Q&A with Thierry Giron
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Q&A with Thierry Giron

Thierry Giron, Managing Director and Partner of Initiative & Finance, looks back on the Covid-19 crisis and its impact on SMEs, considering the major trends, future changes to the economic system and the role of private equity funds. An analysis combining optimism with thoughts on the new normal.

We’re here to help companies through these paradigm shifts

How does this crisis compare or differ from previous upheavals?

Initiative & Finance has been through a number of economic and financial crises in its 35 years, facing a slump every ten years on average. The current situation is different in nature from past crises, but it has had similar effects, which we have learned to handle after several decades in the private equity sector.

The crises we had to deal with previously were purely economic. The economic climate was healthy in 2020, before the Covid-19 outbreak. The difficult mainly lies in anticipating the measures to be taken. However, the economic system should gradually return to its pre-crisis state.


What are the consequences for French companies and SMEs and mid-cap companies specifically?

Not all business sectors have been affected by the crisis in the same way. Around 80% of small, medium, and mid-tier companies in our portfolio faced great uncertainty in March and April when their activity suddenly ground to a halt. However, to a large extent, the government measures rolled out helped to protect cashflow. Some businesses, such as Moustache Bikes, didn’t actually feel a negative impact. Quite the contrary – the electric bicycle manufacturer has seen unprecedented levels of business since the end of lockdown. On the other hand, a small number of companies have really suffered as the crisis has compounded existing problems.

The real concern for businesses certainly lies in the lack of visibility for the rest of the 2020 financial year. Until we are able to anticipate consumers’ return to the market, it is difficult to predict that we’ll be back to normal in three, six, twelve or even eighteen months. The real impact of the Covid-19 crisis therefore remains to be defined.


How has Initiative & Finance responded to events?

We realized that the leaders of the SMEs we work with really needed to be able to talk, to talk to someone with the same concerns. On a practical level, we worked daily to provide strategic information on the solutions that could be implemented, and that was widely appreciated. We also set up legal, fiscal and accounting hotlines which 50% of our SME partners have used.

One positive impact of lockdown has been the strengthening of ties between us and SMEs for the long term. Like all of us, their leaders were faced with uncertainty and isolation. It was thus natural that we should help them through these troubled times as best we could. In situations like these, our profession plays its full role. We are here to support companies through paradigm shifts, as the economic system is transformed.


What will the new normal look like? Has the crisis accelerated certain changes?

Broadly speaking, it has become clear that working processes need to be digitalized to ensure agility and adaptability, even in the most difficult of circumstances.

This interlude actually served as a catalyst for the changes required to the economic system, which can no longer ignore environmental constraints. To survive in the post-Covid world, companies must take this on-board as the crisis has only amplified ecological awareness. The pandemic has also revealed the limits of globalization with the need to relocate certain strategic activities – pharmaceutical production, for example – to Europe. Again, this awareness is an incredibly positive thing which could speed up the necessary transformation of certain production models.

Initiative & Finance is maintaining its focus on environmental, social and governance matters (ESG), an approach initiated before the current crisis and which addresses the need for transformation expressed by companies even before Covid-19. We are more than aware that companies need support as the economy and consumer habits evolve. That is the role of I&F Mid Tomorrow. This fund, for which we have started to raise capital, will assist mid-tier companies seeking solutions to the challenges set out in the UN’s Sustainable Development Goals, especially those relating to the environment. 2020 has thus validated our concern for responsible investment.

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