Auctus Capital Partners and Remote Control Productions have teamed up to create an investment fund called Prestiged to invest in and acquire game companies.
Auctus Capital Partners is an active investment fund in Europe, while Remote Control Productions, headed by Hendrik Lesser, has been active in providing game production services. The Germany-based companies will invest in game companies that already have a certain momentum. And their argument is that they understand both gaming and finance.
The investments will focus on game companies that are already in good shape. It is seeking firms that have a minimum of $531,000 (500,000 euros) in sustainable earnings before interest, taxes and more (EBIT) and a maximum of $21.2 million in EBIT.
The ringleaders include Lesser at Remote Control Productions, Florian Aichinger at Auctus and Robert Knorrek at Auctus. They haven’t done a deal yet, but they’re looking.
The Prestiged team is considering acquisitions right now, particularly as there are numerous game companies that are struggling and could be up for sale at more reasonable prices than in the period when everything was overhyped and too expensive, from the buyer’s view. In the past, big platform companies like Microsoft, Netflix and Apple were paying big guarantees to developers. Not so much anymore, as a wave of consolidation has set in.
The targeted companies should have high visibility in terms of revenues and an attractive games portfolio. The targets could be developers or publishers, and Prestiged is looking at acquiring majority stakes only. They should have strong management team in place with a willingness to grow to the next stage. The main assets should be owned by the targeted company. There are a variety of different investment options — buy and build, succession in the form of a management buyout, or spinoffs.
Prestiged wants to build a leading European gaming group fitting the needs of mid-sized gaming companies, with best-in-class content and a joint vision. It wants to create a group of established gaming companies with creative independence, increased market power, tailored synergies and a focus on long-term as well as sustainable growth.
Prestiged offers no active involvement in daily business operations, except explicitly desired by management. It also can support the group in implementing efficient management of overheads, administration and tertiary services. It wants to empower studios in their creation of compelling and successful titles by leveraging financial expertise via Auctus and Lesser’s 20-year-plus track record.
Prestiged can help develop targeted organic growth strategies and support implementation, execute acquisitions to support the inorganic growth strategy of the group, and more. Auctus has done over 400 transactions over the last 20 years with success in supporting medium-sized companies on their way to market leadership. The result is companies acquired can focus on their operations, and all stakeholders should benefit from the value creation.
On social media, an estimated 30 game publishers shut down. And the entire game industry laid off around 20,000 people in 2023 and so far this year.
Prestiged has talked to 30 or 40 different companies about deals, mainly in Europe and North America. The list includes developers as well as publishers. The deal sizes could be smaller or larger.
“At the moment, we’re having discussions with smaller companies,” Lesser said. “There is a lot for sale at the moment.”
There is some optional support available through Lesser’s own company, Remote Control Productions. It can provide operational services such as market insights, support in organizational management to scale dev teams, business development, and understanding talent pools in the game industry. Separately, Lesser has a Kickstarter campaign going for a game called Songs of Silence.
The goal is to help companies with both inorganic and organic growth potential without interference in daily business by investor. Part of the idea is to build a champion in the industry for game developers, reduce a company’s overall overhead on a corporate level, leaving the team to focus on operations.
It could allow developers to cash out and participate in joint growth opportunities while benefiting from Auctus’ financial strength.
One of the good things about Prestiged is that its capital source isn’t on a particular time limit for exits, which often means its investments have to pay off in a shorter time frame. That’s not the case with Prestiged. The company also plans to operate as an investment fund, making capital available to the companies that it does deals with. But it is not planning on being a commercial operator.
“We take a hands-off approach,” Lesser said. “We sit on the board. The yearly plan has to be approved, but not the daily plans.”