Rödl & Partner GbR
PRIVATE EQUITY IN GERMANY GOES ‘MITTELSTAND’; RÖDL & PARTNER STUDY: MORE & MORE BUSINESSES FINANCE GROWTH WITH RISK CAPITAL
Rödl & Partner GbR / Miscellaneous 28.04.2010 10:00 Dissemination of a Financial News, transmitted by DGAP - a company of EquityStory AG. The issuer / publisher is solely responsible for the content of this announcement. --------------------------------------------------------------------------- PRIVATE EQUITY IN GERMANY GOES 'MITTELSTAND' RÖDL & PARTNER STUDY: MORE & MORE BUSINESSES FINANCE GROWTH WITH RISK CAPITAL - Private equity firms increasingly accept minority holdings - 80 per cent of equity capital invested in German 'Mittelstand' firms - Bavaria ahead of North Rhine-Westphalia as most attractive state for venture capitalists Frankfurt/Munich, April 28, 2010: More and more mittelstand businesses are financing their growth with equity capital. With the absence of 'Big Deals', the private equity industry is concentrating on smaller businesses. In doing so, the industry is increasingly ready to abandon its claim of majority holding. Investment companies are particularly focusing on businesses in the information technology, cleantech, medical engineering and biotechnology industries. Bavaria asserts itself as the most attractive German state for financial investors, ahead of North Rhine-Westphalia and Baden-Württemberg. This is revealed in a poll of private equity companies in Germany from the professional service firm, Rödl & Partner. 'Equity capital is becoming normal in mittelstand firms', explained Wolfgang Kraus, Manag-ing Partner of Rödl & Partner. 'The start of the economic revival will, in growing numbers, be financed through private equity firms. The mittelstand businesses are ready to take on financial investments because they want to grow. Thereby, investors are gradually giving up control of the majority of their shares and are increasingly relinquishing their claim to power.' After the most severe financial and economic crisis in post-war history, the mood in the field is reservedly optimistic. 66 per cent of those questioned in investment companies expect that the private equity market will develop positively and 6 per cent of those believe the development will be much more positive than last year's development. In particular, the first successful IPOs offer hope. The difficult fiscal environment of the private equity field is nevertheless still said to be the main force in slowing down the positive development. 'The difficult business environment for exits has forced the investment companies into long term commitments. The mittelstand welcomes this. But all investments are long-term involve-ments', emphasises Björn Stübiger, Partner at Rödl & Partner, which carried out the study. 'The key question is whether the return to stable underlying data with a considerable entrepreneurial potential to increase value will occur. Politicians are also required to improve the general conditions and in particular conditions for venture capital investments with harmonization at an international level', explained the corporate finance expert. In the spring of 2010, Rödl & Partner consulted more than 300 investment companies operating in Germany. The response rate of 38% makes the survey results representative. International companies and private equity companies with a private and public background were asked about their investment behaviour in Germany. 'The study reflects the versatility of the field. One shouldn't just reduce private equity down to big deals. Then you can see how active the market is despite the financial crisis', says Stübiger. While the private equity companies have adapted their investment strategy to the market environment, many investments fail just as before due to the unrealistic price expectations of companies. Given the reluctance of banks to finance acquisitions via loans, a holding often fails because of the excessive purchase price. The field is focusing on IT as a new front-runner industry The IT field represents the best opportunity for equity investment financing (44.4%). Investors see IT as particularly attractive, followed by environmental technology (35.2%), medical engineering and biotechnology (both 29.6%). While IT companies had previously taken up the middle of the field, the investment focus has changed considerably. This is also true for regenerative energy which has pushed its way up to the fifth ranking position. 'The power of the companies to innovate is the key to getting venture capital financing', explains Stübiger. 'Even in traditional fields such as mechanical engineering financial investors are becoming more active if the company enjoys good growth and especially uses innovative technology.' Bavaria is ahead as the most attractive state for private equity firms Once again the so-called 'free state' of Bavaria by a long way attracts the most financial investors (35.5%), followed by North-Rhine Westphalia (27.8%) and Baden-Württemberg (18.5%). In eastern Germany only the free state of Saxony (4.3%) is able to hold its own. The usual reason given is the economic structure, the number of attractive companies and the active founders' scene in the respectively preferred regions named. The significance of this appraisement is high. 'Where German states are successfully able to attract venture capital, there are better conditions for growth in the economy', points out Kraus. 'So it's worthwhile creating the right conditions to encourage the commitment of investors.' Conclusion: 'Locusts can turn into grasshoppers which are able to revive the economy' The mittelstand is repositioning itself again ready for growth. In Germany venture capitalists are concentrating on investing in innovative and often internationally active mittelstand com-panies in this current upswing. 'The venture capital field and the mittelstand have moved considerably closer together. Confidence has risen that companies will grow and majority takeovers have given way to long-term, sustainable investments. Companies ready to make the jump into new markets see venture capital as an attractive financing option', as the results of the study are summarised by Kraus. 'Now it's time for politicians to recognise the chances on offer from investors. It's high time public awareness moved on from the locust image.' Your contact partners: Wolfgang Kraus, certified public accountant, certified tax consultant, managing partner Tel.: +49-911-9193-3333, E-Mail: wolfgang.kraus@roedl.de Björn Stübiger, Partner, head of Corporate Finance Tel.: +49-89-928780-515, E-Mail: bjoern.stuebiger@roedl.com You may download photographs of the contact partners free of charge from the Rödl & Part-ner Press Centre at www.roedl.de/pressecenter. The study (in German) may be ordered from Rödl & Partner Munich. Please contact Regina Völker: Tel.: +49-8992-8780-525, E-Mail: regina.voelker@roedl.com About Rödl & Partner Rödl & Partner is one of the leading German professional service firms. Rödl & Partner assists companies in their business activities throughout the world. The firm's core business is focused on audit, accounting, tax and legal advisory services. The firm employs a staff of 3,000. Rödl & Partner is represented by more than 80 offices in 40 countries in all major industrial nations in the world, in particular in Central and Eastern Europe, Western Europe, Asia, Africa, the Middle East and the Americas. The corporate finance division of Rödl & Partner advises companies on raising capital via the capital market, strategic partnerships, M&A transactions and the strengthening of equity via private equity and venture capital. The lawyers, tax consultants, accountants and corporate finance experts of Rödl & Partner have extensive experience in the field of financing strategies, IPO consulting, capital increases, with legal, tax and financial due diligence audits and with company acquisitions and disposals in Germany and other countries. To find out more about Rödl & Partner, visit www.roedl.com Press contact: Eye Communications Matthias Struwe MSc MA Stühlingerstr. 24 79106 Freiburg, Germany Tel.: +49-761-1376 221 Fax: +49-761-1376 224 Mobile: +49-171-8893 704 E-Mail: m.struwe@eyecommunications.de Internet: www.eyecommunications.de Photos will be distributed by mecom-bildkanal and available at http://ir-cockpit.equitystory.com/cgi-bin/fncls.ssp?fn=mecomi&news_id=87420 Caption: Rödl & Partner: Grafiken Beteiligungsstudie 2010 28.04.2010 Ad hoc announcement, Financial News and Media Release distributed by DGAP. Media archive at www.dgap-medientreff.de and www.dgap.de --------------------------------------------------------------------------- Language: English Company: Rödl & Partner GbR Äußere Sulzbacher Straße 100 90491 Nürnberg Deutschland Internet: www.roedl.de End of News DGAP News-Service ---------------------------------------------------------------------------
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