Every year brings new lessons. 2023 has taught us about the importance of patience, selectivity, and active management in an environment of greater macroeconomic uncertainty.
Every December I dedicate time to reflecting on what the year has taught me. Not about the numbers — those speak for themselves — but about qualitative lessons that determine the quality of future decisions. 2023 has been an interesting year — not the easiest or most profitable, but one of the most instructive.
In a rising-rate, valuation-adjusting environment, patient investors achieved better entry prices than those who rushed in 2021-2022. Companies selling at 8x EBITDA two years ago are now at 6x. On a company with 3 million EBITDA, that two-point difference is 6 million euros. Patience is worth money — though it carries opportunity cost. The key is distinguishing strategic patience from analysis paralysis.
In 2021, almost any company with positive EBITDA found a buyer. In 2023, we evaluated more deals than ever but closed fewer — not from lack of opportunity, but from raising the bar. We prioritised revenue quality, client diversification, team quality, and thesis clarity. We turned down deals we would likely have done in 2021. No regrets.
2023 confirmed this with special intensity. Portfolio companies that best navigated the year’s difficulties — cost inflation, margin pressure, demand uncertainty — were those with strong management teams. In two portfolio companies, we brought in key managers this year with immediate and significant impact.
In a difficult year, the gap between actively managed and autopilot companies widens. Companies where we worked actively on cost control, commercial improvement, and operational efficiency maintained or improved margins. Those that received less attention suffered more.
The flow of succession-driven deals has grown significantly. More entrepreneurs than ever are contacting us. This flow will be the primary source of middle-market investment opportunities for the coming decade.
In every negotiation, in every due diligence, in every board meeting, honesty generates trust. This year we walked away from a deal after months of work because we discovered the seller had not been transparent about a material contingency. A difficult decision — costly in the short term — but the right one. Reputation is built with the nos as much as with the yeses.
We are moderately optimistic. The macroeconomic environment remains uncertain, but opportunities in the Spanish middle market are abundant and high-quality. Our portfolio is in good shape. Our team is strengthened. And our investment thesis — patient capital, active management, Spanish middle-market focus — is more relevant than ever.
Dirk Manuel Martens Jimenez Founder, Blue Mountain Capital
Founder of Blue Mountain
Over 15 years investing in Spanish companies with patient capital. Expert in business succession, corporate governance, and middle-market investment.
By Blue Mountain Capital
By Dirk Manuel Martens Jiménez
By Dirk Manuel Martens Jiménez
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