German mid-market buyouts in 2016: The DBAG Mid-Market … · 2017-06-09 · 25 January 2017 1/6 German mid-market buyouts in 2016: The DBAG Mid-Market-Private-Equity-Monitor in collaboration

25 January 2017

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German mid-market buyouts in 2016:

The DBAG Mid-Market-Private-Equity-Monitor

in collaboration with FINANCE

“High, but not over-valued” – survey on valuation levels in the German

private equity market

Investment managers at more than 50 private equity firms operating in Germa-

ny are polled twice a year on behalf of Deutsche Beteiligungs AG (DBAG) by

FINANCE magazine about trends in the German mid-market segment. In the

survey conducted at year-end 2016, only five percent of the investment manag-

ers interviewed stated that valuation levels were “normal when compared over the long term”; 86 percent termed prices as being “expensive”. Eight percent of the respondents even consider prices to be “dangerously excessive”. In some areas, the professionals interviewed see a risk of excessive valuations. In par-

ticular, the prices for medical engineering and technology companies are now

so high that there is a threat of a bubble forming in these sectors. By contrast,

trading firms are considered the least over-valued, along with automotive sup-

pliers and mechanical and plant engineering companies.

Source: DBAG Mid-Market-Private-Equity-Monitor in collaboration with FINANCE; Survey among investment managers at more than 50 private equity firms

5%

86%

8%

How would you evaluate overall valuation levels in the German

private equity market?

Normal whencompared over thelong term

Expensive

Dangerouslyexcessive

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Multiple answers possible Source: DBAG Mid-Market-Private-Equity-Monitor in collaboration with FINANCE; Survey among investment managers at more than 50 private equity firms


8%

10%

17%

17%

22%

22%

29%

39%

73%

83%

Trade

Food and beverage

Automotive

Mechanical and plant engineering

Chemicals

Consumer goods

Cleantech

Services

Technology

Medical engineering

In which sectors have prices increased most strongly?

8%

12%

14%

17%

24%

25%

31%

36%

54%

64%

Food and beverage

Trade

Chemicals

Consumer goods

Mechanical and plant engineering

Automotive

Services

Cleantech

Medical engineering

Technology

In which sectors do you see a risk of excessive valuations and bubble forming?

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The Midmarket-Private-Equity-Monitor shows that financial investors are rely-

ing on sustainable strategies to a growing extent in order to support manage-

ments in developing the companies and thereby increasing their value. Only

eight percent of the investment managers interviewed consider financial engi-

neering to be a promising value creation strategy.


2016 buyout market at near record level – market statistics

Financial investors structured more buyouts in Germany’s “Mittelstand” in

2016 than they had since record year 2007. Half of the transactions – 17 out of

a total of 34 – related to sectors in which the price trend has been less dynamic

recently. Every fifth transaction (seven of 34) involved an automotive supplier.

Compared to the preceding year, the proportion of industrial companies among

mid-market buyouts declined: in 2015, they accounted for approximately half

of the 30 transactions, and in 2016 for only about a third.

The statistics relate exclusively to majority takeovers by financial investors in

which the target company’s management co-invests and which have a transac-

tion value of 50 to 250 million euros for the debt-free company. The data is

based on publicly accessible sources as well as on estimates and own research

by DBAG in collaboration with FINANCE magazine.

Private equity firms sponsored buyouts last year in Germany’s “Mittelstand” valued at approximately 3.6 billion euros; the previous year it was 2.7 billion

8% 12%

46%

59% 63%

71%

FinancialEngineering

Repositioning/Buy andBreak

Costreduction/efficiency

Expansionof

business units

Internatio-nalisation

Buy and Build

Which value creation strategy do you consider most promising?

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euros. The average enterprise value rose by 15 percent to some 105 million

euros. The majority of transactions (23 of 34) were attributable to the seg-

ment’s lower end (enterprise value: 50 to 100 million euros). Mid-market MBOs in 2016 Target Vendor Financial Investor

Interforum Founder Bregal Unternehmerkapital

Elatec Stefan Härtel and other previous investors

DPE Deutsche Private Equity

Gala-Kerzen Langhammer family Equistone

Binder-Gruppe Hans and Ottmar Binder Bregal Unternehmerkapital

Hamm-Reno Gruppe Siegfried Kaske, Hamm family

Capiton, Ziylan-Gruppe

WST Präzisionstechnik Finatem Cathay Capital

Hennecke Adcuram Capvis

IHSE Founder Brockhaus Private Equity

Schlemmer Hannover Finanz, Mackprang

3i

AppelrathCüpper Advent OpCapita

Inexio Founder, Management Warburg Pincus, DBAG

Losberger HIG Capital Gilde

Frimo Hans-Günther Bayer, Rainer Wittkorn

DBAG

GBA Laborgruppe Adiuva Capital Quadriga

Onlineprinters TA Associates Bregal Unternehmerkapital

Polytech Founder DBAG

Exocad Fraunhofer Institut, founder Carlyle

Pavis Previous shareholders Paragon

Parador Hüls-Gruppe Nord Holding

Ruf-Bett Hüls-Gruppe Nord Holding

GEV Previous shareholders Riverside

Dermatologikum Hamburg Volker Steinkraus and others

ECM

Utimaco Pinova, BIP Investment Partners

EQT

Raith Hannover Finanz Capiton

Drahtzug Stein Founding family Emeram

Schock HQ Equita IK Investment Partners

Deutsche Intensivpflege Holding

Delta Equity Ergon Capital

Schwind Eye-Tech-Solutions Founder Ardian

Braun Seafort DBAG

Moeschter Jürgen Möschter Hannover Finanz

Fischer Surface Technologies Family shareholders DPE Deutsche Private Equity

Hoffmann Fördertechnik Owner family Afinum

Chicco di Cafe Previous shareholders Paragon

Achat Hotels Previous shareholders Hannover Finanz

Majority takeovers by financial investors via MBO, MBI, secondary/tertiary buyouts; Transaction value: €50-250mn Source: public information, research by FINANCE und DBAG

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21

11

20 25

34 36

26

12

24

31 29

23

31 30 34

1,939

1,500

2,093

3,000

4,030

3,660

2,420

1,450

2,800

3,530 3,495

2,270

3,196

2,735

3,560

0

500

1000

1500

2000

2500

3000

3500

4000

4500

0

5

10

15

20

25

30

35

40

MID-MARKET MBOs IN GERMANY Transaction value: €50-250mn

Number Value (€mn)

24 20

7

14 16 16

18 19

24 23

6

5

2

4

11

5 2

8

3 8

6

1

3

6

4

8

3

4 3

3

2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

MID-MARKET MBOs IN GERMANY by transaction value

€50-100mn €100-175mn €175-250mn

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An unusually high number of buyouts originated from family-owned compa-

nies in 2016. In ten instances, or in nearly every third case, succession was

arranged through a buyout in the role of the majority owner. This represents by

far the highest share of family succession arrangements through buyouts in 15

years.


7

1

3

5

18

2016

Automotive

Mechanical andplant engineeringChemicals

Services

Healthcare

Other

24

17

10 15

4

71

2004-2008

Automotive


Services

Healthcare

Other

18 12

17

11

18

92

2010-2015

Automotive


Services

Healthcare

Other

19 14

10 9 14

9 11 13

20

12

14

9

1

12

15

13 9

14

8

12

3

3

1

3

2

7

3

4 2 10

2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

MID-MARKET MBOs IN GERMANY by type of transaction

Spin-offs Secondaries / Tertiaries Family succession

Documents

German mid-market buyouts in 2016: The DBAG Mid-Market … · 2017-06-09 · 25 January 2017 1/6 German mid-market buyouts in 2016: The DBAG Mid-Market-Private-Equity-Monitor in collaboration