Just like in entrepreneurship, where not all ideas prove to be good or become successful businesses, in the field of investment funds or multinationals, not all bets are winners either.
The most recent example is the Swedish investment fund Greenbridge, which in 2019 acquired a majority stake (75%) in the Rus Savitar-Casa Rusu group, active in furniture production and retail, and in 2022 took over the remaining shares. The investor recently exited this business, accepting the failure and loss incurred.
"We had to choose between declaring bankruptcy and leaving 1,000 people unemployed or selling back to the former shareholders (the business founders, the Rusu family)," responded a fund representative to inquiries from the Swedish newspaper Dagens Industri (di.se).
Similarly, the market evolution caused Innova Capital's expectations regarding the Energobit business not to be met, leading the founders to fully reacquire the business in 2016. These examples are not isolated. However, they are not specific to investment funds alone.
Earlier this year, entrepreneur Mihai Simiuc bought back the Frufru and Urban Monkey brands from the Anglo-Dutch giant Unilever, five years after he had ceded control. What do these three examples have in common?
Key Takeaways:
Failed Expectations: Investment funds and multinationals sometimes fail to meet their business growth expectations, leading to exits and buybacks by original founders.
Resilience of Founders: Founders often demonstrate resilience and commitment by re-purchasing and reviving their original businesses.
Market Dynamics: Changes in market conditions can disrupt plans and lead to unexpected business decisions, including the reacquisition by original owners.
Employment Preservation: Buybacks can be motivated by a desire to preserve jobs and maintain business continuity.
Strategic Re-evaluation: These situations highlight the importance of strategic re-evaluation and flexibility in business management, whether for founders or investors.
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