Interview Exclusive: Torge Barkholtz Discusses Redefining Small Business Succession via Operator-Focused Investments
Novastone Partners, a private equity firm based in Europe, is shaking up the traditional investment landscape by focusing on small to medium-sized enterprises (SMEs) with a unique Operator-led investment model. This approach places experienced industry professionals, known as Operators, at the heart of the ownership transition.
The Operators, who have between 15 to 20 years of industry experience, are the driving force behind Novastone Partners' investments. They actively search for SMEs facing succession challenges and step in as CEOs post-acquisition. This Operator-centric approach aims to address the common issue in SME successions by matching seasoned operators with businesses needing succession solutions.
Novastone Partners focuses on SMEs with recurring revenues, a clear leadership gap, and an EBITDA of $3m to $10m. The firm is sector-agnostic but cautious, avoiding capital-intensive industries and hyper-growth tech. Instead, they focus on business services, MedTech, HealthTech, and engineering.
The Operators bring sector-specific insight, while Novastone Partners provides the structure, delivering transformation that extends beyond the balance sheet into company culture, workforce stability, and customer confidence. The firm's approach is about developing companies, not just managing them, with a focus on making good calls about risk profiles rather than just good deals.
With 23 acquisitions already closed, and more on the horizon, Novastone Partners is building a new playbook for the generational handover of Europe's business backbone. The firm's success is due in part to the rigorous three-month selection process that attracts around 3,500 professionals each year, with only approximately 1% making it through.
Deep mutual trust is established between Novastone Partners and the Operators before any acquisition takes place. This trust is built through a thorough selection process and ongoing support during the search for a business. The centralized RAIF fund structure in Luxembourg supports cross-border deals, with a focus on European and North American investments. Novastone Capital Advisors, the firm's parent company, operates across Europe and North America, with operators searching for companies locally, prioritizing language compatibility.
Torge Barkholtz, a founder with ventures in gourmet food, clean mobility, and sustainability, co-founded Novastone Partners and helped build it up. Barkholtz emphasizes the importance of empathy in private equity, stating that Novastone Partners' operators are driven by experience and empathy, rather than financial pressure, and lead with common sense rather than Excel sheets.
In Barkholtz's view, private equity is neither a savior nor a villain, but a tool that works best when handled by people who understand the weight of legacy. The Operator model aims to address private equity's image problems by providing personal, long-term leadership, with operators seen as owners rather than consultants or interims. Operators are incentivized to stay for the long haul, with the potential for additional compensation if they reach certain IRR thresholds.
Novastone Partners leverages a growing internal data engine, compiled from every operator's sourcing journey, to build knowledge. The firm's approach is about more than just making deals; it's about developing companies and the people who run them, ensuring a sustainable future for Europe's SMEs.
- Novastone Partners, an European private equity firm, focuses on the Operator-led investment model, which places experienced industry professionals, known as Operators, at the heart of ownership transitions.
- These Operators, with 15 to 20 years of industry experience, actively search for small to medium-sized enterprises (SMEs) that face succession challenges, and step in as CEOs post-acquisition.
- The firm invests in SMEs with recurring revenues, a clear leadership gap, and an EBITDA of $3m to $10m, often in sectors such as business services, MedTech, HealthTech, and engineering.
- Novastone Partners' Operators bring sector-specific insight, while the firm provides the structure, with a focus on transforming the company beyond the balance sheet into aspects like company culture, workforce stability, and customer confidence.
- With a rigorous three-month selection process attracting around 3,500 professionals each year, Novastone Partners has 23 acquisitions closed and more on the horizon.
- The centralized RAIF fund structure in Luxembourg supports cross-border deals, with a focus on European and North American investments.
- Torge Barkholtz, a co-founder of Novastone Partners, emphasizes the importance of empathy in private equity, stating that Novastone Partners' operators are driven by experience and empathy, not financial pressure.
- The Operator model aims to address the image problems of private equity by providing personal, long-term leadership, with Operators seen as owners rather than consultants or interims, and incentivized to stay for the long haul.
