Impact PE Gains Traction, Offers Long-Term Investment and Sustainability Focus
Impact-oriented private equity firms are gaining traction, offering a longer investment horizon and integrating social and environmental goals. They differ from traditional firms by supporting the company's existence and valuing cultural fit.
Impact private equity brings several advantages. It provides capital access without strategic dependence, ensuring value retention and cultural continuity. It also promotes professionalization in corporate management and enhances resilience against short-term market fluctuations.
Private equity can secure stable succession when traditional solutions like family succession, management takeover, or strategic buyers fail. Impact investors are particularly suitable when sustainability is integral to the business model, the owner seeks a non-exit-oriented solution, independence must be ensured, and value orientation is crucial.
While impact private equity offers these benefits, it also presents challenges. Ensuring the authenticity of impact-driven investors and navigating a more complex selection process are key hurdles. Additionally, defining governance structures together can be intricate.
In Germany, firms like the Viessmann Generations Group and the European Social Innovation and Impact Fund (ESIIF) have recently backed impact start-ups like everwave. However, their involvement in business succession as impact investors is not yet clearly established in the public domain.
