Improven and Quadrum Capital: 'Sustainable investment without exit strategy'

Last month reported that Improven and Quadrum Capital continued to expand their relationship. In doing so, we noted that more and more consulting parties are coming into the hands of private equity. That made Improven managing partner Jan Bosman raise an eyebrow. So we called him and Dennis de Buijzer of Quadrum Capital so they could explain to us why this deal is really different from all the others.

Anyone who follows the Dutch consulting industry will not have failed to notice: there is a major consolidation going on. Every week - sometimes more often - we can add another new acquisition or merger when noting, with the ever-growing advisory groups often able to draw on the deep pockets of private equity parties.

Not surprising, then, that we also see the new deal between finance, risk and IT consulting firm Improven and investment firm Quadrum Capital joined this list, Jan Bosman also acknowledges.

"Strictly speaking, it is not incorrect either," the managing partner begins. "Quadrum Capital is indeed investing with private equity. But between the partnership we have entered into and the usual private equity investment, there is a world of difference."

"First of all, Quadrum Capital is not a strange party coming to pick us up for a while," Bosman explained to us. "They had been involved since the launch of Improven in 2016, but have now formally taken a stake from their funds."

No panting investors on your neck

More importantly, he stresses, Quadrum Capital is making this new investment from its new Evergreen Fund. And that is where the biggest difference lies from private equity as we usually know it.

Usually, a fund has a specific term - often five years - during which as much return as possible is sought. There is plenty of focus on rapid profit growth in order to then dispose of the acquired party for as much money as possible. This is often accompanied by high loans and financial structures to create maximum leverage. This does not apply to the Quadrum Evergreen Fund, Bosman explains.

"It is a fund that makes little or no use of loans ánd with no exit strategy. That makes it totally different from a usual private equity investment, where the return is made on the exit."

"Improven has been growing for five years in a row and manages to stand out within a market that also offers plenty of opportunities for the future."

"Here the return is not on a short-term exit, but the objective is to invest for the long term in sustainable, high-yielding, solid organisations, which simply have a sustainable return year on year. Therefore, there are no investors in the fund breathing down our necks asking when the investment will have doubled."

Dennis de Buijzer, investment manager at Quadrum Capital, explains that the Evergreen Fund is specifically aimed at participants who are going for the long term. "The constituency consists of entrepreneurs, ex-entrepreneurs and entrepreneurial families," he says. "Some participants like to build something for their children. Then they are not keen on having their assets released after just a few profitable years and having to be reallocated."

United in sustainable growth

The focus of the partnership is therefore entirely on sustainable growth, and this is exactly where the two partners meet: Improven was looking for a party to financially support this long-term growth, and Quadrum Capital for a party with healthy growth potential.

"What we are doing at Improven is building a beautiful consultancy organisation that can be sustainably successful," Bosman said. "In doing so, it is essential that we maintain our individuality, and then it is very nice to partner with an investment fund that shares that objective."

Another important feature is that Quadrum Capital does not actively interfere in Improven's operations. De Buijzer: "We act as a sparring partner and stay a bit more in the background. We therefore only invest in companies with professional and independent management, and with Improven's partner team that is definitely the case."

"In doing so, the firm has been growing for five years in a row and manages to distinguish itself within a market that also offers plenty of opportunities for the future," he indicates. "Companies are increasingly focusing on risk, finance and IT. Moreover, Improven serves both private and public sector clients, which ensures a stable base."

Growth based on own strengths

From this base, Improven intends to build further with the support of Quadrum Capital. Bosman stresses that in doing so, the agency will remain true to its existing focus on finance, risk and IT. "That specialisation is an important part of our success. We are now recognised on the quality we offer there and of course we want to continue that."

However, the agency does keep moving with the constantly evolving field. "You can now see that project and programme management are becoming increasingly important. Certainly large organisations face so many projects in their transformation programmes that it becomes a challenge to keep control. That's where we help them."

Related to this, change management is also playing an increasingly important role. "In the ongoing digital transformation, it has long since become not only about content or technology, but at least as much about bringing people along and anchoring the change."

"We are reinforcing this dimension accelerated in our services and at hiring new talent we also select for this. After all, traits like 'connectivity' and 'organisational sensitivity' are essential here."

To complement organic growth, it is also looking at acquisitions, but this certainly does not involve a biggest buy-and-build strategy, according to Bosman. "We did not join Quadrum because of a big pot of money to buy up competitors, but selective acquisitions of small, complementary players are on the horizon."

In doing so, he can already report that Improven is already "pretty serious" about one acquisition. "We will hopefully be able to announce more about that soon."

Continuing on its chosen path

What prevails in Bosman's story is that the partnership with Quadrum Capital should be seen primarily as a way for Improven to vigorously continue on the path it has already embarked on.

"Thanks to this expanded cooperation, we can continue to do even better what we have been doing for years: grow in a controlled way based on quality."

"It's not a big trend change," he points out. "We will continue to do what we were already doing, our strategy is and will remain doing fun projects, for fun clients with fun colleagues. The partner team remains the same and will be strengthened in the coming years, in line with the organisation's growth. The response from our team is therefore very positive."

"Our people naturally also see what is happening in the market, how many parties are being picked up," he explains. "The message we are sending with this is that the stable shareholder we already had on board has once again perpetuated the partnership so that we can continue to grow on our own terms, by maintaining our own identity."

An important part of that identity also lies in Improven's commitment to broad social impact. For instance, in framework contracts, the agency agrees concrete and measurable social objectives with clients, invests a percentage of turnover in social return and works continuously on themes such as sustainability, circularity, inequality and diversity.

"We also deploy our own expertise," Bosman says. "For example, for people with a distance to the labour market. For instance, we guide status holders to work and learning places and offer them professional guidance. For example, training in finance and data, advice around preparing a CV and LinkedIn profile, and guidance in searching for and finding workplaces."

This important pillar of Improven's culture therefore remains proudly intact, Bosman assures us. "Thanks to the growth supported by Quadrum, we can only further increase our positive impact."

The same goes for the extensive growth and development opportunities Improven offers its professionals. "That is another part of our message to our people: with our growth comes new opportunities for our people to grow with us. By now, quite a few of them have become seniors and at some point they also enjoy being the leader of a team themselves."

"With Young Improven as well as our programmes for mediors and seniors, we already had a nice ongoing learning curriculum, but this also offers new opportunities for growth," he explains. "And that completes the circle, because that in turn contributes to our growth - where finding and retaining talent is one of the biggest challenges today."

"In short," concludes Bosman, "thanks to this expanded cooperation, we can continue to do even better what we have been doing for years: grow in a controlled way based on quality by developing our talents and helping customers in the best possible way."