Interview Exclusive: Torge Barkholtz discusses reforming Small and Medium Enterprise succession strategies via operator-led investment approach
In the world of private equity, Novastone Partners is making waves with its unique Operator model. This innovative approach, focused on operator-led buyouts, targets small and medium-sized enterprises (SMEs) that often face succession challenges.
The key differentiator for Novastone Partners is intent. Unlike traditional private equity firms, they are driven by experience and empathy, rather than solely by financial gains. This model addresses succession risk by replacing founders with capable executives who have a vested interest in the success of the businesses.
Novastone Partners' Operator model is designed to cater to mature, profitable SMEs that are often overlooked by institutional private equity but too large or complex for traditional search funds or venture capital. The leadership-first approach prioritizes operators with relevant, proven leadership experience to run the businesses.
Operators can earn up to 20% equity if they meet growth and return benchmarks, creating a strong motivation to drive business performance and successful exits. The deals are syndicated on a deal-by-deal basis from diverse sources, enabling scalability beyond traditional small funds.
Novastone Partners' model blends entrepreneurial drive, institutional rigor, and operational leadership, representing an evolution rather than a hybrid of prior private equity or search fund approaches. The centralised RAIF fund structure in Luxembourg supports cross-border deals, with European investments being handled by the European team and North American investments by the US team.
Language is a critical factor in their search for companies, and Novastone Partners primarily operates in Europe and North America, but they search for companies locally. The firm is sector-agnostic but cautious, avoiding capital-intensive industries and hyper-growth tech. They specialize in business services, MedTech, HealthTech, and engineering.
The risk profile of a company, including potential impacts from tariffs, regulation, or politics, is carefully considered when making investments. Novastone Partners also leverages a growing internal data engine, compiled from every operator's sourcing journey.
With 23 acquisitions already under their belt and more on the horizon, Novastone Partners is aiming to build a new playbook for the generational handover of Europe's business backbone. In a world where a succession crisis is approaching, customers, vendors, and employees want to know about a company's future. Novastone Partners is providing a solution, combining capital with proven leadership, institutional governance, and strong incentive alignment, thereby making ownership transitions smoother and enabling long-term value creation after founders step down.
- Novastone Partners, in the realm of private equity, is revolutionizing the industry with its Operator model, which focuses on operator-led buyouts of small and medium-sized enterprises (SMEs).
- Unlike traditional private equity firms, Novastone Partners prioritizes experience and empathy over just financial gains, addressing succession risk by replacing founders with capable executives.
- The Operator model by Novastone Partners is geared towards mature, profitable SMEs, often overlooked by institutional private equity, yet too large or complex for traditional search funds or venture capital.
- Operators stand to earn up to 20% equity if they meet growth and return benchmarks, incentivizing them to enhance business performance and ensure successful exits.
- Novastone Partners' deals are syndicated on a deal-by-deal basis from diverse sources, allowing for scalability beyond traditional small funds.
- The firm's model blends entrepreneurial drive, institutional rigor, and operational leadership, representing an evolution rather than a hybrid of prior private equity or search fund approaches.
- Novastone Partners is cautious in selecting companies, avoiding capital-intensive industries and hyper-growth tech, and specializes in business services, MedTech, HealthTech, and engineering.
- With 23 acquisitions completed and more to come, Novastone Partners is shaping a new playbook for the generational handover of Europe's business backbone, providing a solution for companies navigating a succession crisis by combining capital with proven leadership, institutional governance, and strong incentive alignment, thus creating long-term value after founders step down.
