How I Bought a Company with Little Equity as an MBI Candidate
Jan Podubrin reports on his path to entrepreneurship and how he acquired a company with little equity.
I am Jan Podubrin, 35, and I am not the type to settle for the status quo. After years as a manager with extensive experience in mechanical engineering and leadership roles at a large Swiss corporation, I felt it clearly: the time was ripe for something of my own. This was no gentle glide but a determined leap into cold water. My journey to take over an established mechanical engineering company is the best proof that with the right mix of courage, strategic planning, and creative financing, you can achieve your goals even without a large equity cushion. Let me tell you how it works.
The Initial Spark: The Call of the Entrepreneur
Why did I end up here in the first place? Quite simply: no job ever truly made me happy. I didn’t just want to play along; I wanted to control the game. I wanted to shape things, set the pace—not just be a cog in the machine. Mechanical engineering is my world, but “just starting over” isn’t something you do lightly there. It quickly became clear to me: succession is my path. And yes, you read the glossy stories about search funds and private equity. But the reality in the German Mittelstand is different: 95 percent of economic output comes from companies with 10 to 30 employees and an EBITDA often well below one million. But you know what? They also make good money, are profitable, and desperately need a future.
For me, it was clear: I wasn’t starting out as a freelancer. I wanted to be an entrepreneur. That means I was looking for an existing structure, a company of a certain size so that not everything depended on me from day one. My search began as early as 2020, but life got in the way—private upheavals slowed me down. But by early 2024, the time was right. I went full throttle, contacting dozens of companies every week. And in August 2024, it finally happened: I found my company, a business with 17 employees. The economic handover? On April 1, 2025. No April Fool’s joke, but hard reality.
Financing: A Tightrope Walk with a Strong Safety Net
The purchase price for my company? It’s in the seven-figure range. And my own capital? Just enough to cover the GmbH formation and all the ancillary purchase costs. The big question was: how do you manage such an amount? The answer: a clever combination of government support and a strong seller loan.
- KfW Programs: I used two programs from the KfW Bank. It all runs through the house bank, which for me was Deutsche Bank. The KfW provides the funds.
- Guarantee Bank: The guarantee bank is the crucial backer. It takes on the guarantee for part of the loan, relieving the house bank of much of the risk.
- Seller Loan: This was the absolute game-changer. A large portion, precisely 30 percent of the purchase price, came from the seller as a loan. Usually, it’s more like 10 to 20 percent. But this subordinated loan acts like equity for the bank, making the financing attractive.
Honestly: banks look you straight in the eye. Your personal and professional suitability is the be-all and end-all. They put me through the wringer, asking questions that catch you off guard—what car do you want to lease, how do you plan your withdrawals. I was clear: “Nothing, all profits go to the bank for the first few years. And if anything’s left over, it goes back into the company.” The ratio of one quarter distribution to three quarters retention of profits convinced them. And yes, my locksmith training helped me immensely. I understand the workshop, the people. The banks notice that.
Also important is the company’s debt service capacity. The Debt Service Coverage Ratio (DSCR) should ideally be above 1.5—meaning what you earn must be 1.5 times the debt service you have to cover. Mine was more like 1.1 to 1.3, but that was still manageable.
And of course: for such loans, personal liability is usually indispensable. You put yourself fully behind it. I say: if you want to be an entrepreneur, you have to be willing to take risks. Anything else is just dreaming.
The Team Behind Me: Advisors and Alternative Paths
You can’t do this alone. I had a damn good tax and business advisor, a former banker from Commerzbank. He was the bottleneck in his firm, but his expertise in profitability and liquidity planning was worth its weight in gold. That’s the foundation on which the banks build.
And there are more options beyond KfW and the guarantee bank: Mittelständische Beteiligungsgesellschaften (MBG), for example. They can step in as silent partners with mezzanine capital. A model I also considered was financing with 20 percent seller loan, 30 percent MBG participation, and 50 percent bank loan. It pays to keep all doors open!
The Reality After the Takeover: Leading People, Shaping Strategy
My purchase wasn’t a classic succession situation. The previous owner was only 43, had grown the company from three to 17 employees and the revenue from under 1 million to 2.5 million euros in four years. The workforce was initially stunned when I showed up. Fear for their jobs, uncertainty.
My first step? Open communication and clear boundaries. For the first four months, I just “went with the flow,” listened, understood the processes, and was on the shop floor every morning. My background helped enormously. I speak the language of the workshop, understand their worries, fears, and concerns. At the same time, I set limits from the start. Anyone who tried to push me around had to learn where the line is drawn. That’s part of it too.
Strategically, I approach the topic holistically. A new logo or website alone won’t cut it. I need a clear overall strategy:
- Marketing and Sales: New impulses are needed.
- Digitalization: Exploit potentials wherever possible.
- Process Optimization: Identify and eliminate weak points.
- Customer Relationships: Maintain existing networks, build new ones.
My Conclusion and Looking Ahead
My story proves: it is absolutely possible to take over a company in the seven-figure range with little equity. More important than a fat bank balance is the right combination:
- Personal and professional suitability: You need expertise and leadership skills.
- Convincing presence: Banks and employees must trust you.
- Good advice: Get top experts on your side.
- Willingness to take risks: You have to like the thrill of high liabilities.
I succeeded in taking over a thriving mechanical engineering company. And this is just the beginning. My goal is to build a mechanical engineering group, aiming to acquire five to seven companies in five to seven years. The German Mittelstand is full of opportunities—you just have to seize them boldly!
