Soon after acquiring Oikos, we advised management to closely work with specialist industrial consultancy Munich Strategy to lead a programme of digitalisation and operational excellence, and this quickly bore fruit.
Despite COVID-19, Oikos has consistently traded above budget and its order book was full, so we knew there was clear visibility of what the company’s turnover would be for the next 18 to 24 months.
It was clear that at the current rate of growth a further capacity increase was on the cards for Oikos, so through the summer of 2020, early conversations with the Oikos management team, led by CEO Marco Hammer, took place to map out a timeline for when Oikos would need to invest in a new factory.
The analysis showed that investment in additional capacity would have to start in 2022, with the new factory scheduled to start loading new orders from 2022/2023. To plan carefully, potential delays of six to 12 months and cost overruns of 10%-15% need to be considered when building a new site, which would have taken us up to 2024. As a new site has to show real numbers once opened before any prospective sale, it would need at least another 12 months of trading before being in a position to look at a potential sale.
While Equistone Fund V had the capacity to fund this next phase of the company’s growth, the business was in a position to transition to an owner with deeper pockets to fund the capacity expansion and to facilitate international growth.