• Yvonne Döbler

The optimist.

(Reading time: 6 - 12 minutes)


Expansion strategy. In 18 years, Wolfgang Trier, now 55, has turned the bankruptcy candidate Softing into a serious supplier of communication solutions for industry. "And the best," Trier is convinced, "is yet to come.

"We are currently sounding out the market to find companies that could fit into the strategy and portfolio of our Automation segment. And are available at a reasonable price in the crisis," says Wolfgang Trier, CEO of the publicly listed Softing AG. "That would then be another piece in the mosaic on the way to breaking the EUR 100 million sales barrier and achieving a double-digit EBIT margin again." If the plan works out, the Corona crisis would at least have one positive aspect for Trier. Inorganic growth is particularly profitable in a market shakeout phase. "We have always bought competitors who have strengthened our segments. And that is, of course, how we are operating today."

Softing is a hardware and software company with products that are not so easy to explain. "In principle, it's always about digital data, its forwarding and its use in B2B," explains Trier. In the largest single area, "Industrial", he helps his customers with digitization and drives forward the communication and networking of machines worldwide. "For internationally positioned companies, it is important that their machines can communicate with each other both locally in production and across different locations. The company generates sales of around 60 million euros there.

In the second large segment, "Automotive", Softing offers hardware and software as diagnostic and analysis tools which can be used to record and retrieve the various data of the electronic control units in the car. "They are used by leading manufacturers and suppliers in development and service."

In the third, the smallest and youngest area, IT Networks, devices for measuring the quality of data lines are developed and sold.

All in all, Wolfgang Trier actually wanted to break the 100 million Euro sales mark this year already. In fact, it will probably only be just under 80 million euros. "This is due to Corona. We have to go through this now, just like all other entrepreneurs. But postponed is not cancelled. For 2021 we have our sights set on a return to the 2019 figures, and in 2022 - hopefully beyond Corona - we want to break the 100 million mark," the entrepreneur says confidently.

When Wolfgang Trier joined Softing in 2002, the company, which was formerly celebrated on the Neuer Markt, was on the verge of bankruptcy. The stock market price is one euro, the entire company is worth only five million euros with a turnover of 19 million. "Without massive intervention, insolvency was at most half a year away," remembers Trier.

At the time, the electrical engineer and business graduate was working as a reorganizer for a management consultancy and was actually permanently on the road. "My wife did not find this family-friendly and suggested a more stationary job." So he is offered the "Softing restructuring case".

Trier takes a look at the business model and figures, recognizes the potential and, with around two million euros in the first few years, buys almost 25 percent of the five million shares. At that time, the Softing Group was already dealing with machines in the factory that needed to communicate and with electronic control units in the car. "That was the future. I was sure we had a market for these products." Softing's problem was that quite a few developments were never brought to market and were kept alive for a long time despite their failure. It swallowed up a lot of capital. "There was a lack of structure and direction, the captain. I promised to be that one."

Trier gives the new direction: "First of all, by adjusting the cost structures. Then with a focus on content - which products are profitable and will be continued, which ones will be discontinued. And then with an internationalization strategy - if we want to sell our products worldwide, we had to grow beyond the DACH region. Acquisitions should help us to reach a critical size as a supplier.


The first step is to take many small steps to get the company back on track. "We had a subsidiary in Italy that was mismanned and lacked sufficient products for the Italian market," says Trier. He closes the loss-making subsidiary and buys a small industrial agency, which already has a basic turnover of around one million euros in this business segment. "We docked there, were immediately out of the red." Today, Softing Italia generates sales of around ten million euros. In 2005, hard&soft Salwetter-Rottenberger GmbH in Reutlingen followed in order to strengthen the Automotive Electronics division in the field of test systems for ECUs used in automobile production. Trier continues to acquire companies. "However, we almost never invested more than five million euros, because we didn't want to get into debt and the company didn't want to sail on the edge."

In 2010, the restructuring phase is completed. Softing has sales of just over 30 million euros. The bottom line is a million euros in profit. Now the growth phase begins. "I was determined to leverage the strength of a stock market listing in the process. It makes it possible to pay for acquisitions with own shares or to carry out capital increases." In the coming years, Trier will thus increase the number of shares from five to 9.2 million. Not all shareholders like this dilution. "However, I myself have subscribed to all cash capital increases. This was important for credibility."

In early 2014, he announces his most strategically important investment to date, the purchase of American Online Development Inc. (OLDI). "This was the important access to the US market that Softing had long lacked."

For the entrepreneur, it's a matter that requires tact and sensitivity. OLDI's largest customer is Rockwell Automation, the top dog for automation in the USA. Trier cannot afford to lose him: "I asked Rockwell beforehand whether we would be welcome as buyers. Acceptance was not enough for me because of the high dependency on the lead customer, I wanted us to be wanted. The background: Rockwell had a turnover of three billion dollars at that time and could have easily bought OLDI itself. Trier wants to understand why the Americans don't get in on the ground floor themselves. He is convinced by your argument. Rockwell is a giant steamship that needs small, agile and independent ships around it, so an entry into OLDI is out of the question.

A few months earlier, Wolfgang Trier had acquired Psiber Data, which later became IT Networks - and thus opened up a whole new business segment for Softing. The devices from IT Networks can be used to determine the quality and bandwidth of data lines in old and newly installed networks. "There are basically three physical access points to the Internet: copper cable, fiber optic cable and WLAN. We cover all three and check how powerful they actually are," explains Trier.

Companies that depend on the bandwidth and quality of data lines need this information if there are to be no unpleasant surprises later on. With the devices from IT Networks, it can be determined in less than ten seconds whether a line actually delivers the promised performance. "Also those who want to prevent network failures and quickly correct network errors need our measuring devices." In the medium term, the entrepreneur estimates the global market volume for Softing among installers, system integrators and network operators at 20 to 30 million euros. So far, IT Networks has not even been able to exploit half of this volume. In 2019, this segment generated sales of twelve million euros.

Softing is developing very well until 2015. Then there will be repeated difficulties. "Technology companies like us have the problem that their developments must always be at the forefront. Customers often take longer to implement this in their processes. Time and again, requests for additional technical features come up. This delays the introduction. Because I am fundamentally optimistic, I may then sometimes be too fast in communication. Some things simply take longer than I want to believe."

In 2016, the automotive sector will be developing too much at once: new hardware, new software, everything in one development step. "This has consumed far more resources than planned, our products just didn't get done in time." Revenues are down, earnings are down 90 percent - from 5.7 to 0.7 million euros.

But Wolfgang Trier is not discouraged. The purchase of the Liechtenstein-based company Globalmatix for 15 million euros in 2018 is expected to provide new impetus. Trier is carrying out a capital increase against contribution in kind, 1.45 million new shares at a price of 9.43 Euros will bring him around 13.7 million Euros. He finances the missing 1.3 million euros with a loan. "After OLDI, this was the most important purchase for me," explains Trier. The calculation: "We have a worldwide trend towards networking. And mobile, via the cloud, so that data can be exchanged across borders at all locations. Globalmatix can do that." The application possibilities: Fleet management, preventive diagnosis, accident registration and more.

"This is a small box that can be retrofitted behind the dashboard in any car, delivery van or truck", explains Trier. The box accesses the vehicle electronics and, depending on the owner's approval, sends the required information to the cloud. Every parking maneuver, every trip, every accident is recorded using the box.

"So we initially sell our hardware, which taps into the electronics in the vehicle, on a one-off basis. But the aim is then to conclude a multi-year user contract for data retrieval from the vehicle. Depending on the scope and quality, we can do this for a few euros per month and vehicle," he explains the business model. So far, the target group has been large fleet operators, insurance companies and car rental companies. But the box can also be used for a variety of industrial applications - wherever many distributed units need to be connected to a central location simply, cost-effectively and securely. "We have a fully scalable business model here with a very good, double-digit margin outlook."

But there are delays again. "It took us much longer than expected to analyze the many possible applications of Globalmatix' technology and to focus on a few business areas at first," admits Trier. He will invest almost two million euros in the new acquisition in 2018 and 2019 respectively. Then he is ready, wants to scale up in 2020 and generate revenues. But now comes Corona. Many customers no longer have budgets. Trier will have to wait. "The signals point to a commercial breakthrough in 2021," he hopes.

Many things that Trier touches succeed. Some not. And some things just take time. In early 2018, he develops a receiver for WLAN signals at IT Networks, in which he has high hopes. Even at the development stage, it is clear that it is a niche product for specialists. "You have to have some knowledge of the WLAN standard to use it. We are not yet close enough to our target group," says Trier. So far, he has not been able to sell the quantities to recoup the development costs. He will continue to develop the technology, but this project will also take much longer than expected.

At the moment, Softing is of course also suffering from the slump in sales in the automobile industry and the industry's reluctance to invest. Wolfgang Trier has therefore reacted by adjusting the strategy in the Industrial segment. Until now, he has mainly equipped new machines with his systems. "Now we are increasingly concerned with connecting the stock of valuable machines to the company's data networks," explains Trier. "We want to expand this strategically, because Corona makes business with newly installed machines more difficult."

These are probably the great entrepreneurial skills of Wolfgang Trier - flexibility, innovative strength, unshakable optimism and staying power.

If everything works out the way the entrepreneur imagines it, 2021 - or 2022 at the latest - could become a year in which all areas of his Softing AG actually do well. According to Trier, the ship is now on a good course. "First of all, we have to get our margin back into double figures." And then? "Then we keep growing." ®


The Softing share.

The share price of Softing AG has gone through a rapid up and down. After the dynamic growth of the years 2010 to 2015 catapulted the share price from EUR 3 to EUR 18, a long downhill slide began with the delays in important products. Another problem was that Wolfgang Trier himself often published overly optimistic expectations, which caused some investors to lose confidence. At prices around five euros (as of mid-November 2020), the market value of Softing AG is now only around 45 million euros. That is not much for a company that could generate more than 100 million in sales after the Corona crisis.

Of course, the figures for the year 2020 as a whole are likely to be weak. But Trier has already shown earlier that it can generate five to ten percent returns. If this is successful again, earnings per share of one euro would be possible. Then the share price would probably rise significantly again.


Author: Yvonne Döbler

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