Investment controlling

Definition of terms  

As part of expansion or restructuring, companies regularly acquire shares in other, legally independent companies or buy them outright. The aim of these strategic acquisitions is to penetrate new markets, benefit from synergy effects and expand the product portfolio. Investments are often also made in central areas of the value chain, such as raw material purchasing or logistics, in order to strengthen control over critical processes, improve quality and efficiency and minimize risks in the supply chain.  

Changes in a company's investment portfolio are accompanied by numerous controlling issues that are dealt with by investment controlling. This supports the management of groups, holding companies, SMEs and investment companies in managing and coordinating their investments and subsidiaries and ensures that the entire company achieves an increase in success and value.

Differentiation between strategic and operational controlling

In the literature, a distinction is made between strategic and operational investment controlling. While strategic investment controlling has a long-term focus and is primarily concerned with the planning of the investment portfolio at Group level, the definition of overarching objectives and strategy development, operational investment controlling concentrates on short-term measures to increase the profitability of the respective investment and to support management through ongoing planning and reporting processes.

Differentiation from Group controlling  

Investment controlling and group controlling are often used interchangeably. However, the two terms should be strictly differentiated, as Group controlling refers exclusively to the monitoring, management and optimization of the entire Group, including all investments and business units, while the focus of investment controlling is on the individual investments and the optimization of their performance.

The relevance of investment controlling  

The acquisition of companies or shares is accompanied by significant investments and has a major impact on the liquidity of the parent company. Especially when a company holds several investments or subsidiaries, it becomes difficult to keep an eye on the performance of the individual entities, manage risks and make strategic decisions. Investment controlling helps to overcome these challenges and makes it possible to identify problems in investments and subsidiaries at an early stage. As there has been a trend towards more strategic company acquisitions in recent years due to ever shorter product cycles, which increase the pressure for innovation and efficiency in companies, it can be assumed that investment controlling will continue to gain in relevance.

What tasks does investment controlling involve?  

Valuation of investments and companies  

A central aspect of investment controlling is the evaluation of potential investments and companies prior to acquisition. Controlling assesses the financial strength, growth potential, market position and other relevant factors in order to determine the value of an investment. This evaluation forms the basis for the decision as to whether an investment is advantageous for the company or not.  

Monitoring of investments  

After the acquisition of an investment, the task of investment controlling is to monitor the development and performance of the investment. This includes the regular analysis of key financial figures, operating data and other relevant information in order to assess the profitability and business progress of the investment. Deviations from the planned targets are identified and analyzed in order to initiate corrective measures if necessary.

Risk management and measures for action  

Investment controlling also plays an important role in risk management. It identifies potential risks and opportunities in connection with the investments and develops strategies to minimize risks. If an investment does not show the expected business progress or risks become too great, investment controlling can recommend specific measures for action. This may include, for example, the sale of companies or shares in companies in order to optimize the profitability and value of the investment portfolio.  

Requirements for investment controllers

Investment Controllers serve as the central point of contact for several subsidiaries and assist them with business management issues. Specific responsibilities may include managing budgeting and forecasting, as well as preparing financial statements, consolidations, group reports, and financial analyses. Investment Controllers also serve as a vital link between the parent company and its subsidiaries.  

Since subsidiaries are often international, investment controllers should have strong foreign language skills. In addition to analytical skills, a background in business administration and expertise in IT and BI are helpful for success in this role.