Opening up private markets to entrepreneurs with Marktlink Capital

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Audio Transcript

Tim Smallbone

Hello and welcome to Inflexion Point, the podcast that explores those crucial moments in a company's journey that change the trajectory of success. Through conversations with business founders and entrepreneurs, we'll explore what those moments look like and how to recognise and harness them. I'm Tim Smallbone, and in my 20 years as a partner at Inflexion, I've been lucky enough to witness a huge number of those moments that are a part of every success story.

Tom Beltman

In the market of asset managers, there's a lot of farmers and I think that is very important, but you also need to be a good hunter.

Tim van der Meer

It felt like selling an apartment building that you are building and after two floors are finished and you are planning to build over 100 floors.

Sander Ruijter

This is a business with its own sort of strengths and its own ambition that leans on the commercial DNA of the Marktlink Group.

Tim Smallbone

In today's episode we're in Amsterdam with Marktlink Capital, a platform opening up Dutch markets to entrepreneurs and families. It was founded in 2020 out of Marktlink, the Dutch M&A firm which was launched in 1996. Since then, Marktlink Capital has raised over 3 billion euros in committed capital, almost entirely from private investors rather than institutions. Earlier this year, Inflexion backed the next stage of Marktlink Capital's growth with a minority investment through our partnership capital fund. I'm joined by Tim van der Meer and Tom Beltman, managing partners who've built Marktlink over the past two decades, and by Sander Ruijter, head of Inflexion's Benelux office, who led our investment in the business. Welcome to you all. Thanks for joining me. Tom, what is your background? How did this all begin? You didn't start off as M&A advisors. What did you begin as?

Tom Beltman

Yeah, we were friends before we started at Marktlink. So that's to begin with. I'm from an entrepreneurial family and I always wanted to become an entrepreneur. And then my parents sold their family stake in their business. And I saw that businesses are themselves sellable products. And I was amazed by that. I'm very interested. So it was quite a logical step for me to get into M&A. And I think you sparked my interest for Marktlink when you returned from an interview and you got the job and they said they need one more guy and this is going to be something for you.

Tim Smallbone

So you were mates before you even got together at Marktlink?

Tim van der Meer

Yeah, we were study friends. So we studied together and we lived on campus. So he was still sleeping when I came back from the job interview. I woke him up and I said, Tom, this is a very weird company, but there's something triggering me and it's going to fit your profile as well. So he had an interview as well and we both started at the same time.

Tim Smallbone

It was both of your first jobs. You didn't do anything else before.

Tim van der Meer

No, it was my first job and probably my last job. And together we have built Marktlink and made it a very scalable company in the sense that We were juniors and we had the whole way into managing partner. And that's the promise we give to all youngsters starting every day that they can become Tim or Tom.

Tom Beltman

And in order to keep on that promise, we need to grow, right? Because all partners need to be willing to share part of the company. And that's only interesting for everybody. If you grow, everybody's incentivized.

Tim Smallbone

So just give me an idea of the scale of the growth. When you joined them, how many people and how many is it now?

Tim van der Meer

Yeah, so I was employee number 9 because my car broke down, so I had to work two weeks earlier before I really started to get my lease car. So I was employee number 9 and you were number 10. And of numbers 1 to 8, two are still there. And so we were basically from the start of the company. And now we are with 500 people in 13 countries.

Tim Smallbone

Wow. 500. 13 countries.

Tim van der Meer

So you started by saying we are a Dutch M&A firm. No, we are a European M&A firm. And we are really proud of that.

Tom Beltman

And started off in the Netherlands.

Tim Smallbone

And this is pure M&A. That's pure M&A. So it's advising people who want to sell the business and advising on the buy side as well. Presumably it's just a pure M&A advisory.

Tim van der Meer

So Marktlink started 30 years ago, and it was founded by two entrepreneurs. And that's very important for the story of the 30 years ahead from that point, because they were not two M&A advisors from a typical big four background or banking background. They were two entrepreneurs. They saw a huge market opportunity in advising SME business owners in selling or buying companies. So that's how they started with an entrepreneurial spirit in mind. And that's what we are doing every day.

Tom Beltman

Yeah, just a little bit more commercial. And I think being commercial is one of the pitfalls, I think, in M&A advisory. In fact, as an M&A advisor, you only need to do 2 things, right? Get mandates in and get them to closing. But getting mandates in is always competing with getting mandates to closing, right? Because you only have 24 hours in a day. And making getting good deals come in a key aspect of your company is what I think is still an important factor of the culture within Marktlink, being commercial. And by coincidence, I think that entrepreneurs, our target group, recognize that, right? So being commercial isn't that bad. They like it. They like to be cold. They like to get a cold call. That's how entrepreneurs have built their own company.

Tim Smallbone

They respect it.

Tom Beltman

They respect it. Yeah, absolutely.

Tim Smallbone

Going back to the start of the business, there were plenty of other M&A firms around. How did you differentiate yourself? How did you crack it? I mean, you could easily have sunk because you weren't doing anything different to anybody else. Or were you?

Tom Beltman

Yeah, I think there's two important factors that made Marktlink a little bit more scalable. That is, well, three factors. Investing in technology, investing in sales and marketing. So being present and show what you can do and become the authority in certain sectors. And I think the most important factor is attracting and retaining talent. I think in many boutiques, that is the disturbing factor to grow, right? Giving people perspective that they can become an owner or an entrepreneur within their firm as well is very difficult. And I think that is also what Tim just expressed. having a very transparent career path. So I think everybody knows from each other what they earn within the company. Your path is clear, so you know what your salary increase will be next year when you start. And it's up to you to become a successful entrepreneur within Marktlink and build your own company within Marktlink. And when you do that, you can become a partner.

Tim Smallbone

Making it an employee friendly business, but attracting presumably very ambitious individuals.

Tom Beltman

Absolutely. So it's absolutely employer friendly, but for a certain amount of people, right? So you want to take this responsibility. You want to be available all year, all week, all day. It is like being an entrepreneur, right? And I think it's not something that is attractive to anyone, but I think we've also gotten better in selecting the people that are the right talents for this job.

Tim van der Meer

Because you need 10,000 hours before you are able to do your own deals. So if we attract talents and let them go at 7 or 8,000 hours, then we should hire somebody else.

Tim Smallbone

You have to be a certain individual who can cope with the demands because for the entrepreneur who's selling his business, this is the single most important event in his life. So basically they are super demanding clients.

Tim van der Meer

It's purpose, purpose all over. So this is because I think we are very attractive employer and we see a lot of people wanting to work for us because I think it's a huge thing to do to help entrepreneurs in the most important decisions in their lives.

Tom Beltman

I think it's really, really difficult to find people that are intelligent, but also socially intelligent and commercial, right? So you need three big talents in order to be a very good M&A deal maker. And having these talents and be willing to develop these talents, that's hard to find.

Tim Smallbone

You need to have the analytical, the financial skills, but you also need that sort of pushiness, the ability to make that cold call you referred to, ability to sell.

Tim van der Meer

And the ability to talk to Sander, he's a different guy than the typical entrepreneur that's our client. And we are the bridge between guys like Sander and the...

Tim Smallbone

We'll talk about Marktlink Capital in a moment. But Sander, you presumably knew Marktlink Group in the M&A business long before Marktlink Capital?

Sander Ruijter

Absolutely. And I have found the development of that business really impressive because some people sometimes made a bit of fun of the cowboys of Marktlink M&A and they were advertising alongside the pitch of the Dutch national football team when no one dared to sort of advertise in that way about sell your company today. And now, I mean, they've reached a scale where everyone is very impressed when actually secretly a while back, they were thinking, that's only going to stay a very small company. And that trajectory has been super impressive, how they've constantly found new niches to help their entrepreneur clients with, and then also make a big success out of those new initiatives. I found it super impressive.

Tim Smallbone

So you were developing a really powerful international M&A business. So how did Marktlink Capital come about?

Tom Beltman

That's interesting. That's an interesting question. I think there were two factors. I think like any M&A boutique, there's investment opportunities coming alongside. We discussed that, but we thought it's not a good idea to do direct investments, right? Being the broker and the investor is conflict. But also our clients ask us, hey, I've now come across this asset class of private equity, very interesting. I had my cash event, can I also invest in private equity? And then we discussed about opportunities and everything, and we came across the idea of starting a fund of fund in private equity. And I think we were very lucky to find a very good team that appreciated our commercial approach. And I think in the market of asset managers, there's a lot of farmers and I think that is very important, but you also need to be a good hunter, right? So having the best kept secret is, I think, not a very good idea if you want to scale a business. And so the combination of selecting the best in class private equity and venture capital firms, or I think the top decile, but also being able to convince clients that it is a good idea because it is quite an uneducated target group, right? So there's a lot of explaining, being able to explain what the asset class is, what the risks are, what the illiquidity is, demands also, I think, a certain characteristic that really fits well with our DNA. So there we are today.

Tim Smallbone

And just to be clear what the business is, an entrepreneur sells his business, so he's got a capital sum. And just reflecting about what you've just said, he's wondering what am I going to do with that money. And so the fund of funds that you've created, which is Marktlink Capital, is an opportunity for them to invest that money into private equity funds.

Tim van der Meer

So look at this typical entrepreneur. He doesn't know a lot of PE girls or boys before he entered into this deal. So he was a bit sceptical about PE and then he had his ten management meetings and he said, wow, 9 1/2 of them I really liked. Can I invest in them?

Tim Smallbone

Presumably you had the skills within the business to explain to them. I think it's what you were saying.

Tom Beltman

Yeah, absolutely.

Tim Smallbone

To articulate, which is actually quite a complicated product.

Tom Beltman

Yeah, it is. It is. And I think one of the most important factors that we, at the end of the day, M&A business is a project business, right? And now being able to create a community of entrepreneurs that really want to, that stick to our company of the 3 1/2 thousand entrepreneurs, I think 80% still own a business. So I think it's a really relevant network also for private equity firms.

Tim Smallbone

So not all the people have sold their business. 80% actually haven't sold the business.

Tom Beltman

They haven't sold the business yet. So I think it's a really interesting pool for the future for Marktlink M&A as well. But there's also a lot of sector knowledge within our Marktlink community, right? So I think it also helps us in executing our M&A mandates.

Tim Smallbone

So if you have Marktlink advise you on this disposal. It gives you the opportunity to then invest in the fund of funds. Is that what you're saying?

Tim van der Meer

Yeah.

Tim Smallbone

So the follow on sale.

Tim van der Meer

Yeah. And again, Tim, we were also very lucky back then in 2020, the negative interest rates that helped us to get fund one up and running, of course. And after fund one, then the rest is much easier. So again, we were lucky.

Tim Smallbone

When you had this idea, was it did you hire someone?

Tim van der Meer

It's like real entrepreneurship. We were thinking about ideas for the last 20 years and a lot of them failed.

Tom Beltman

This one coincidentally was successful. No, that's not serious, but I think we are, I think we both are quite energetic and we see a lot of opportunities. All the time. And I think we discuss a lot about it; makes us enthusiastic about what we do, but it's also nice to develop ideas. We still think that we are just getting started in growing the company product-wise, but also country-wise.

Tim van der Meer

We were fully aware that the market thought, these guys of Marktlink, what are they doing? And when we were by far the market leader in the Netherlands, we thought, let's copy that. And we believe in Europe, we think we are going to be one more European market. So now we opened up in 12 different European countries. Three offices are going to open in the coming months. So that's what we are and what Marktlink is.

Tim Smallbone

And Sander, you were aware of Marktlink as an advisory business. When did you first become aware of the Marktlink Capital investment business?

Sander Ruijter

Well, Marktlink makes it known when they start something new. So already in 2020, they became very visible. But I think for me, it's what Tim said. It's not that investing in fund of funds for entrepreneurs was a well-kept secret or necessarily even a new idea. I mean, this has happened in North America for a long time. It's happened in Europe for a long time. But Marktlink and Marktlink Capital have gone about it in a different way. And that's why since 2020, when they became actually directly quite visible, they've immediately outgrown the other market participants in the Netherlands, but also have done much better than other similar businesses in other European countries that started at around the same time, but were not able to scale at the same pace. And that's what we were really impressed by.

Tim Smallbone

So what came and what was the idea for doing a deal? You were building this nice business. Inflexion’s now invested in the business alongside you. What was the idea behind bringing an outside investor?

Tom Beltman

Well, Tim and I think that we have been very lucky so far, but Sander's also been very lucky. We were just having discussions about the European market and the opportunities that are there. I think within our M&A business, there is no reason to do a buy and build. I think we grow greenfield. That's a different story with growing assets under management. There is opportunity for buy and build. So that was the discussion that we were having. And then we got a very, very beautiful love letter from Sander and his team. And that was, we think, the right match because the combination of a very good team, a very reputable private equity investor that is willing to invest in a minority with very attractive deal terms was for us a sort of no-brainer to at least explore if there were further opportunities.

Tim Smallbone

So the Inflexion point for how this all happened was you sent them a letter, Sander.

Sander Ruijter

We sent them a love letter because we loved them. No, we were super impressed. And I mean, I always work closely with my sector colleagues and Andrea Bertolini leads our financial services team. Andrea had been looking at this market across Europe. We had been looking at this market in the Netherlands. And we just came to the conclusion that this was the best company of its kind in this market in Europe. So if you are very excited about a business, well, in the way that Marktlink does it, reach out to them. Don't keep it a secret. And that's what we did. And indeed, that seems to have been the right reach out at the right time. Even though no one wanted to sell. So they were on board with the idea of getting a partner that could help them on certain parts of the business plan. But then they said, well, there's no one who wants to sell one share. So that was a difficult needle to thread. But we got there.

Tim Smallbone

But as entrepreneurs, it was a timely letter because you were starting to contemplate M&A itself for your own business.

Tim van der Meer

And it was a very smart letter. It was exactly what Sander said that we don't have clients, we only have projects. So we are always out there reaching out to entrepreneurs if we can help them. And that's exactly what Sander did. So that triggered us as a partner group to at least have a meeting with you guys. And then we found out that you were very smart as well. And together we are going to conquer Europe.

Tim Smallbone

And the Partnership Capital product chimed with you, that taking a minority stake was what was attractive to you.

Tim van der Meer

Yeah, absolutely.

Tom Beltman

I think your colleagues told me that your biggest competitor is not selling at all, right? And I think it is quite a unique proposition to be able to offer a minority shareholding because we see the upside. We don't want to sell. We want to stay as owners on board. And I think the solution that Inflexion brings that really resonated very well with our partner group.

Tim Smallbone

And the attraction was having the firepower presumably of Inflexion's funds behind you to do M&A?

Tim van der Meer

Yeah, absolutely. But Tim, it felt like selling an apartment building that you are building and after two floors are finished and you are planning to build over 100 floors. And that was the difficulty. And then Sander explained to us that we are going to build together a 300 floor building. And that convinced our partner group.

Tim Smallbone

And how do you compete? Because this is a competitive market. There are a lot of LPs, limited partners who are the investors in private equity businesses who have a fund of funds for private investors. How do you compete? Because you're purely for private investors, aren't you? You're not bolted onto an institutional investment machine.

Tom Beltman

Access. access to the best funds. I think that what really helps us is that we have a big group of entrepreneurs behind us. We are not the pension fund of the fire department in Ohio. We are a group of entrepreneurs. And I think that this group of entrepreneurs are interesting also for private equity firms because we open up a network for them. And what we've seen so far is that helps. That they are happy to let us in because we have this group of successful entrepreneurs behind us. I think that is key.

Sander Ruijter

When we reached out to the Marktlink team with that love letter, one of the things that we said is that we believe that this is going to be a market where scale matters. Many private equity firms like ourselves are interested to bring on board private investors, but we don't want to have 10 or 20 different vehicles for private investors on board. We want a few of them at scale. And similarly, like Tim is describing, private investors want access to the best funds. So that means that there is a rationale to create more scale in this market. And we felt that Marktlink Capital was the right platform to create that scale with. That was, I think, a core part of the thesis that we all subscribe to.

Tim Smallbone

And the pair of you have had a career as M&A advisors. And have you now turned your back on that? You're now purely running Marktlink Capital.

Tim van der Meer

No. The opposite. I think 70% of my time is still deal making, having conversations with entrepreneurs.

Tim Smallbone

You're still very actively engaged with the conventional advisory business.

Tom Beltman

I think our role is mainly to make people successful and to become partners, right? So we have, I think, a very good partner group in Marktlink Capital. that is better capable than the two of us to lead and grow this company.

Sander Ruijter

That's another thing that I think you've done super well, because you know that there's a different type of person who's the best M&A advisor compared to the person that's the best fund of fund investor. And you've hired super high quality people into Marktlink Capital and you've allowed them to run that business, but you've brought on board the DNA, the commercial thinking of Marktlink as a group. And therefore Marktlink Capital, when we started looking in detail at the business, we found a very independent company that was sharing many attributes of the group, but still being independent. And therefore you're not talking about a carve out of a division. No, this is a business with its own sort of strengths and its own ambition that leans on the commercial DNA of the Marktlink Group.

Tim Smallbone

So where do we go from here? Inflexion's invested. How's it going?

Tom Beltman

Well, I think this is a part of our journey that is going to be a book in itself. We have a really very suitable group of people within Marktlink Capital with a very, very, I think, positive and great culture. But we see a lot of opportunities in buy and build, but we also see alternatives in product offerings.

Tim Smallbone

So your core products are access to private equity. Are you saying there are other products you want to bolt onto that?

Tom Beltman

Maybe, yes, as long as it's private markets.

Tim Smallbone

And have you been able to use some of Inflexion's value acceleration team? Have they been involved at all?

Tom Beltman

We have, between signing and closing, we have started the value creation programme already. So we've met all the colleagues. I think it's impressive what is happening and also to really prioritize and rationalize what you're doing. I think it's very inspirational also for for me, being quite involved in it and also for our group, right? So there's so many ideas, so many opportunities, but selecting the best ones and where to focus on is a very interesting thing to do. Although I'm 100% sure that also this value creation plan will not be carved in stone because other opportunities will come across, right.

Tim Smallbone

Yeah. So ultimately, is it about assets under management? It's about trying to build scale.

Tom Beltman

Yeah, absolutely.

Tim Smallbone

And that means what, more people?

Tom Beltman

Absolutely more people, more countries, more cultures. It's not only about return on investment, it's also creating a network for entrepreneurs where they can learn from each other.

Tim van der Meer

Today in Brussels, the European Committee said that they are going to help build European winning companies. And that's our goal as well. So we think that in 10, 15 years, there will be much more European winning companies. So not only Dutch companies or German, but more European winning. And that's Marktlink.

Tim Smallbone

For the entrepreneurs who put their capital behind you, they sort of enter a network, a club, do they? Are they aware who else is invested? Is it like a network effect for them?

Tom Beltman

Yeah, so we organise, I think, about 100 events per year where they can meet. So they will be sector-wise, but also on certain interests and where they meet and where they can learn from each other. We just came off the Formula One in Zandvoort, where we have met, I think, in total about 3000 entrepreneurs, where the biggest day was our Marktlink Connect event, where we connected 1200 entrepreneurs with each other. And what I personally think is that the best advisor for any entrepreneur is another entrepreneur. And so you should have seen it. It's so inspirational to see people that come alone to this event, but that nobody misses anyone because you will, within a minute, you'll be talking and you will be networking. And I think one of the good things also about our events is that we try to get rid of advisors around it, right? So you want to have entrepreneurs only. I've been at so many events where there are more entrepreneurs that want something from me than entrepreneurs I would like to meet. Entrepreneurs like to meet entrepreneurs.

Tim Smallbone

I can see the attraction. You're putting some capital up, presumably at a good rate of return, but actually you're getting a lot else, a lot of sort of softer stuff.

Tim van der Meer

Yeah, absolutely. Yeah, entrepreneurs really like that.

Tim Smallbone

So you had this fantastic M&A business. You created Marktlink Capital on the side, which we've been discussing. Was that the only extra business you created?

Tom Beltman

I think important to mention is that the third pillar of our firm is exit ready, where we help business owners to make their firm exit ready. And this is also a very important lead pipeline for future M&A mandates. And it is also our business development arm.

Tim Smallbone

So you started off with that exit readiness product, which I can see immediately leads on to, wow, if you're ready, we may as well sell the business for you.

Tim van der Meer

It started with failure. So we invested a lot in, like Sander said, in all these kinds of advertising and marketing. We spent millions in that. And then we got all these inbounds, inbounds, and then only the 10% that wanted to sell their company now were relevant. The other 90%, we forgot about them. And that's what exit ready is. Yeah, so nurture these leads, help them, even help them in creating extra value for the company. So we have an exit ready advisory as well. So we help them in the three years before selling the company in creating 10 to 20, maybe 30% extra company value. So yeah. It started with a failure and we…

Tim Smallbone

And you turned it into another profit stream, which also added a lot of value for your clients.

Tim van der Meer

It is. Yeah.

Tim Smallbone

And how important is technology to what you've done? You're a people business. To what extent do you use technology?

Tom Beltman

I think we have invested so far heavily in technology because we think that data is key in deal making. Just as a detail, we have, I think we close approximately 200 deals this year on every deal, you might expect between 3 and 10 non-binding offers. These non-binding offers are really relevant information for our clients and potential clients, right? And having this information centrally is really in the benefit of our clients. This is something that we keep track on. But this is also something that our third partner, third managing partner, Ferry Nahon, is very involved in. And he is the lead responsible person for our 20 people technology team now.

Tim Smallbone

Tim, Tom. It's been an amazing story. Having built one highly successful business, you then continue to build it, more and more bolt-ons along the side, entrepreneurs to the core, and still obviously as enthused as you ever were. That's it for this episode. My thanks to Tim, Tom and Sander for joining me. Remember to subscribe to Inflexion Point wherever you get your podcasts so you don't miss an episode. And you can listen back to our previous instalments as well. Thanks for listening.

About the episode

Inflexion Point tells the story of Marktlink Capital, the private markets investment platform for entrepreneurs, and how a fund of funds launched out of a Dutch M&A adviser became a business with its own European ambition. Host Tim Smallbone is joined by Tim van der Meer and Tom Beltman, the managing partners who have built Marktlink over two decades, and Sander Ruijter, head of Inflexion’s Benelux office, who led the investment. They reflect on the moments that shaped it: the launch in 2020 after clients who had sold their businesses asked how to invest the proceeds, the letter Inflexion sent to a business whose partners had no wish to sell, and the minority investment that followed. Along the way, they talk about why being a hunter matters as much as being a farmer, how a commercial culture carried across from M&A advice, and why scale matters in a market where private investors want access to the best funds.