with a platform, in a growing market that is also fragmented. And then, in that market, you start bringing companies together in order to build, from maybe a mid-market Dutch company, a European leader. That’s not just buying but also integrating, professionalizing and the sustainability aspect. And all those processes take place side by side, and that happens over a period of 5 to 7 years. We would like to build firms that are future proof. In some cases, after our involvement, there is still a lot of potential. Then it could be that another investor buys the platform from us and in other cases strategic buyers can be buyers of our portfolio companies. For example, last year we sold Heliox, a company from Brabant that makes chargers for e-buses and e-trucks, to a larger firm; Siemens.

We invest across multiple sectors, but we actually do mostly services, that suits better with the buy and build strategy. We don’t really invest in heavy asset-based industries. But regardless, there are still a lot of different companies that we invest in.

What is a value that Waterland adds to their portfolio companies?

For Waterland, that typically comes with buy-and-build and integration, so we contact entrepreneurs with the message, ‘you lead an impressive company, in a good sector.’ Next to organic growth, you can find growth through acquisitions. We can bring that into our partnership. Then we partner up through the company equity and then we move forward together and from there we shape the acquisition strategy. We initially take the lead on that. Often, over time, we can transfer that within the company, for that we hire m&a people, integration people, and we take a step back.

At the beginning of such a process, are you the ones who approach such a company or do they come to you?

We almost always approach the company ourselves, so it’s almost in all cases that we approach them but, in some cases, they approach us. Another  source is auctions or company auctions, for example. But by far the biggest source of deal sourcing for us is simply; we call or email an entrepreneur; tell them we want to get acquainted and that we have some ideas. However, the conversion rate is not very high. You probably have to visit 10 companies to eventually do a deal. We do that on a regular basis and because of that we also know a lot of entrepreneurs. Many businesses of a reasonable size and who have built success, we’ve probably talked to once.

What is the average size of companies you look at for boarding?

That varies a lot, but I can always give you an average of course. Actually, a lot of companies have around 50 million euros worth of sales. That’s also a logical group for us to start with. We then build them up to 100, 200 and sometimes even 500 million in sales in about 4 to 7 years. In our last fund, you see some companies that are even beyond that. So, there’s a pretty big spread. We just made an investment and it’s doing below 50 million euros of sales. We’re going to start an interesting growth trajectory together. But that shows we’re willing to start at the lower bound sometimes if we see growth potential.

Do you sometimes have real problems with an entrepreneur once you become an investor?

It’s not always a ‘party’, of course. What matters is that you agree in advance on an ambition that you both fully support and that you can also measure, so that you can also hold each other accountable if either party cannot contribute enough to it. Ultimately, it is also very important for us to remain soft on the people but hard on the issues. To eventually find a way forward together. But you have to figure it out together. That also means that we hold each other to account and that can sometimes be quite tough, but always constructive and that we can also find a way forward again.

Could you describe the corporate culture within Waterland?

We just happened to be discussing those, the five values of Waterland culture.

‘Entrepreneurship’ is number one. We work with entrepreneurs, of course. We are not as entrepreneurial as the entrepreneurs, but we are entrepreneurial enough to be a logical conversation partner. ‘Collaborative’ is the second, because we very much want to work together in that partner spirit. The third is ‘responsible’. Look, we need to build companies that are future-proof. Not only at the level of the partnership we have, but also to the future and society at large, so we try to instill in our investment team a sense of responsibility in the broad sense. The fourth value is ‘passionate’. That stands for the fact that we actually do this work because we enjoy it, people see that difference. Entrepreneurs have no desire to partner with people who sit at the table out of some sort of obligation; they want to work with at least as much motivation as they have themselves. Our absenteeism level is zero and has been for years. Anyone who works here who asks you what the most fun job is will say this is the most fun job. The fifth value we have is ‘considered’. When we take risks, we do it with some conservatism, a bit of conservatism and a bit of caution. We do our work thoroughly so as not to make the wrong choices. We do our work thoroughly to know the market better than others.

Is it difficult to separate private and business within private equity?

No, I don’t think so, that’s much harder with roles like investment banking or consulting, that’s because that’s more intense in terms of hours, this is more volatile. Only if it really goes wrong somewhere, I sometimes have to do something on Sunday morning. It also depends on the corporate culture, but we do try to ensure that everyone has time for themselves. In the end, we also have a business of making choices here. I don’t have to actually do anything, I just have to make sure that the right decisions are made, a decision can be made in a second, but I want to make sure that I make the right one, because making a wrong decision costs money and hurts. So, I would rather have the time and a fresh set of brains than make a mistake in that.

What skills and attributes are needed if you want to work at Waterland as a student?

Basically, I’m looking for people who are analytically strong and interested in entrepreneurship. I actually need people who, when they drive around a business park, ask themselves, pointing out, ‘what would that be, and what would that be’. That’s why we are looking for people who are very entrepreneurial and especially if you can couple that with good analytical skills to then also be able to do good due diligence and make good valuations. I think that’s the most important combination of skills.

Would you recommend getting started in private equity as a student?

What I would recommend is to do internships first, to see if that’s a good fit for you. I have also hired people right out of college, but I have to say, the success rate on that group is the lowest. Most people who start with us already have two/three years of work experience. What I always recommend is that in case you currently work at a consulting firm and you know you want to work in private equity don’t wait too long. Learn the basics and then make the jump to private equity.

What is your most successful personal investment?

That’s the investment in my wife. In the end, you don’t become happy from working only. It all helps, but in the end it’s all about your situation at home. You can’t invest enough in family and friends. So, whatever happens, make sure you can always have dinner at home with your kids. Try not to be away too much. But in terms of financial investments, I am a of course an investor in the funds of Waterland. That’s where we park our savings and we like to do that, plus we have good returns. Outside of that, I don’t have many financial investments, also because I’m already too involved in it while working. If I know one thing, money doesn’t make you happy. But, let’s face it, a little bit of money does help you not become unhappy, but from a certain level it really doesn’t make you happier.