10th Munich Private Equity Training Conference

In his keynote, Michael Phillips, head of Apax Partners in Germany, noted that after 10 years of boom, the industry is now entering a phase of consolidation and a more careful and diligent approach to investing. This means that targets are becoming available that had not been in reach of private equity during the boom times. A subsequent seminar on private equity funds outlined the impact of recent EU legislation to regulate alternative investment fund managers, which is deemed unsuitable for private equity funds due to many issues that remain unaddressed. However, the panellists expressed their hope that the discussion about regulation may eventually pave the way towards proper private equity legislation in Germany.

A more uplifting presentation focusing on insolvency planning followed, illustrated through a case study of SinLeffers GmbH, which, during insolvency, remained in control of the management - an enlightening example pertinent to portfolio companies facing administration. Another burning topic was debt restructuring, discussed by a panel of lawyers, debt advisers and bank representatives, which gave an inside view on the challenges for all participants in debt renegotiation.

The most popular workshop in the afternoon concerned secondary transactions of fund stakes and explored the reasons for selling at falling prices, as well as a reluctance to buy into a falling market, with a few signs pointing towards a bottoming out.

The second day opened on crisis financing for stakeholders. It was followed by a presentation that highlighted the recent changes affecting management incentives and explored the "sweet equity" model to incentivise the management of companies struck by the crisis. The next presentation explored the advantages of a Luxembourg-based acquisition vehicle. The Special Purpose Acquisition Company (SPAC) was the focus of the next panel. It is a hybrid of a private equity transaction model and an IPO; however, since the onset of the crisis, launches of SPACs have been flat in Germany and the performance of the stock market is not encouraging for the models in the near-future.

Debt restructuring's impact on balance and earnings was explored in a workshop running parallel to a presentation on the management's duties and liabilities in crisis. A lively discussion then centred on the "tax traps" that private equity faces in an uncompetitive legal environment. The conference ended on a presentation on the overall economic cycle, historical examples and a prediction that markets are likely to fall amid a low risk of inflation, and a slow, protracted recovery.

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