What Britain can learn from the Mittelstand
by Matt Taylor
Ask a German business owner what makes their economy resilient, and they are unlikely to point to Frankfurt’s banks or Berlin’s start-up scene. More often, they will point to the Mittelstand: the family-owned and founder-led firms that make the components, machinery and specialist products the rest of the world quietly relies on. Most employ fewer than 500 people. Many are global leaders in highly specialised niches. Almost none are household names, and that is precisely the point.
Britain has its own version of this, even if we’ve never given it a flattering German name. Visit any of our regional towns and you’ll find precision engineers, healthcare specialists, energy services firms, and manufacturers who have spent decades building genuine expertise, and just quietly getting better at what they do. This is exactly the area of the market where Rockpool looks to find opportunities.
We back lower mid-market British businesses: established, cash-generative companies with diverse customers, recurring revenues and founders who have usually built something from nothing. We are interested in the engineering firm that has doubled its margins, the healthcare business solving a real clinical need, and the financial advice practice built on years of client trust. These are Britain’s Mittelstand, and they deserve the same patient, committed capital that has supported their German counterparts for generations.
Small and medium-sized businesses account for the overwhelming majority of UK private sector employment. When we invest in them, we are not just backing a balance sheet; we are backing jobs, supply chains and economic growth across the country. Supporting entrepreneurs at this scale is one of the most direct ways private capital can strengthen the wider economy, while also aiming to deliver attractive returns for investors and management teams.
Germany didn’t build the Mittelstand by chasing the next big thing. It built it by respecting the compounding value of expertise, ownership, and time, largely funded by the businesses themselves, reinvested profits, and founders who kept tight control of their companies for generations. Britain has no shortage of businesses with that same character. Where we see an opportunity is in involving private equity in a way that supports that model rather than disrupts it. Growth capital can help a founder invest in the next stage of the business, alongside the operational expertise and networks that private equity can offer, without asking them to give up what got them there. That’s the role we see for ourselves at Rockpool.
