Nowadays, no doubt, institutional investors fulfill an important task in corporate financing and in the existential safeguarding of companies, specifically when it is about strengthening management or in the course of succession of generations bringing new people to the top. I also think it is positive that more and more institutional investors are superceding financial institutions as shareholders, because the latter have not exactly been cutting a good figure in the recent past. So far so good. However, where there is light there is also a lot of shade and thus there are considerable distinctions even with institutional investors. The wheat has not been separated from the chaff, yet. And so far, no effective framework has been established, which would make it possible to distinguish good companies from the not so good ones or to even keep the not so good ones from operating right from the start.

What worries me and what I view as a definite risk is the fact that many of these investors buy into a company in order to make a quick buck. I am almost tempted to say 'sneaking in' and pretending for a while everything is rosy and then exploiting the assets and flying the coop.

To keep shares three to five years in order to sell them with the greatest possible profit, is hardly ever good for the company. In general, buying a business with the goal of reselling it quickly turns these companies into a commodity. And this is anything but good, even in our fast moving times.

He who is contemplating taking in an institutional investor as shareholder or selling to one, should look closely who he is dealing with. What is the past and what are the goals of this aspirant. It is rather significant, who is representing the company. One should not be too impressed by millions in assets or millions in income, which many of the managers of institutional investors can show for, basically as a reference for their proficiency.

Through institutional investors, money is flowing into the economy and if the proper people accompany and channel this cash flow, then all of this might be, as already mentioned above, a blessing. Investing should be seen as a long-term activity, not something short-lived.

Nowadays, what does short-term or long-term mean? Especially, since the ones who are very quick and flexible seem to be always first? Despite globalization and all kinds of possible fads, or maybe just because of those, I think it is time to turn back to those values which allow us to confidently and perspectively govern the time and space around us instead of being governed. The latter allows us to separate the wheat from the chaff in connection with the evaluation and choice of institutional investors. This would already eliminate many risks before they would even see the light of day.