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Rödl & Partner Study: German Mittelstand finances growth increasingly with venture capital
Rödl & Partner GbR / Key word(s): Study/Private Equity Rödl & Partner Study: German Mittelstand finances growth increasingly with venture capital – Venture capital firms focused on Mittelstand companies expect positive development – Cleantech, ICT and healthcare leading industries for venture capital firms – Bavaria most attractive German state for venture capitalists – Berlin jumps to 4th place Frankfurt/Munich, 03.05.2012: The private equity industry is benefitting from growth in the German economy. More and more German Mittelstand companies are financing their strategic expansion with venture capital. Venture capital firms focused on Mittelstand companies therefore expect a positive development in the venture capital market – despite intense competition for attractive investments and ever increasing company prices. This year more than 90% of venture capital firms plan to agree to new investments. The first target is cleantech companies, followed by the ICT and healthcare industries. These are the findings of the private equity study drawn up by the international consulting and audit firm Rödl & Partner. ‘Today venture capital firms are indispensable as finance partners for Mittelstand companies’, explains Wolfgang Kraus, Managing Partner at Rödl & Partner. ‘At the same time the companies profit not only from the venture capital. Venture capital firms also bring in their expertise and drive the strategic development of their equity interests. This support is very important especially in the current boom of taking over companies in crisis in order to transform the opportunities on offer into an economic success.’ However, the conditions in the venture capital market have become rougher. Strategic investors and family offices are intensifying the competition for attractive investment targets. This is driving company prices up and up. In addition, many family-owned companies are able to finance their expansion from their own liquidity. Given this background venture capital firms are increasingly adapting to meet the requirements of Mittelstand companies. For the first time the number of minority shareholdings has reached 56%. Venture capital firms are less frequently demanding direct influence by posting managing directors. In the place of short-term investments, long-term equity investments now have become more common – 75% of the companies report an average holding period of 5 years and longer. ‘The capital market is opening up and is reaching out to Mittelstand companies’, emphasises partner Björn Stübiger, who drew up the study. ‘The investment of venture capital in Mittelstand companies is an indicator of further economic growth. The venture capital industry is looking for success stories. The reason is that a successful partnership must result in disposal with a profit. Mittelstand companies promise an attractive return on equity.’ While venture capital firms focused on Mittelstand companies view the future optimistically, investors focused on deals over 100 million euros are more sceptical. The reason for this is most likely that it is becoming increasingly difficult for venture capital firms to find investors for their investments. Transactions under 5 million euros are therefore more and more completely financed through own funds. Industry focus: Cleantech frontrunner for the first time before IT and healthcare The most attractive industry for venture capitalists is the cleantech industry, i.e. companies concerned with environmental technology. In the context of the global changeover to alternative energy sources this industry has now become a frontrunner and forced the ICT industry down to second place. The healthcare industry is in third place. In spite of the boom in the German industry, fields which depend on the economic climate such as mechanical engineering and the automotive industry are a long way behind in positions four and six. Bavaria in front of NRW and Baden-Württemberg as most attractive region for the venture capital market In the face of the cluster initiatives in cleantech, ICT and healthcare companies in Bavaria and North-Rhine Westphalia it is no wonder that these German states are also able to keep their top rankings as the most attractive investment locations for venture capital firms. Baden Württemberg in third place has a successful technology sector and is a location for a dynamic mechanical engineering and automotive industry. Berlin is for the first time in fourth place – here the conditions for company start-ups are currently being improved in the ICT and media fields. Conclusion: Venture capitalists are able to cover the financing requirements of Mittelstand companies ‘The venture capital industry has successfully adapted to the Mittelstand. The increasing number of Mittelstand smart deals may well not compensate for the missing big deals. Yet the optimism of the venture capital firms focused on Mittelstand companies is justified’, concludes Kraus from the result of the study. ‘The fact that 90% of the venture capital firms plan new investments and two thirds plan exits for this year indicates the sustainable success of private equity in Germany’, emphasises Stübiger. ‘The industry, however, is now in line for a consolidation phase. The intense competition has put pressure on expected returns. The optimistic investment targets of the industry can only be realised by sustained economic growth in Germany.’ For the study Rödl & Partner carried out a survey at the beginning of 2012 of over 300 venture capital firms in Germany. The response rate was 35%. Participants in the survey were international companies and venture capital firms from the private and public sector.
Graphics / charts On request we will be happy to provide you with high definition graphics on the results of the study. In this case please contact our press office. Printed version of the study
A printed version of the study is available from Rödl & Partner in Munich.
Your contact partners:
Wolfgang Kraus, Certified Public Accountant, Certified Tax Consultant, Managing Partner
Björn Stübiger, Partner, Head of Corporate Finance
Press contact:
You may download photographs of the contact partners from the Rödl & Partner Press Centre at www.roedl.de/pressecenter. Further graphics are available at www.roedl.de/PE-Studie-2012.
Rödl & Partner – entrepreneurs advise entrepreneurs Rödl & Partner has its own offices at 87 locations in 39 countries. The integrated professional services firm for law, tax, consulting, auditing and accounting owes its dynamic success to more than three thousand entrepreneurial-thinking professionals. In close co-operation with their clients, they develop information from the fields of business, tax, law and IT enabling a sounder basis for increasingly cross-border decisions and provide support for these during their implementation. 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. End of financial news 03.05.2012 Dissemination of a Corporate News, transmitted by DGAP – a company of EquityStory AG. The issuer is solely responsible for the content of this announcement. DGAP’s Distribution Services include Regulatory Announcements, Financial/Corporate News and Press Releases. Media archive at www.dgap-medientreff.de and www.dgap.de |
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