GERMANY - Mid-market buyouts unscathed by finance crisis

According to a statement issued by Deutsche Beteiligungs AG, activity in the mid-market buyout space in Germany is unbroken and is evidently unimpeded by the liquidity crisis. Market data issued today supports this: 35 transactions were recorded in 2007, slightly up from the previous year's 34 and reaching an all-time high for the fifth consecutive year. The transaction value receded from EUR 4.0bn to EUR 3.7bn. The statistics relate exclusively to majority takeovers by financial investors in which the target companies' managements co-invest and which have a transaction value of EUR 50m to EUR 250m for the debt-free company. Activity in mid-market buyout space has remained unscathed by the finance crisis; in the first half of 2007 there were as many transactions recorded as in the second half. However, the majority of the transactions completed in the second half of 2007 had already been prepared before the finance crisis took hold. A total of 26 financial investors were involved in the transactions recorded in 2007. There was a shift in industrial sectors this year. 2006 saw five deals in automotive suppliers, whereas in 2007 there was only one. By contrast, five transactions in the electronics sector were registered, following just one the year before. The list is dominated by management buyouts from the portfolios of large corporations; spin-offs accounted for 17 of the 38 transactions. Family owners sold three companies to financial investors to settle succession issues; two companies were taken private by financial investors and the companies' managements. Furthermore, the market recorded 13 secondary buyouts. For the first time, tertiary buyouts have come up on the list – which proves that the German buyout market has evolved into a liquid equity market for successful, unquoted companies.