Patient capital for succession — a new asset class in the Baltics?

The gap

When an owner hands a company to its managers, someone has to pay the owner. The managers rarely have the money. A bank will lend some of it, but usually against assets and with tight terms. A strategic buyer could pay more — but a strategic buyer takes control.

The bridge

In Germany, the Netherlands and elsewhere, a set of investors now provides succession capital without control. A typical deal:

• the investor pays the departing owner a large part of the agreed price;
• in return, it receives non-voting profit shares or a subordinated loan in the company;
• the company repays the investor from its profits over 8–13 years, up to an agreed cap;
• control passes to the managers as stewards, and the company is locked against a sale.

Purpose Evergreen Capital, for example, describes tickets of roughly €0.5–5 million, no voting rights, capped returns and long terms, for profitable companies with several years of track record.¹

Why it could matter here

Baltic economies have many profitable, founder-led SMEs approaching a change of generation, and few local buyers who would keep them independent. For investors, the profile is unusual: established cash flows, a motivated management team, and a return that does not depend on finding a buyer later.

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Footnotes

1. Purpose Evergreen Capital, purpose-economy.org/en/pec/. Figures as published by the fund; terms vary by deal. ↩