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In 2021, the Aareon Group recorded its biggest ever increase in acquisitions. Elke Wolff is head of Corporate Affairs & PMI at Aareon, the department responsible for integrating into the Group the companies brought on board by Aareon’s mergers & acquisitions experts led by Dr. Roland Claussen. In this interview, the two discuss the art of successful integration, cognitive diversity and adding value for customers.
Elke Wolff (EW): We’ve visibly evolved when it comes to acquiring and integrating new companies. Before 2021, we bought a company approximately every 15 months – 14 of them in total. Dedicated M&A* and PMI* teams didn’t exist back then. Potential takeovers were carefully analysed by Aareon’s Management Board in close collaboration with our legal department and external consultants, and the relevant companies targeted. The corresponding integration projects were managed by employees from staff departments. In 2006, I ran one of these projects myself for the first time, focusing on personnel and back-office integration – that is, linking the new companies to our financial reporting operations and integrating them in our internal processes and systems.
*PMI
Post-Merger Integration refers to the integration phase following the legal merger of companies within the scope of M&A projects.
In 2020, we adapted our corporate strategy with the aim of accelerating inorganic growth and, in doing so, realigned our M&A and PMI activities in terms of organisation and capacities. Dr. Roland Claussen has led the new Transactions and Corporate Development department since the end of 2020. With the help of his new team, we’ve stepped up the pace of acquisitions significantly, acquiring six new innovative companies for the Aareon Group within a year. Together with the PMI experts, my team’s job is to integrate these companies into specialist departments such as Corporate Finance, Group HR and Group Application Management, to name but a few. Here, too, we’ve taken on new staff and built up our expertise. Overall, we have been really successful.
*PMI
Post-Merger Integration refers to the integration phase following the legal merger of companies within the scope of M&A projects.
In 2020, we adapted our corporate strategy with the aim of accelerating inorganic growth and, in doing so, realigned our M&A and PMI activities in terms of organisation and capacities. Dr. Roland Claussen has led the new Transactions and Corporate Development department since the end of 2020. With the help of his new team, we’ve stepped up the pace of acquisitions significantly, acquiring six new innovative companies for the Aareon Group within a year. Together with the PMI experts, my team’s job is to integrate these companies into specialist departments such as Corporate Finance, Group HR and Group Application Management, to name but a few. Here, too, we’ve taken on new staff and built up our expertise. Overall, we have been really successful.
Roland Claussen (RC): The conditions at Aareon were very promising because we were able to build on solid foundations. First and foremost, we established a systematic transaction process last year and optimised cooperation between the specialist departments, so we’re now in a position to carry out as many as 6-8 transactions a year. It is said that Aareon has “M&A” in its DNA, especially when it comes to integrating companies into the Aareon Group post-merger. Elke Wolff and her team have been very successful at steering that process for quite a few years now. A number of previously acquired companies and their products have now become an integral part of the Aareon Group. In Germany, for example, there is the Wodis ERP system, for which a new product generation – Wodis Yuneo – has already been developed to supersede Wodis Sigma. We’ve also succeeded in expanding our international business, for example with the ERP systems Tobias (now known as Tobias 365) in the Netherlands and PortalImmo (now known as PortalImmo Habitat) in France. Intensifying the analysis and due-diligence phase, standardising processes, and integrating governance and compliance requirements from a very early stage are the main changes we’ve made as regards M&A process organisation.
*M&A
M&A stands for Mergers & Acquisitions, a term used for transactions in the corporate sector, such as business combinations and takeovers of companies or company shares.
Roland Claussen (RC): The conditions at Aareon were very promising because we were able to build on solid foundations. First and foremost, we established a systematic transaction process last year and optimised cooperation between the specialist departments, so we’re now in a position to carry out as many as 6-8 transactions a year. It is said that Aareon has “M&A” in its DNA, especially when it comes to integrating companies into the Aareon Group post-merger. Elke Wolff and her team have been very successful at steering that process for quite a few years now. A number of previously acquired companies and their products have now become an integral part of the Aareon Group. In Germany, for example, there is the Wodis ERP system, for which a new product generation – Wodis Yuneo – has already been developed to supersede Wodis Sigma. We’ve also succeeded in expanding our international business, for example with the ERP systems Tobias (now known as Tobias 365) in the Netherlands and PortalImmo (now known as PortalImmo Habitat) in France. Intensifying the analysis and due-diligence phase, standardising processes, and integrating governance and compliance requirements from a very early stage are the main changes we’ve made as regards M&A process organisation.
*M&A
M&A stands for Mergers & Acquisitions, a term used for transactions in the corporate sector, such as business combinations and takeovers of companies or company shares.
RC: Our goal was to intensify and accelerate the M&A activities, that is, all necessary steps from market screening to establishing contact, due diligence, negotiations and conclusion of the contract. This entailed standardising many of the work stages and communication interfaces between the teams. Precisely defined procedures, extending all the way to the accurate documentation of results, are crucial elements in this process – and once this framework is stable, it gives rise to agile working methods. These structures are now up and running. Last year, we completed six international transactions on this basis. All in all, up to 15 colleagues in different teams can be involved in our transactions. The communication paths in a project are always short, so outstanding issues can be clarified straight away.
EW: Thanks to Roland’s team, the procedure for identifying potential acquisitions has become much more professional. And the quality of our analyses has also improved further. These analyses form a valuable decision-making basis for all parties during negotiations with a potential acquisition. My team, too, was reorganised at the start of 2021 with the acquisition of new expertise. Together with the specialist departments involved, we standardised the various steps involved in the integration process and documented them in a playbook. So, we’re now able to run several integration projects at a time more quickly than before.
RC: In Germany, we acquired an established ERP product and long-standing market competitor with the takeover of the GAPGroup. Its customers – mainly cooperatives and municipal companies – can continue to use their tried-and-tested applications, while also benefiting from the additional products and services provided by Aareon Smart World. So, as well as strengthening an existing customer segment, we’ve also managed to tap into cross-selling potential. Another example is wohnungshelden, a Munich-based start-up that offers customers a wide range of convenient functions with which to manage the letting process. Again, this allowed us to enhance our current range of products and services, while accessing new customer groups. On the subject of new markets, we’ve tapped into the growth segment of small and medium-sized property managers in the UK, and our acquisitions of Arthur Online, Tilt and Fixflo follow this logic. That was quite a big thing for us. Not only do we now have a CRM and an ERP system for this target group, but also a property maintenance portal in the form of Fixflo. And in the Netherlands, Twinq, a provider of solutions for the management of owners’ associations – a common feature of the market there – has been a positive addition to our portfolio. So, here too, we’ve been able to expand our market presence by adding to our product range.
RC: First and foremost, of course, it’s about providing customers with the best possible offering and adding real value. Our customers benefit from a broader range of solutions. In order to achieve this goal, it’s important for us to invest in new technologies – and especially in dynamic teams – early on in addition to developing our own new products; after all, we can’t rely on technology alone to move things, we need people too. This enables us to strengthen Aareon’s position as an innovative driver of digitalisation in the housing industry. In the long term, we want to grow faster than the market and further improve our operating result. The buy-and-build strategy we’re pursuing aims to sustain longterm success through systematic acquisitions, among other things. Our processes now enable us to achieve a success rate of over 60%, which is significantly above the market average.
“We need people, not just technology, to make things happen.”
EW: In the best case, by helping us to realise the synergy potential we are aiming for and, if possible, an upside potential too. RELion, for example, secured our entry into the Austrian and Swiss markets and gave us a broader customer base in the CRE (commercial real estate) sector in Germany. CalCon, a long-standing partner, has now become part of the Aareon family. Its AiBATROS® planning software has enabled us to expand our product range and offer our customers a solution for reducing their carbon footprint – and not just in Germany, either. AiBATROS® has already been launched by our colleagues at Aareon Nederland, for instance. But acquisitions have another upside: they allow us to acquire new talent – innovative colleagues with different perspectives, opinions and expertise. Aareon benefits from cognitive diversity. It’s not always straightforward: we have to listen to each other, get each other on board and reach agreement. But the results are better in the end. Our customers benefit from this, too. And some of our colleagues who joined us via acquisitions have gone on to have successful careers in the Aareon Group. Dr. André Rasquin and Dr. Imad Abdallah, both of whom came to us through acquisitions, now have positions on the Management Board.
EW: In terms of the Group as a whole, we’re not aiming for a rigid, uniform corporate culture. We want it to be quite diverse, with different teams engendering a degree of disruption. In PMI, one of our tasks is to ensure that unnecessary change isn’t foisted upon anyone. It goes without saying that we have to observe binding requirements, such as strict data security regulations and compliance standards; but we want the working methods of our new colleagues to remain appropriate for the respective country.
Our colleagues from the UK are very open to best practices – they’re communicative and very interested in close collaboration and transparency. Our colleagues from the Netherlands like to work in teams and are highly independent – they are pragmatic. They look to find quick solutions to problems where they can. This diversity ultimately benefits the entire Aareon Group.
RC: That’s true. The more attention to detail in the analysis phase, the more successful integration will be later on. M&A often appears technocratic from the outside and, to some extent, of course it is. After all, this is a commercial process.
“A climate of trust between sellers and buyers is important.”
But it’s even more important to create a climate of mutual trust between the seller and the buyer as early as possible, so as to develop a common understanding and common goals with a view to convincing the seller of the potential of a takeover. Aside from all the key indicators and analyses, interpersonal relationships are incredibly important – after all, you’ll often be talking to owners and founders who have an emotional bond with their company and their employees, and who need to keep their word with their customers.
RC: In 2021, the longest acquisition process took three months, while the fastest was done in around four weeks. The process of initiating a transaction is usually much more time-consuming: sometimes it takes just a few days before serious negotiations can begin. In other cases, you can have repeated conversations with someone over several months before they agree to enter the transaction process with you. We often have to negotiate with founders or family businesses. That process can be particularly complex and feature highly individual constellations.
EW: In 2021, we got together with the relevant specialist departments in the new companies and the existing business locations in other countries to establish a detailed, end-to-end post-merger process. We will continue to standardise and optimise this process with one particular goal in mind:
“We want to leverage synergies.”
we want to leverage the synergies brought about by mergers with other companies to preserve our position as a reliable, forward-looking partner for the European property industry. With the support of our new colleagues, I’m sure we’ll be successful in our endeavours.
RC: We have a defined M&A strategy that takes account of different countries and market segments in a dynamic process – always against the backdrop of our existing products and activities, that goes without saying. In 2022, we’ll certainly see further acquisitions in the international arena, and that includes countries that weren’t on the agenda last year. In terms of volume, our M&A activities should be on a similar scale to last year; that said, as far as financing goes, we’re certainly well-equipped to conclude larger transactions, too. With a team like this behind us, I’m generally very optimistic that we’ll achieve our goals in 2022, too.
Thank you for speaking to us!
Dr. Roland Claussen is Director of Transactions & Corporate Development. He has held various senior roles in the fields of corporate development, strategy and product management in the course of his career, specialising in software, technology and data, and has been responsible for Aareon’s M&A activities since November 2020.
Elke Wolff is Director of Corporate Affairs & PMI. Her first integration project at Aareon was in 2006 and involved Wodis GmbH, which today plays a key role in Aareon’s product range, having launched a new product generation, Wodis Yuneo, with great success in 2020. Since 2016, she has managed a team that was renamed Corporate Affairs & PMI in 2021 and is also in charge of the end-to-end post-merger process. Her accredited project managers assume responsibility for the process and collaborate closely with the relevant specialist departments, such as Corporate Finance, Group IT, Legal, and Group HR.
