Karel Verhaeghe | VK architects+engineers
In March of last year, private equity player Down2Earth Capital announced the sale of its majority stake in VK architects+engineers to engineering and architectural firm Sweco. Over five years earlier, Down2Earth Capital had invested in the multidisciplinary design firm headquartered in Merelbeke. Through a dynamic buy-and-build strategy, VK architects+engineers had become a leading player in the Benelux during that period. As CFO, Karel Verhaeghe was at the forefront during this exciting phase in the company’s lifecycle, with a global history of over 70 years.
In March of last year, private equity player Down2Earth Capital announced the sale of its majority stake in VK architects+engineers to engineering and architectural firm Sweco. Over five years earlier, Down2Earth Capital had invested in the multidisciplinary design firm headquartered in Merelbeke. Through a dynamic buy-and-build strategy, VK architects+engineers had become a leading player in the Benelux during that period. As CFO, Karel Verhaeghe was at the forefront during this exciting phase in the company’s lifecycle, with a global history of over 70 years.
You were already on board at VK architects+engineers when Down2Earth Capital entered in late 2017. What were the motivations of owner Peter Van Kerckhove to open up the capital of the family business?
Karel Verhaeghe: “The story begins in 2012 when Peter Van Kerckhove decided to take a step back himself. At that time, he was nearly 60 years old and had no family successors. Peter handed over operational leadership to a new, four-person team led by CEO Paul Corbeel. Two years later, we began discussions with Peter about a potential management buy-out, but the financial expectations were too far apart. Under the guidance of Deloitte, we resumed discussions in 2016, exploring all options, including a full sale to an industrial partner. However, we felt too much like entrepreneurs and ultimately chose a collaboration with private equity. We also took a risk by acquiring about 25 percent of the shares with our team.”
Down2Earth Capital was chosen. Why?
Karel Verhaeghe: “We didn’t just talk to Down2Earth, but also with several other PE firms as well as some industrial players. Down2Earth Capital made a good offer at the time, and there was an immediate connection with founders Alain Keppens and Ivo Marechal. They understood that we didn’t want a dominant presence and our collaboration grew into a strong partnership.”
What did the Down2Earth Capital team bring to the company?
Karel Verhaeghe: “It was an extremely interesting period during which we completed a total of nine acquisitions together. Down2Earth Capital’s main role was to constantly challenge us without stifling our freedom. They were the ideal sparring partner for us. A prime example is the acquisition of Infranea. They presented the proposal, but initially, we weren’t convinced. Later, they asked us to reconsider, and eventually, the deal went through.”
“Private equity is the ideal sparring partner”
“Private equity is the ideal sparring partner”
A private equity player seeks short-term returns. Did you feel that pressure too?
Karel Verhaeghe: “Fortunately, the image of private equity has improved significantly since then, but at the time, there were still all sorts of negative stories circulating about the sector. Private equity players were said to only focus on the bottom line and heavily cut costs, etc. Our experience with Down2Earth Capital was completely different. We continued to invest in R&D and niches like advanced engineering, which could potentially impact profitability, but we believed in those long-term investments. When valuing a company, not only EBITDA matters, but also the multiple. We worked on both for five years.”
Last year, VK architects+engineers was sold. Interestingly, to an old acquaintance. How did that happen?
Karel Verhaeghe: “We also knew that Down2Earth Capital wouldn’t stay on board forever. In five years, VK architects+engineers had grown from 250 employees to 650, and with that rapid growth, the organisation began to feel some pressure. Additionally, 2023 was shaping up to be a challenging year in the real estate market, partly due to increased interest rates. Sweco had shown interest before and had remained in contact over the years. For a moment, we considered another round of private equity, but ultimately, as management, we said yes to an offer we couldn’t refuse. In hindsight, it was also the right timing.”
About VK architects+engineers
Hubert Van Kerckhove founded VK architects+engineers in Roeselare in 1952. Over 30 years later, son Peter took over daily management and immediately began diversifying the company’s activities and target markets. With no family succession, he sought to secure the company’s future. In 2017, he teamed up with management to collaborate with private equity player Down2Earth Capital. Through a dynamic buy-and-build strategy, the company grew over five years into a leading player in the Benelux and the United Kingdom, with a turnover of 80 million euros and 650 employees. VK architects+engineers is heavily present in the healthcare sector, with notable references including ZNA Antwerp, UZ Gent, and Grand Hôpital de Charleroi. Also prominent are projects like the Wintercircus (Ghent), the Haren prison, and the Oosterweel project.