News – Venture Capital & Private Equity practice

Opinion piece by David Dessers & Kenny Willems - De Tijd

Why Selling Crown Jewels is not a bad thing – Opinion De Tijd

Recently a number of Belgian companies were sold to foreign investors and/or industrial parties, e.g., Clear2Pay (sold to FIS Global) and Amplidata (sold to Western Digital), but also Omega Pharma (sold to Perrigo) and ActoGenix (sold to Intrexon). A recurring commentary in such cases is that “Belgium is selling its crown jewels to foreigners” and that the Belgian founders are driven by “personal enrichment”.

This is, however, a very one-sided and short-term approach. Even more, we are convinced that these transactions are necessary to maintain high-tech innovation ecosystems in this country, and to allow them to grow (internationally).

According to American professor Jerome S. Engel (University of California, Berkeley), most companies in such ecosystems are “born global”. From the outset, it is obvious to the founders, initial employees, investors, providers etc. that the pursuit of international expansion is of crucial importance. And rightly so, because for most of these companies the Belgian market is too small; the market potential is much larger abroad. Furthermore, these new high-tech products and services have the substantial advantage that, while they may be developed in Belgium, they can be marketed rapidly on an international level.

We recently see a clear pattern emerging whereby Belgian entrepreneurs are fully committed, as from incorporation to a sales & marketing strategy with an international focus. Such strategy is often managed from abroad, but any innovation and R&D activities remain based in Belgium. Belgium has some pertinent advantages: talented researchers and developers are typically much more affordable than those located in the usual high-tech hotspots (such as Silicon Valley, London or Berlin) and are in general more loyal to their employer. Furthermore, there are important tax advantages available in Belgium for employing researchers (exemption of employment withholding taxes) and Belgium remains ideally suited to test the viability of new technologies prior to a large scale roll-out.

We have also determined that in these acquisitions, retaining employees and key decision makers is very important for the buyers. We note that buyers not only want to keep the R&D activities in Belgium; on the contrary, they tend to focus on additional investment and recruitment. Our “crown jewels” are thus exported on a global scale while we maintain local employment in Belgium and carve out a strategic position within the new company. Of course, it is necessary to ensure that the above-mentioned advantages for R&D and innovation activities in Belgium are also preserved in the long run.

A second observation is that the great majority of entrepreneurs who have recently sold their company tend to reinvest those proceeds in the Belgian economy with great enthusiasm. Michel Akkermans of Clear2Pay invested in Volta Ventures and Jürgen Ingels launched the SmartFinTech venture capital fund. Thus far Marc Coucke invested in the Belgian pharmaceutical company Mithra and the Volta fund, while in the biotech world, entrepreneurs such as Désiré Collen or Rudi Mariën have also made significant reinvestments of their historical proceeds. This interplay between entrepreneurs who, with the assistance of fellow entrepreneurs, procure the successful growth and sale of companies and reinvest the proceeds in new start-ups is one of the key elements in the success of Silicon Valley’s well-known innovation cluster. Now that Belgium and Flanders are taking encouraging steps in the right direction, we urge not to yield to the temptation of only focusing on (possible) negative effects of an exit. We should instead embrace the positive impact without reserve.

In this context we are pleasantly surprised by the recent announcements of new tax measures of the federal government to support start-ups. We warmly applaud the system of tax- or investment deduction to encourage venture capital investments in start-ups, and the exemption from withholding tax for their staff that would be made available to young companies. These fit neatly into the Startup Manifesto (#BEStartupManifesto) which we hold very dear!

Of course we hope that the government will do what is needed to ensure that these measures do not get drowned in endless red tape before entrepreneurs can take advantage of them, which has often been the case in the past with new tax measures.


Kenny Willems, CFO of iMinds, research centre and incubator for digital technologies of the Flemish Government.

David Dessers, managing partner of Cresco Business Law Firm and legal advisor to tech entrepreneurs, emerging and growth companies.


* Free translation opinion published in De Tijd – 18 April 2015

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