Acquire proven businesses. Run them better. Compound the equity.
You can see it first in the small towns. A precision-machining shop outside Eindhoven, profitable for thirty-one years, running the same loyal order book it ran a decade ago. The machines are paid off. The margins never made headlines and never missed. The founder is sixty-seven; his daughter is a lawyer in Amsterdam. And on the day he stops, none of it survives him.
Multiply that shop by a continent. Every year, hundreds of thousands of owners reach the end of a working life with no one to hand the keys to. The businesses are not failing — the succession is. What is quietly changing hands, or quietly closing, is the productive base of the real economy: the workshops, distributors, installers, and service firms everything else stands on.
We believe this is the ownership story of the coming two decades. Not because it is fashionable — it is the opposite of fashionable — but because the arithmetic is extraordinary, and almost no one is organized to act on it. The numbers below are the argument.
1.The numbers are not subtle. In the European Union, some 450,000 companies change hands every year, carrying roughly 2 million jobs with them. A further 150,000 firms close annually, not for lack of profit, but for lack of a successor, taking an estimated 600,000 jobs down with them. A third of all owners will have exited within the decade.
2.The pattern is global. In the United States, more than half of all privately held businesses belong to an owner past the age of 55. Japan counted 2.45 million company owners over the age of 70 by 2025, roughly half of them without a successor, a gap its own ministry priced at 6.5 million jobs and 22 trillion yen of lost output.
3.Against that supply stands a simple fact of pricing. A sound enterprise earning a million in EBITDA changes hands at 3 to 4 times earnings. The consolidated platform that eventually owns it trades closer to 8 or 10. Same cash flows, twice the multiple. The difference is not information. It is structure, scale, and the patience to hold.
European Commission, US Census Bureau, Japan METI, private market transaction indices.
02. Correspondence
The thesis is set out in a private memorandum.