STUDIES > Alternative Investments

KfW Research
Going into the second half of the year, the German VC market sent out a positive signal, giving hope for a strong conclusion to the year in the coming quarter. In Q3 2024, the quarterly volume of investment in German start-ups exceeded the threshold of EUR 2 billion again for the first time in more than a year. Overall, German start-ups raised some EUR 2.5 billion from investors in 280 funding rounds. >more

STUDIES > M&A

KfW Research
The coronavirus crisis has put a damper on the SME M&A market from which it has not yet recovered - this is shown by recent evaluations by KfW Research based on the Orbis M&A database. The number of M&A transactions targeting a German SME between 2020 and 2023 was around 35% below the pre-coronavirus level (2015-2019). Domestic investors and buyers were particularly cautious. Their share fell from 60 % to around 51 %. By contrast, foreign buyers - particularly investors from the USA and the UK - were proportionately more frequently represented in the SME M&A market in 2020-2023. SMEs in the information and communication technology sector - especially information service providers and software companies - were particularly in demand recently. The coronavirus crisis and the associated additional surge in digitalization have significantly increased their share of M&A transactions in the SME sector. >more

STUDIES > Macro

McKinsey & Company
Germany can increase its economic output by almost 50 percent by 2035 - and use this growth to mobilize higher investments in social security systems, education, healthcare, climate change and infrastructure expansion. Sustainable growth benefits everyone. The value of the German economy would grow from EUR 12 trillion to EUR 24 trillion, which would mean EUR 31,000 more annual income for households. To make this possible, Germany must once again become more attractive for investment - the growth turnaround requires additional investment of EUR 330 billion per year - 8% of GDP - and a dual strategy: a stronger focus on dynamic future fields (“shift”) and higher productivity in all industries and value chains (“lift”). >more

STUDIES > Macro

Deutsche Bank Research
The much-discussed crisis in German industry has come to a head with VW's recent announcement of possible plant closures in Germany. This would be a first in the company's history. The hard data on industrial production also indicates that German industry is currently experiencing the most pronounced downturn in the history of the Federal Republic. However, this differs from previous downturns - for better or for worse. >more

REPORTS > DACH Capital Market Data

ValueTrust, finexpert and the Institute of Management Accounting and Auditing at WU Vienna publish the 15th edition of the DACH Capital Market Study, which is published semi-annually. In this Study, we provide cost of capital inputs required to perform an enterprise valuation in Germany, Austria and Switzerland, including the relevant parameters used to calculate the cost of capital under the CAPM. In addition, we provide a trading multiples overview and an anaylsis of total shareholder returns. >more

STUDIES > Macro

Roland Berger
The hoped-for turnaround in the German economy in the middle of the year does not seem to be materializing - relevant indicators point to continued economic weakness. After a year of negative growth in 2023, there is a threat of stagnation in 2024. High interest rates and (geo)political uncertainty continue to weigh on the German economy, even though the European Central Bank has initiated a turnaround in interest rates and further interest rate cuts are expected by the end of the year. >more

RESEARCH PAPERS > Corporate Valuation

Aswath Damodaran
2024
As companies and investors globalize, we are increasingly faced with estimation questions about the risk associated with this globalization. When investors invest in China Mobile, Infosys or Vale, they may be rewarded with higher returns, but they are also exposed to additional risk. When Siemens and Apple push for growth in Asia and Latin America, they clearly are exposed to the political and economic turmoil that often characterize these markets. In practical terms, how, if at all, should we adjust for this additional risk? We will begin the paper with an overview of overall country risk, its sources, and measures. We will continue with a discussion of sovereign default risk and examine sovereign ratings and credit default swaps (CDS) as measures of that risk. We will extend that discussion to look at country risk from the perspective of equity investors, by looking at equity risk premiums for different countries and consequences for valuation. In the fourth section, we argue that a company's exposure to country risk should not be determined by where it is incorporated and traded. By that measure, neither Coca Cola nor Nestle are exposed to country risk. Exposure to country risk should come from a company's operations, making country risk a critical component of the valuation of almost every large multinational corporation. In the final section, we will also look at how to move across currencies in valuation and capital budgeting, and how to avoid mismatching errors. >more

STUDIES > Corporate Finance

Alvarez & Marsal
The A&M Distress Alert assesses performance and balance sheet robustness of European businesses, aiming to identify those that are in financial distress or may soon be heading in that direction. The latest alert finds last year, and recent months have not brought European companies the relief that many had hoped. With the expected rate cutting cycle proceeding at a historically low pace and the “last mile” of inflation proving tricky to tame, the same operational and liquidity challenges that plagued businesses in the aftermath of the pandemic increasingly appear today. >more

CAPITAL MARKET DATA > Betas, Multiples, Returns

finexpert updated the capital market data (Betas, Multiples, Returns) as to July 15, 2024. For data access, you must be a basic finexpert member. In addition, premium members have access to the archive for our capital market data from 2007 onwards. >more

STUDIES > Macro

Deutsche Bank Research
The energy shock of 2022 posed an existential challenge to Germany's export-based and manufacturing-led growth model. Pessimists worried that without cheap energy, Germany would see a structural decline in both its industrial base and its trade surpluses. Optimists argued that the model would adapt to higher energy prices. So where do we stand? >more

We welcomed our 2.500th member! (June 2024) >more

STUDIES > Macro

KfW Research
Start-up activity in Germany increased slightly in 2023, as the KfW Start-up Monitor shows. The number of start-ups rose to 568,000 (+3%). However, the number of full-time start-ups fell to 205,000 (-8%), while the number of sideline start-ups rose again to 363,000 (+11%). Overall, start-up activity in 2023 lacked the overall economic impetus. Forecasts for the economy and labor market suggest similarly weak momentum in the current year 2024. >more

STUDIES > Macro

KfW Research
The current gloomy mood among German companies is due to a confusing mix of cyclical factors and structural challenges. A systematic analysis of the relevant business location factors reveals a mixed picture of pronounced strengths and clear weaknesses. Innovative power, an internationally competitive logistics infrastructure and a well-trained labour force continue to be among the strengths. However, demographic change and the clearly negative trend in basic school qualifications threaten to turn this current strength into a weakness. Other weaknesses include relatively low public investment and a high tax burden on companies. In terms of energy supply, Germany is also at a competitive disadvantage due to high costs, particularly in relation to the USA and Canada. Overall, there is an urgent need for action to build on strengths and tackle weaknesses in order to ensure that Germany remains competitive in the future. >more

FINEXPERT REPORT > German Takeover

finexpert | ValueTrust
The 2024 issue of the German Takeover Report Vol.10 May 2024 covers all takeover offers and delisting tender offers of the year 2023 according to the German takeover code WpÜG and provides extensive information on relevant variables like bid types, premia offered, market reaction of target’s and (if available) on bidder’s stock prices. 2023 has seen a modest recovery in German public M&A activity from the low values in 2022. While the number of offers is again close to pre-Covid19 levels, deal volume is still far from the corresponding pre-crisis figures.>more

Content
4 Market Overview
13 Capital Market Reaction
17 Statements & Fairness Opinions
25 Success Rates
30 Takeover Case Study: va-Q-tec AG
31 Endgame Analysis
36 Transaction Details 2023

STUDIES > Performance

Bain & Company
The analysis of the most important economic value levers reveals the strengths and weaknesses of the Bundesliga soccer clubs. The more effective the use of their economic resources, the greater their chances of keeping up with international competition in the long term. Bayern Munich also performed particularly well in the 2022/2023 season, followed by Union Berlin and Eintracht Frankfurt. Union Berlin and Freiburg excel in squad value management, Leverkusen sets standards in merchandising and Stuttgart is number one in social media. >more

REPORTS > DACH Capital Market Data

ValueTrust
ValueTrust, finexpert and the Institute of Management Accounting and Auditing at WU Vienna publish the 14th edition of the DACH Capital Market Study, which is published semi-annually. In our study, we highlight capital market developments in the second half of 2023 and analyze the cost of capital of twelve sectors for the DACH region using various methods. >more

STUDIES > Macro

Fraunhofer ISI
The future-proof positioning of Germany's supply of mineral raw materials is central to securing the country as a business location. Security of supply of these raw materials is particularly relevant for future technologies and to limit potential supply risks that could have a negative impact on dependent sectors of the economy. This involves the entire value chain from production to recovery. Raw materials are also imported already processed into goods and play a role here. A study commissioned by KfW Research and carried out by IW Consult and Fraunhofer ISI analyzes the raw material-related value creation and supply risks along the production and supply chains for the raw materials copper, lithium and the group of rare earths. >more

RESEARCH PAPERS > Corporate Valuation

Aswath Damodaran
2024
The equity risk premium is the price of risk in equity markets, and it is not just a key input in estimating costs of equity and capital in both corporate finance and valuation, but it is also a key metric in assessing the overall market. Given its importance, it is surprising how haphazard the estimation of equity risk premiums remains in practice. We begin this paper by looking at the economic determinants of equity risk premiums, including investor risk aversion, information uncertainty and perceptions of macroeconomic risk. In the standard approach to estimating the equity risk premium, historical returns are used, with the difference in annual returns on stocks versus bonds, over a long period, comprising the expected risk premium. We note the limitations of this approach, even in markets with an abundance of data, like the United States, and its complete failure in emerging markets, where the historical data tends to be limited and volatile. We look at two other approaches to estimating equity risk premiums – the survey approach, where investors and managers are asked to assess the risk premium and the implied premium approach, where a forward-looking estimate of the premium is estimated using either current equity prices or risk premiums in other markets. In the next section, we look at the relationship between the equity risk premium and risk premiums in the bond market (default spreads) and in real estate (cap rates) and how that relationship can be mined to generate expected equity risk premiums. We close the paper by examining why different approaches yield different values for the equity risk premium, and how to choose the “right” number to use in analysis. >more

STUDIES > Performance

AFME | zeb
The Association for Financial Markets in Europe (AFME) has published a new study on the role of capital markets in Germany. The study, which was published in collaboration with zeb, highlights the potential of a stronger role for capital markets in the German financial system. The German financial system continues to be characterized by the importance of banks; the significance of the capital markets in Germany therefore lags behind other countries - both for companies and private households. >more

STUDIES > Alternative Investments

FTI Andersch | Center for Corporate Transactions and Private Equity (CCTPE) at HHL Leipzig Graduate School of Management
Only just under one in four private equity funds surveyed in Germany (23%) reported rising earnings (EBITDA) from their portfolio companies in the last twelve months. A large proportion had expected a different economic development: almost 40 percent of the funds stated that the EBITDA of their portfolio companies was below their own expectations. For almost half of the funds surveyed, the liquidity of the portfolio companies also developed worse than expected. This is the result of a recent study by management consultancy FTI-Andersch and the Center for Corporate Transactions and Private Equity (CCTPE) at HHL Leipzig Graduate School of Management. >more

RESEARCH PAPERS > Corporate Finance

Benjamin Hammer, Nikolaus Marcotty-Dehm, and Jens Martin
2024
This paper provides the first empirical investigation of the disclosure of use of proceeds in private equity (PE)-backed initial public offerings (IPOs). We find that PE-backed issuers primarily use the IPO as a means of repaying claimholders. The subset of PE-backed issuers that disclose “repay debt” as the use of proceeds have high ex-ante debt-to-total assets ratios and use the IPO proceeds to reduce them by approximately 31 percentage points post IPO. Further results suggest that the need to repay claimholders in PE-backed IPOs conflicts with the implementation of other stated use-of-proceeds categories related to M&A and R&D. Finally, we provide evidence that PE backing reduces the adverse impact of an uninformative use-of-proceeds disclosure on underpricing. >more

STUDIES > Corporate Finance

KfW Research
The financial system plays an important role in the transformation of the economy towards climate neutrality. This is because the transition to a sustainable economy requires a corresponding mobilization of capital. Sustainability information will therefore also become increasingly important in lending. So far, this process has mainly involved credit institutions and their larger corporate customers, while requests for sustainability information are still relatively rare for SMEs in general. The results of a special survey for the KfW SME Panel in fall 2023 show that last year, only around one in six SMEs (16%) addressed the topic of sustainability in loan negotiations. This particularly affected larger SMEs, where the proportion was 45%. However, the need for information on the topic of sustainability is likely to increase further in the future and also include small and medium-sized enterprises. >more

STUDIES > Performance

Oliver Wyman
The interest of private households in securities remains high: between the end of 2020 and July 2023, more than 5 million securities accounts were added, a growth of more than 20%. The industry now generates annual income of almost EUR 2 billion, with almost 7 million self-directed investors in Germany. Neobrokers and (ETF) savings plans in particular play a significant role in this. At the same time, the market is facing profound change. Although the market continues to grow, inflation and rising interest rates have weakened this growth. In 2023, neobrokers accounted for 40% of transactions, with savings plans accounting for a third of transactions. >more

STUDIES > Performance

KfW Research
Data protection, tax and employment law as well as lengthy administrative procedures are the most frequently cited obstacles to innovation with regard to bureaucracy. However, it is almost impossible to quantify the concrete braking effect. In order to avoid a disproportionate burden on innovation activities due to bureaucracy, it is necessary to examine bureaucratic regulations to determine whether the intended protective effects are in reasonable proportion to the innovation-inhibiting effect. Reducing bureaucracy is therefore a small-scale process that requires expert knowledge and patience. One way of preventing the emergence of new bureaucratic burdens is to implement a consistent innovation review of new legal regulations. The digitalization of administrative processes and the interface with companies is another way to reduce the burden of bureaucracy on companies. >more

STUDIES > Performance

PwC
CEOs worldwide are more optimistic than in the previous year: 38% of business leaders expect global economic growth to increase. Just one year ago, the figure was only 18%. However, the mood remains gloomy: 45% of CEOs believe that global economic growth will decline this year (previous year: 73%). 16% stated "unchanged". >more

STUDIES > Macro

FTSE Russell
Our third annual Net Zero Atlas provides an updated analysis of G20 countries’ climate targets, mitigation strategies, and physical risk exposures. The report outlines a refreshed evaluation of the ‘temperature alignment’ of national climate commitments and actions for G20 countries. Critically it includes expanded analysis that considers the latest physical impacts of climate change on G20 countries and systematically assesses their approaches to adaptation planning.  >more

STUDIES > Performance

Thinking Ahead Institute
The Asset Owner 100 is a Thinking Ahead Institute study which gathers data on the total assets of the top 100 asset owners around the world. Though not included in the ranking, the study also presents the total assets for the top 10 insurers and the top 10 foundations and endowments. The study reveals the world’s 100 largest asset owners are now responsible for US$ 23.4 trillion as of the end of 2022; experiencing a decline of nearly 9% compared to the previous year when this stood at US$25.7 trillion for the largest 100 asset owners at the time. Pension funds only just retain the majority share of AUM among the largest 100, with the combined assets of pension funds making up 52.8%. By contrast, sovereign wealth funds have seen their share rise and now make up 38.9% of total assets among the world’s largest 100 asset owners.  >more

STUDIES > Alternative Investments

Arthur D Little | Invest Europe
Arthur D. Little (ADL) and Invest Europe’s European PE survey, combined with Invest Europe’s first half activity data, takes a clear look at the evolution of fundraising, investment, and divestment in the first six months of the year and gathers fund manager and investor views on the short- and medium-term outlook for activity. The survey also investigates the challenges and opportunities that have the potential to shape Europe’s PE and VC industry further into the future. >more

STUDIES > Macro

International Monetary Fund
The baseline forecast is for global growth to slow from 3.5 percent in 2022 to 3.0 percent in 2023 and 2.9 percent in 2024, well below the historical (2000–19) average of 3.8 percent. Advanced economies are expected to slow from 2.6 percent in 2022 to 1.5 percent in 2023 and 1.4 percent in 2024 as policy tightening starts to bite. Emerging market and developing economies are projected to have a modest decline in growth from 4.1 percent in 2022 to 4.0 percent in both 2023 and 2024. Global inflation is forecast to decline steadily, from 8.7 percent in 2022 to 6.9 percent in 2023 and 5.8 percent in 2024, due to tighter monetary policy aided by lower international commodity prices. Core inflation is generally projected to decline more gradually, and inflation is not expected to return to target until 2025 in most cases. >more

REPORTS > Capital Market Data DACH

ValueTrust, finexpert and the Institute of Management Accounting and Auditing at WU Vienna publish the 13th edition of the DACH Capital Market Study, which is published semi-annually. In our study, we highlight capital market developments in the first half of 2023 and analyze the cost of capital of twelve sectors for the DACH region using various methods. >more

RESEARCH PAPERS > Alternative Investments

Benjamin Hammer, Robert Loos, Lukas Andreas Oswald, and Bernhard Schwetzler
2023
We investigate the impact of industry specialization of private equity firms on financial distress risk of portfolio companies using Altman’s Z-Score for a sample of 21045 firm-year observations. Difference-in-differences estimates suggest an increase in distress risk through private equity backing. The effect is stronger for specialist-backed firms than for generalist-backed firms relative to a carefully matched control group. However, specialist-backed firms can afford the increase in distress risk because they are less risky than generalist-backed firms before the buyout. Overall, our findings are consistent with the idea that greater idiosyncratic risk in specialized PE portfolios induces more risk-averse target selection. >more

STUDIES > M&A

I-Advise
The ninth edition of the study on corporate valuation situations in Germany shows the development of valuation practice in squeeze-outs, domination and profit and loss transfer agreements, mergers and changes of legal form in the years 2010 to 2022 and now comprises 244 valuation cases examined. >more

STUDIES > Corporate Finance

KfW Research
Start-up activity in Germany fell to 550,000 start-ups in 2022. Of these, 222,000 were full-time startups (40 %) and 328,000 were sideline startups. However, in one in five sideline startups, the intention is to expand self-employment to fulltime employment. The sustained positive development of the labor market has contributed significantly to this decline. The shortage of skilled workers will remain a major challenge for startup activity in the future. Overall, the number of female founders in particular has fallen, while the number of male founders has hardly changed. >more

STUDIES > Alternative Investments

KfW Research
Climate-tech investments are on the rise in the VC market. This is the conclusion of a new study by KfW Research, which analyzes developments, potentials and challenges of climate tech on the German VC market. Climate tech plays an important role for the German VC market. In 2022, more than EUR 1.5 billion was invested in 118 financing rounds in Germany. The significant growth in climate-tech investments in the German VC market, was greater than investments in the rest of the market. However, due to the size of the VC market in the U.S., there is significantly more funding available per startup. A survey of German VC investors makes it clear that high growth opportunities arise primarily due to the expected increase in demand from market players. On the other hand, a high technological risk and the high financing requirements pose a particular challenge for investors in the climate tech sector. >more

We welcomed our 2.400th member! (May 2023) >more

RESEARCH PAPERS > Corporate Valuation

Aswath Damodaran
2023
The equity risk premium is the price of risk in equity markets, and it is not just a key input in estimating costs of equity and capital in both corporate finance and valuation, but it is also a key metric in assessing the overall market. Given its importance, it is surprising how haphazard the estimation of equity risk premiums remains in practice. We begin this paper by looking at the economic determinants of equity risk premiums, including investor risk aversion, information uncertainty and perceptions of macroeconomic risk. In the standard approach to estimating the equity risk premium, historical returns are used, with the difference in annual returns on stocks versus bonds, over a long period, comprising the expected risk premium. We note the limitations of this approach, even in markets with an abundance of data, like the United States, and its complete failure in emerging markets, where the historical data tends to be limited and volatile. We look at two other approaches to estimating equity risk premiums – the survey approach, where investors and managers are asked to assess the risk premium and the implied premium approach, where a forward-looking estimate of the premium is estimated using either current equity prices or risk premiums in other markets. In the next section, we look at the relationship between the equity risk premium and risk premiums in the bond market (default spreads) and in real estate (cap rates) and how that relationship can be mined to generate expected equity risk premiums. We close the paper by examining why different approaches yield different values for the equity risk premium, and how to choose the “right” number to use in analysis. >more

FINEXPERT REPORT > Takeover

finexpert | ValueTrust Vol.9 March 2023
The 2023 issue of the German takeover report covers all takeover offers and delisting tender offers of the year 2022 according to the German takeover code WpÜG and provides extensive information on relevant variables like bid types, premia offered, market reaction of target’s and (if available) on bidder’s stock prices.>more
Content
3 Market Overview
12 Capital Market Reaction
16 Statements & Fairness Opinions
24 Success Rates
29 Takeover Case Study: ADVA Optical Networking SE
31 Endgame Analysis
36 Transaction Details 2022

STUDIES > M & A

Bain & Company
Last year was a challenging one for all dealmakers as inflation, interest rates, geopolitical tensions, and increased regulatory oversight placed unprecedented demand on the skills of deal executives. Throughout it all, though, M&A persevered—not always in the same numbers or with the same processes as in the past, but deals got done. Overall deal value fell during the year, with multiples dropping from record highs in 2021 and fewer large deals. But the pace of small deals was surprisingly resilient. And dealmaker sentiment as we enter 2023 is optimistic.  History tells us that companies making bold moves during times of turbulence tend to win over the long term. The mission of this, our fifth annual report: Improve M&A by sharing the insights of the world's best dealmakers. >more

STUDIES > Accounting

EY
The threat of recession, rising energy prices and a decline in purchasing power among the population are causing more and more companies to take a more cautious view of the future: The number of profit or sales warnings issued by companies listed on the DAX, MDAX and SDAX rose to 70 last year, up 35 on the previous year. The sharpest increase in warnings was recorded in the DAX: After seven negative forecast corrections in the previous year, a total of 18 such warnings were counted in 2022. In the MDAX, the number rose from eight to 15, and in the SDAX from 20 to 37. Despite the significant increase in 2022, however, the number of warnings is still well below the previous record of 108, which was reached in 2020 when the outbreak of the Corona pandemic led to companies having to concede their forecasts in rows. >more

STUDIES > Macro

KfW Research
According to the new KfW-ifo Skilled Workers Barometer, a shortage of skilled workers hampered the business activities of 46% of companies at the beginning of the 4th quarter. The shortage of skilled workers has worsened compared with the previous year despite the Ukraine crisis. Skilled workers are lacking in all sectors of the economy, most frequently in the service sector, where almost half of companies are hampered by a lack of skilled workers. Open positions are now vacant for an average of 5 months. The time taken to fill vacancies is rising steeply. One reason for this is the weak growth in labor productivity. Labor productivity per employee has almost stagnated in the last 5 years. >more

STUDIES > Performance

PwC
In "Issuance Market Germany," PwC analyzes all new share issues and capital increases on the Frankfurt Stock Exchange on a quarterly basis. In addition, new issues of corporate bonds by German issuers are recorded. The data on capital increases are based on information from Thomson Reuters and include transactions up to and including December 02, 2022. >more

STUDIES > Performance

Alix Partners
For several years, we have been using the AlixPartners Supervisory Board Radar together with supervisory boards to investigate the question of how boards of directors and managing directors should work together with their boards. The AlixPartners Supervisory Board Radar 2022 now looks at the topic from the other side: We surveyed 100 board members and mirrored the results with supervisory boards. The survey shows: In the disruptive market environment, a broader role for the supervisory board as a sparring partner is essential. Previously established processes and supervisory board work developed from the original control function are not sufficient to fully exploit the potential of effective supervisory board work. >more

STUDIES > Macro

Roland Berger
A menace is haunting Europe - the menace of recession in Europe. If we take the mere technical definition of a recession as a basis – two consecutive quarters of falling GDP – then, by the end of the year, we may be faced with this prospect: the European economy is in recession. >more

STUDIES > Macro

KfW Research
The record inflation figures of recent months have put the European Central Bank (ECB) and the U.S. Federal Reserve (Fed) under pressure to counter the high price increases with a more restrictive monetary policy. While the Fed started its monetary policy turnaround as early as March, the ECB did not complete its policy reversal until the July 2022 Council meeting. This Focus justifies this difference in the pace of monetary policy action taken so far by the two central banks with the different developments in the economy and the labor market after the pandemic. Since the ECB initiated its turnaround later, the window of opportunity for significant interest rate steps to fight inflation seems much smaller due to the emerging economic slowdown in the eurozone. The ECB is in a difficult position, and whether it can consistently follow through with its further course seems less clear. >more

STUDIES > Corporate Finance

Creditreform
German SMEs are facing a tough winter. The energy crisis, war and inflation are having a significant impact on business sentiment. The latest analysis shows a sharp drop in the business climate index from plus 25.2 points last year to plus 3.1 points at present. >more

STUDIES > Performance

PwC
Inflation in Germany is at its highest level in 50 years. The price increases are also clearly felt in the construction and real estate sector: For two years now, prices for construction products and services have been pointing steeply upwards as a result of the Corona pandemic and the resulting stuttering supply chains. The Ukraine war will cause this price spiral to turn even faster. >more

STUDIES > M & A

BCG
The technology sector is entering a downturn, but BCG research and experience has found that these periods are an excellent opportunity for dealmaking — provided that companies can execute their mergers and acquisitions (M&A) strategy and achieve their value-creation objectives. That’s a big challenge, as more than half of all deals across all sectors fail to meet those objectives. Tech companies in particular often confront a common challenge: they primarily buy businesses to fuel growth, but they don’t align planning measures and resources toward that goal until after the deal closes. Even then, the measures aimed at capturing growth are far less rigorous than the approaches companies use to reduce costs. As a result, value creation is delayed by 12 to 24 months—if it comes at all. >more

STUDIES > Alternative Investments

Level 20
This report provides the first comprehensive data set on the representation of female investment professionals in Europe. The data spans the 13 European countries in which Level 20 has active chapters and supplements a UK analysis published in partnership with the BVCA, in March 2021. This data collection exercise marks the first step in establishing an authoritative analysis of gender diversity within the European PE and VC sector and includes data from over 1,000 PE and VC firms employing more than 9,000 investment professionals in 2022 – 14,000 when combined with UK data collected in 2021. >more

RESEARCH PAPERS > Alternative Investments

Yilmaz Bekyol, and Bernhard Schwetzler
2022
This study considers the trade-off between better top management team (TMT) decision-making involving complementary perspectives and inefficiencies due to conflicts between individuals. In analyzing characteristics of 1,071 fund partners involved in 1,295 buyout deals by 117 funds, we find that TMTs with greater variety in socio-demographic aspects achieve higher money multiples or IRR. In contrast, greater occupational diversity is associated with a negative net effect on performance. This suggests that the endowment of diversity rooted in demographic characteristics is generally beneficial, while voluntarily acquired attributes are associated with higher coordination efforts. Additionally, we find the allocation of team members and the associated diversity levels on individual deals of a fund affect fund performance. Generally, an even allocation is positively (negatively) related to fund performance for occupational (socio-demographic) diversity. However, for funds with a high enough endowment of diversity, even distribution across deals is also positively associated with fund performance for socio-demographic diversity. Finally, we find a positive moderating impact of CEO involvement and a negative moderating impact of industry specialization. Overall, the results of this study could guide LPs and fund-of-funds in investment processes and support GPs with staffing decisions. >more

RESEARCH PAPERS > Alternative Investments

Benjamin Hammer, Sven Mettner, Denis Schweizer, and Timothy E. Trombley
2022
Using a hand-collected sample of global office locations of private equity (PE) firms, we show that portfolio companies backed by local offices outperform cross-border buyouts in terms of operational improvements. The effect strengthens with higher cross-country cultural distance or information frictions, and with the host country’s economic policy uncertainty. Experiential learning helps cross-border buyouts catch up in the long run, whereas hiring a local professional does not serve to close the performance gap with local offices. Furthermore, local offices can even provide a competitive edge over domestic peers. However, the extent to which this is true depends on society’s level of distrust in foreigners. Our main conclusions hold for measures of buyout pricing and deal returns and are robust to several endogeneity checks. Semi-structured interviews with PE professionals support our findings and shed light on antecedents of office openings and channels for portfolio companies’ outperformance. >more

STUDIES > Performance

KfW Research
The generational change in SMEs is progressing. By the end of 2025, 16 % of small and medium-sized enterprises (SMEs) are aiming for a succession solution. But the hurdles are high, as a special analysis of the KfW SME Panel shows: Three quarters of all SMEs consider it a problem to find a suitable successor. Just under 40 % of SMEs see agreeing on a purchase price as a major hurdle. Among the approximately 600,000 SMEs aiming for succession by the end of 2025, around 165,000 face involuntary closure or at least a significant delay. The activation and support of potential takeover founders is crucial to the success of business succession in SMEs. >more

STUDIES > Performance

KfW Research
After the corona bump in 2020, start-up activity in Germany in 2021 has risen pre-crisis level. With 607,000 start-ups 70,000 or 13 % more people started their own business than in 2020. After three years of hardly any change in the number of female entrepreneurs, in 2021 there was an above-average increase.  The Corona pandemic has ruthlessly exposed the weaknesses of traditional business models. Female and male founders have obviously reacted to this: Significantly more start-ups are digital and internet-based, with shares of 31 % (digital) and 41 % (internet-based). >more

RESEARCH PAPERS > Corporate Valuation

Aswath Damodaran
2022
The equity risk premium is the price of risk in equity markets, and it is not just a key input in estimating costs of equity and capital in both corporate finance and valuation, but it is also a key metric in assessing the overall market. Given its importance, it is surprising how haphazard the estimation of equity risk premiums remains in practice. We begin this paper by looking at the economic determinants of equity risk premiums, including investor risk aversion, information uncertainty and perceptions of macroeconomic risk. In the standard approach to estimating the equity risk premium, historical returns are used, with the difference in annual returns on stocks versus bonds, over a long period, comprising the expected risk premium...  >more

We welcomed our 2.300th member! (May 2022) >more

FINEXPERT REPORT > Takeover

finexpert | ValueTrust
The 2022 issue of the finexpert German takeover report covers all takeover offers and delisting tender offers of the year 2021 according to the German takeover code WpÜG and provides extensive information on relevant variables like bid types, premia offered, market reaction of target’s and (if available) on bidder’s stock prices.>more
Content
3 Market Overview
12 Capital Market Reaction
16 Statements & Fairness Opinions
22 Success Rates
27 Takeover Case Study: Deutsche Wohnen SE
30 Endgame Analysis
35 Transaction Details 2021

STUDIES > Corporate Finance

Moody's
Russia’s military invasion of Ukraine has led to turmoil in the global financial markets, causing rippling effects for credit risk across countries and sectors. This article assesses some of the repercussions on corporate credit risk in the immediate aftermath of the geopolitical crisis. We highlight country- and industry-level risk dimensions of the Russia-Ukraine military conflict, covering four primary areas: mass emigration, surging energy prices, supply chain risks, and rising inflationary pressure. >more

STUDIES > Performance

PwC
This evolving landscape has changed the course of the global political agenda, with significant knock-on effects on global financial markets. In this new backdrop, ESG and sustainable finance will become a matter of survival to meet the needs of sustainability-conscious investors, increased regulatory requirements and societal expectations. In this context, ESG investing is evolving into a veritable paradigm shift – particularly within the EU. >more

TUTORIALS > Valuation Video

Bernhard Schwetzler
This video is discussing some common errors when introducing inflation into corporate valuation models by a simple example. (February 11, 2022).  >more (videoarchiv QoD#1-25) 

REPORTS > Capital Market Data DACH

ValueTrust, finexpert and WU Vienna analyze the relevant parameters to calculate the costs of capital based on the Capital Asset Pricing Model (risk-free rate, market risk premium and beta). Additionally, they determine implied as well as historical market and sector returns. Moreover, this study includes capital structure-adjusted implied sector returns, which serve as an indicator for theunlevered cost of equity. The relevered cost of equity can be calculated by adapting the company specific debt situation to the unlevered cost of equity. This procedure serves as an alternative to the CAPM. >more

STUDIES > M & A

PwC
The report "Destination Germany. M&A Activities of Foreign Investors 2021" by the auditing and consulting firm PwC Germany analyzes all mergers, company acquisitions and sales, leveraged buyouts, spin-offs, privatisations and acquisitions of minority stakes in German companies by foreign investors announced between January 1, 2017 and November 15, 2021. >more

STUDIES > Macro

KfW Research
China's two longer-term development goals are to achieve high-income country status by 2025 and to double economic output by 2035. Achieving the first goal requires only a growth rate in nominal gross national income per capita of 4% per year on average. The second target, on the other hand, is more ambitious. This is because the contribution of capital to growth will continue to decline, partly because the ongoing restructuring of the growth model implies that investment will lose importance in favor of consumption. This development must be offset by general productivity gains and human capital formation. >more

STUDIES > Corporate Finance

PwC
In this report PwC analyzes all new share issues and capital increases on the Frankfurt Stock Exchange on a quarterly basis. In addition, new issues of corporate bonds by German issuers are recorded. The data on capital increases is based on information from Thomson Reuters and includes transactions up to and including December 10, 2021. >more

STUDIES > Performance

Deloitte
The year 2020 was marked by the COVID 19 pandemic, and the pandemic will continue to be present in the first three quarters of 2021. In this year's Restructuring Report, Deloitte has taken a detailed look at the future economic developments of individual industries. We are particularly interested in the question of how these industries will continue to develop against the backdrop of an impending wave of restructuring. According to the experts surveyed, the automotive, tourism and stationary retail sectors will come to the fore in the short to medium term. Megatrends such as digitization, climate change and demographic change will also play a key role in changing the restructuring environment. >more

STUDIES > Performance

Deloitte
The unprecedented situation since the COVID-19 pandemic hit Europe has once again highlighted change dynamics, with banks needing to adapt rapidly to new trends and drivers in the market. This has inspired us to set up a systematic process for trend monitoring and evaluation in banking to help market participants navigate uncertainty. In our new series of articles, we will shed light on the key trends and drivers in the European banking market. >more

STUDIES > Performance

EY
After two years of decline, the salaries of board members of German listed companies rose again for the first time in 2020 - by 2.6 percent for board members and by as much as 7.1 percent for CEOs. On average across all Prime Standard indices, a board member earned 2.05 million euros. For CEOs, the average of total annual direct compensation was 2.86 million euros. In 2019, the compensation of all members of the Executive Board had still decreased by 4.6 percent year-on-year to 1.95 million euros. This is shown by the Mixed Compensation Barometer of the audit and consulting firm EY. Only board members who served on the board for the entire fiscal year were taken into account. The decisive factor was the composition of the indices valid at the end of the financial year. >more

STUDIES > Macro

KfW Research
In order to become climate-neutral by the middle of the century, Germany will have to invest around EUR 5 trillion. EUR must be invested in Germany to become climate-neutral by the middle of the century. This is the conclusion of a study commissioned by KfW Research. This is an ambitious figure, but it is put into perspective when one considers that many of these investments are already pending and must now be put to sustainable use. For this challenge to succeed, public investment funds must be used in a targeted manner and complementary private investments must be mobilized. If this succeeds, Germany will have the opportunity to improve its competitiveness and prosperity and to emerge stronger from the transformation to climate neutrality. >more

STUDIES > Macro

BCG
As of today, 191 countries have ratified the Paris Climate Agreement, and more than 50% of world GDP is generated by countries that have made net-zero pledges. President Biden has announced that the US will target reducing emissions by 50% or more by 2030 (compared with 2005 levels) on the way to net zero emissions by 2050. The EU plans to be carbon neutral by 2050. China’s president has committed his country to achieving carbon neutrality by 2060. But getting there will take a lot of work. Annual global emissions of carbon dioxide equivalents amount to about 51 gigatons. We estimate that existing technologies can eliminate about 25% of current emissions, and technologies in early adoption can address another 40%. This leaves approximately 35% of current annual emissions, for which we need new technologies if we are to achieve net zero. >more

STUDIES > Corporate Finance

PwC
Supply chain disruptions, fluctuations in demand and the shutdown of production during the first lockdown in spring 2020 put the automotive industry to the test last year. As a result, passenger car production declined 16 percent between 2019 and 2020. However, the pandemic also had an impact on the working capital management (WCM) of OEMs and suppliers: for example, the capital lockup period temporarily rose to 60 days in the second quarter of 2020, but leveled off again at 33 days by the end of the year - four days higher than in 2016. In this context, the working capital performance of manufacturers in particular deteriorated, while suppliers were able to improve their WCM. These are the findings of a PwC analysis of more than 800 companies in the automotive industry. >more

STUDIES > Macro

Roland Berger | Bundesverband Deutsche Startups
Startups and scaleups are valued above all for their innovative strength - be it because they make payment easier with payment apps, or because they develop novel vaccines or revolutionize business processes with new software. Relatively little is known, however, about their employment effect, i.e., their role in creating and securing new jobs. In a recent study, Roland Berger, the Internet Economy Foundation, the German Startups Association and Deutsche Börse examined the topic in greater detail. >more

STUDIES > M&A

ValueTrust
ValueTrust has published the eighth edition of the ValueTrust European Capital Market Study (as of June 30, 2021). With this study, ValueTrust provides a data compilation of capital market parameters that enables an enterprise valuation in Europe. The purpose of the study is to serve as a tool and data source as well as to show trends in the parameters analysed.>more

STUDIES > M & A

Baker Tilly
Dealmakers are more focused on ESG than ever before. In large numbers, many confirm that ESG issues are critical both to their own organizations and also to the way they approach potential transactions. Most say they have even walked away from at least one deal on ESG grounds; many say their view on valuation has been materially affected by ESG considerations that have emerged during due diligence. >more

FINEXPERT SEMINARS > Webinar
3x3 hours 22 to 24 November 2021

Bernhard Schwetzler

• Growth in Terminal Value
• Insolvency, insolvency costs and corporate valuation
• Other possible controversial issues in corporate valuation >more 

STUDIES > Macro

EY
Foreign investors largely remained loyal to Germany as an investment location last year despite the Corona crisis and lockdowns: The number of investment projects announced by foreign companies in Germany fell by only four percent year-on-year to 930. The UK and France recorded much sharper declines: In France, the number of foreign investments fell by 18 percent to 985, and in the UK by 12 percent to 975. Nevertheless, the UK and France occupied the top two places in the European location rankings ahead of Germany. Across Europe, a total of 5,578 investment projects by foreign investors were announced, 13 percent fewer than in the previous year - there was no such slump even in 2009. >more

STUDIES > Corporate Finance

Horvath & Partners / FINANCE
For the FINANCE CFO Panel, the FINANCE editorial team surveys more than 150 CFOs of leading German companies every six months. We want to find out what moves CFOs, what trends in financing and corporate strategy they expect, and what drives them personally. The panel shows assessments of current topics relating to modern financial management - exclusively from the CFOs' point of view. >more

We welcomed our 2.200th member! (May 2021) >more

STUDIES > Performance

PwC
The market capitalization of the world's 100 most valuable public companies (PLCs) has increased by $10.3 trillion (48 percent) in just one year. At the end of March 2021, it stood at $31.7 trillion - a new record. This is one of the core findings of the latest "Global Top 100" ranking published annually by the accounting and consulting firm PricewaterhouseCoopers (PwC). The analysis compares the total value of the world's 100 most valuable companies on March 31, 2021, with the value on March 31, 2020, and also presents the changes by industry and region. >more

STUDIES > Alternative Investments

Invest Europe
The most comprehensive analysis of fundraising, investment and divestment trends with data on more than 1,600 European private equity and venture capital firms, the 2020 statistics cover 89% of the €708bn in capital under management in Europe. >more

CAPITAL MARKET DATA > Betas, Multiples, Returns

finexpert updated the capital market data (Betas, Multiples, Returns) as to April 15, 2021. For data access, you must be a basic finexpert member. In addition, premium members have access to the archive for our capital market data from 2007 onwards. >more

STUDIES > M & A

Bain & Company
The volume of strategic M&A deals in the automotive industry has more than doubled within five years as the profound change in the industry requires new strategic approaches. With M&A transactions and partnerships, suppliers can secure a leading position in a market in which high-tech and software are playing an increasingly important role. >more

STUDIES > Corporate Finance

KfW Research
New lending business of banks and savings banks with domestic companies and self-employed persons, as calculated by KfW Research, slipped significantly into negative territory in the final quarter of 2020. Compared with the previous year, it fell by -4.3%, as the current KfW Credit Market Outlook shows. For the first half of the year, KfW Research forecasts a continuation of the downward trend: In the first quarter, new lending business is likely to be -8% below the previous year, and -10% in the second. >more

STUDIES > Alternative Investments

BVK
2020 was no ordinary year and also posed numerous challenges for the German private equity market. Despite this, private equity companies in Germany invested a total of €12.6 billion. This not only underlined the strength of the German private equity market, but also helped many companies through the pandemic and is now supporting them in overcoming the further consequences of the pandemic. >more

STUDIES > Alternative Investments

Ernst & Young
The funding of the current top 100 German tech startups has further improved in 2020 compared to previous years: They have been able to raise 13.7 billion US dollars from investors since their founding. Compared to the top 100 startups in 2019, this represents an increase of USD 3.7 billion or 37 percent. The ten best-funded technology startups in 2020 received a combined total of 1.3 billion U.S. dollars less than the top ten of the previous year, bringing their venture capital total to 1.8 billion U.S. dollars. On the other hand, the investments were distributed among more startups: The number of deals in the technology segment rose from 791 in 2019 to 820 last year. >more

STUDIES > Corporate Finance

Skadden
Special purpose acquisition companies (SPACs), also referred to as “blank check” companies, have reached record numbers in the United States, with 242 SPACs conducting an initial public offering (IPO) on either NYSE or Nasdaq Stock Market and 52 announcing an initial business combination or “de-SPAC” in 2020, up 320% and 156% respectively over 2019, according to the research firm Deal Point Data. Although listings of SPAC entities on European exchanges have been much less common, the number of European companies choosing to go public in the U.S. by way of a de-SPAC transaction is on the rise. >more

FINEXPERT REPORT > Takeover

finexpert | ValueTrust
The 2021 issue of the finexpert-ValueTrust German takeover report covers all takeover offers and delisting tender offers of the year 2020 according to the German takeover code WpÜG and provides extensive information on relevant variables like bid types, premia offered, market reaction of target’s and (if available) on bidder’s stock prices. >more
3 Market Overview
12 Capital Market Reaction
16 Statements & Fairness Opinions
22 Success Rates
29 Takeover Case Study: ISRA Vision AG
31 Transaction Details 2020

CAPITAL MARKET DATA > Betas, Multiples, Returns

finexpert updated the capital market data (Betas, Multiples, Returns) as to January 15, 2021. For data access, you must be a basic finexpert member. In addition, premium members have access to the archive for our capital market data from 2007 onwards. >more

TUTORIALS > Valuation Video

Bernhard Schwetzler
Applying industry betas requires some adjustments in case of differences between the leverage of the industry and the leverage of firm to be valued. This adjustment is called the De-/Relevering of the beta factors. There are two popular versions of the corresponding equations for this procedure. This video discusses the requirements for both equations necessary to produce reasonable results. It also makes a judgement on the realism and the consistency of these requirements. (February 5, 2021).  >more  (videoarchiv QoD#1-24) 

STUDIES > M&A

ValueTrust
ValueTrust has published the seventh edition of the European Capital Market Study (as of December 31, 2020), which is issued semi-annually. In our European Capital Market Study, we show the cost of equity for ten different sectors according to four different methods. >more

STUDIES > Alternative Investments

HHL | EY
According to a study by EY and the Center for Corporate Transactions & Private Equity (CCTPE) at HHL, diversity in terms of gender, nationality and age boosts buyout performance. While sociodemographic diversity in lead partner teams has a positive impact on performance, occupational diversity has a detrimental effect. For more complex buyout deals, different rules apply: Here, both diversity dimensions have a positive impact on value creation. >more

STUDIES > Alternative Investments

Andersch
A minus of 25 to 30% in textile retail - the Corona year 2020 threatens to become a disaster not only for the fashion industry, but also for the landlords of the business units. Even the top locations will not be spared from the expected increase in insolvencies. Suppliers must prepare for this now - and act. The industry update provides an up-to-date overview of the entire market situation of the real estate industry in and after the corona crisis. >more

STUDIES > Performance

Lazard
As 2020 nears an end, investors face a challenging combination of crosscurrents. On the positive side, the US election has passed with a market-friendly outcome and three COVID-19 vaccines appear to be within weeks of initial distribution, with more likely to follow. Typically, these events would be the all-clear signal investors need to shift out of defensive work-from-home beneficiaries into cyclical recovery plays. However, major developed countries across the Northern Hemisphere are facing new record levels of COVID-19 infections, spurring new economic lockdowns and increasing the risk that many companies, particularly small businesses, might not make it to the other side of this pandemic. Judging from our earlier pandemic experience, this scenario would signal exactly the opposite market reaction as that to the vaccines. Investors face a timing conundrum, indicating yet again that it is likely to be darkest before the dawn. >more

RESEARCH PAPERS > Alternative Investments

Benjamin Hammer, Silke Pettkus, Denis Schweizer, and Norbert Wuensche
2020
This paper explores how diversity among lead partner teams (LPTs) of private equity (PE) funds affects buyout performance. We argue that there is a trade-off between the “bright side” of diversity, i.e., improved decision-making due to a broader set of perspectives, and the “dark side”, i.e., deteriorated decision-making due to a potential for clashes and a lack of cooperation. Our theoretical framework suggests that the net effect on performance depends on whether LPTs are diverse in socio-demographic or occupational aspects. To test this hypothesis, we develop a comprehensive index that measures LPT diversity along six dimensions. Using a sample of 241 buyouts and 547 involved PE partners, we find that higher scores in the socio-demographic component (gender, age, nationality) are associated with higher deal returns and multiple expansion. The opposite is true for higher scores in the occupational component (professional experience, educational background, university affiliation). Further results suggest that the “bright side” of diversity gets relatively more important in case of complex buyouts and uncertain deal environments. >more

RESEARCH PAPERS > Corporate Governance

Ludwig Dobmeier, Renata Lavrova, and Bernhard Schwetzler
2020
Under German law the corporate endgame process of obtaining full control over a company offers multiple investment opportunities for investors with high investment flexibility, and is therefore particularly attractive to hedge funds. This paper investigates the determinants of hedge fund investment in corporate endgame processes based on a sample of 76 endgame situations of publicly listed German companies and investment data of 326 hedge funds. Examining characteristics of investment targets, we find that hedge funds invest in companies with a non-dominant majority owner and high stake of index funds as latter’s inability to react in change of control situations creates a supportive investment environment for hedge funds. Hedge funds are most likely to invest after takeover consummation and before announcement of a new endgame transaction. Investigating the determinants of ongoing engagement after initial investment, we find that the presence of other institutional investors, especially hedge funds positively affects engagement likelihood, serving as a validation of the own investment approach. Abnormal performance and trading liquidity of target stock also positively affect hedge funds’ engagement. The results indicate that the endgame process in Germany is an attractive investment opportunity for hedge funds, while hedge fund involvement also adds complexity to the corporate control process. >more

STUDIES > M&A

ZEW
The M&A report is jointly prepared by ZEW and Bureau van Dijk. Every six months, it provides information on current topics and developments in global mergers and acquisitions based on the Zephyr database. Zephyr provides daily updated detailed information on more than one million M&A, IPO and private equity transactions worldwide. >more

STUDIES > Performance

PwC
Significant decrease in the remuneration of executive board members in German Dax companies: In 2019, CEOs earned a median of 5.5 million euros - almost 14.6 percent less than in 2018 (6.4 million euros). The decline in the compensation paid to the Board of Management is mainly due to the gloomy global economy at the end of 2019. The main reasons for this were the trade conflict between the U.S. and China and the Brexit negotiations. >more

STUDIES > M&A

Andersch | HHL Leipzig Graduate School of Management
The study 'Impact of Covid-19 on PE portfolio companies' was developed in cooperation between the management consultancy Andersch FTI and the Center for Corporate Transactions and Private Equity (CCTPE) at HHL Leipzig Graduate School of Management. The responses of 32 PE funds located in the DACH region to their current situation in the Corona crisis were evaluated. The focus was on PE funds with active portfolios with up to ten companies (66 percent). 41 percent of the funds are in the small-cap segment, 59 percent in the mid-cap. The survey was anonymized and conducted with standardized questions according to academic standards over a period of 3.5 weeks in August 2020. >more

We welcomed our 2.100th member! (October 2020) >more

STUDIES > M&A

Hauck & Aufhäuser | HHL Leipzig Graduate School of Management
The Center for Corporate Transactions and Private Equity (CCTPE) at HHL Leipzig Graduate School of Management teamed up with Hauck & Aufhäuser to analyze how the addition of private market products such as private equity, infrastructure and real estate affects risk and return of "classic" portfolios, e.g., including bonds and equities. >more

STUDIES > M&A

ValueTrust, finexpert and JKU Linz
Valuation parameters and cost of equity are derived in a comprehensive manner to provide a sound basis for investment decisions, even more relevant than usual in the current volatile economic environment. Cost of equity are derived according to four different methodologies for twelve different sectors. >more

STUDIES > Alternative Investments

HHL | BVK | KfW
With this joint study, the Bundesverband Deutscher Kapitalbeteiligungsgesellschaften (BVK) and the Center for Corporate Transactions and Private Equity (CCTPE) of HHL Leipzig Graduate School of Management, supported by KfW Capital, provide an overview of the investment behavior and strategies of German investors in their private equity investments. >more

STUDIES > Performance

World Economic Forum
Emerging technologies such as AI, 5G, DLT, and quantum are increasingly being used by financial services firms and are forming clusters that are driving innovation throughout the sector. These advances can offer new services and savings to both customers and financial institutions. While financial executives largely recognize the promise of emerging technologies, many financial services firms are still struggling to develop comprehensive innovation strategies given the sheer number of technologies maturing in the industry. >more

Cooperation with HHL and Handelsblatt

finexpert enters into cooperation with HHL Leipzig Graduate School of Management and the Handelsblatt publishing group - certificate course "Financial Modelling, Valuation and M&A". Together with our new cooperation partners we offer the online certificate course "Financial Modelling, Valuation and M&A" starting in September. This course offers a well-founded examination of the various challenges in the context of a corporate transaction, from valuation/pricing to the accounting treatment and financing of the transaction to the structuring of the transaction. The appropriate modeling of the solutions in Excel is also part of the program. >more

We updated the capital market data (Betas, Multiples, Returns) as to July 15, 2020. For data access, you must be a basic finexpert member. In addition, premium members have access to the archive for our capital market data from 2007 onwards. >more

RESEARCH PAPERS > Alternative Investments

Benjamin Hammer, Nils Janssen, and Bernhard Schwetzler, 2020
Using a dataset of 1,149 global private equity transactions, we find that cross-border buyouts are associated with significantly higher valuation multiples than domestic ones. We attribute this finding to informational disadvantages of foreign acquirers. Consistent with this idea, we find that the spread in valuation multiples becomes smaller when the target operates in a country with high accounting standards, when it was publicly listed prior to the buyout, and when information production is facilitated due to large firm size. Further results suggest that local partnering in a syndicate serves as an effective remedy to avoid adverse pricing effects. The spread in valuation multiples is also less pronounced for large buyout funds, presumably because they draw on sufficient organizational resources to cope with cross-border-related transaction costs. >more

STUDIES > Macro

Goldman Sachs
Government deficits, debt issuance and debt levels are set to surge as countries race to ease the economic impact of the coronacrisis. This raises many questions: who will finance this debt, will it force a market repricing and/or an eventual growth or inflation problem, and would greater use of negative rates help avoid any of these risks? At the same time, whether corporate bankruptcies could derail the economic recovery is a key concern. In short, how disruptive the recent, dramatic shift in debt dynamics might be is Top of Mind. >more

STUDIES > Performance

IHS Markit | Deutscher Investor Relations Verband
DIRK - Deutscher Investor Relations Verband (German Investor Relations Association) and IHS Markit (formerly Ipreo), the leading global investor relations (IR) consulting and technology company, have analyzed the structural changes in the investor landscape of the DAX in the joint market study "Investoren der Deutschland AG 7.0" - "Who owns the German DAX? The main focus of the study was both the distribution and, in particular, the changes and cash flows of the institutional free float of DAX issuers in terms of geography, investment style and the most frequently used trading venues. Investments at investor group level, the importance of extra-financial criteria and investor voting behaviour were examined in detail. >more

STUDIES > Performance

UBS
In a world where yields are turning negative and bond markets are becoming more volatile, China's onshore fixed income markets are an attractive option for investors. Offering attractive yields, low correlation, safe haven properties and hedging costs so far in 2020, China bonds have a strong investment case. China bonds also offer strategic, long-term exposure to long-term megatrends in China such as the rise of the RMB as a reserve currency, the growth of China's pension industry, and China's rising status as one of the world's largest economies. >more

STUDIES > Macro
Deutsche Bank Research
Germany has got COVID-19 under control faster than many other countries. It also recorded one of the lowest infection fatality rates among the G10 countries. The complete fiscal policy U-turn in response to COVID-19 induced economic damage should allow the German economy to weather this crisis better than many other countries – although the impact will still be massive. We have identified six structural features of the German society contributing to its superior collective resilience. >more

RESEARCH PAPERS > Corporate Valuation

Aswath Damodaran
2020
The equity risk premium is the price of risk in equity markets, and it is a key input in estimating costs of equity and capital in both corporate finance and valuation. Given its importance, it is surprising how haphazard the estimation of equity risk premiums remains in practice. We begin this paper by looking at the economic determinants of equity risk premiums, including investor risk aversion, information uncertainty and perceptions of macroeconomic risk. In the standard approach to estimating the equity risk premium, historical returns are used, with the difference in annual returns on stocks versus bonds, over a long period, comprising the expected risk premium. We note the limitations of this approach, even in markets like the United States, which have long periods of historical data available, and its complete failure in emerging markets, where the historical data tends to be limited and volatile. We look at two other approaches to estimating equity risk premiums – the survey approach, where investors and managers are asked to assess the risk premium and the implied approach, where a forward-looking estimate of the premium is estimated using either current equity prices or risk premiums in non-equity markets. In the next section, we look at the relationship between the equity risk premium and risk premiums in the bond market (default spreads) and in real estate (cap rates) and how that relationship can be mined to generated expected equity risk premiums. We close the paper by examining why different approaches yield different values for the equity risk premium, and how to choose the “right” number to use in analysis. >more

RESEARCH PAPERS > Alternative Investments

Benjamin Hammer, Heiko Hinrichs, and Denis Schweizer
2020
This paper investigates whether private equity (PE)-backed acquirers have a “parenting advantage” in the mergers & acquisitions (M&A) market. We employ a sample of 788 PE-backed firms and a carefully matched control group of 6,652 non-PE backed peers, for which we observe the entire acquisition history over a 19-year time span. Difference-in-differences estimates suggest that PE backing induces a sizeable but short-lived boost to acquisition activity, whereas type and complexity of these acquisitions are not different. These results are consistent with the idea that PE backing enhances execution and speed in the M&A market. We find that portfolio firms benefit from this acquisition boost through improved valuations and margins on average. The extent to which this holds true, however, depends on the institutional setting of the PE owner. When there is not enough time for learning gains due to an approaching end of the fund lifetime, or when knowledge cannot diffuse due to limited attention of the PE owner, acquisitions may even be detrimental. >more

STUDIES > Performance

Bain & Company - Recoveries have always mattered in business. Some of the biggest shifts in market share occur coming out of downturns, when new industry leaders — and new industries — often emerge. Rarely, though, has recovery meant putting people’s lives at risk. The post-Covid-19 world will accelerate some existing trends and create new ones, and all business models will have to evolve in order to grow and thrive. But there’s no way to accurately predict the coming year, and it’s a dangerous mistake to rely too heavily on forecasts, which have to be complemented with highly adaptive and resilient business models. >more

STUDIES > Alternative Investments

CMS Hasche Sigle / FINANCE - For the Private Equity Panel, the FINANCE editorial team, together with the law firm CMS Hasche Sigle, interviews senior investment managers from more than 50 leading private equity houses in Germany three times a year about their current market assessment. The Corona crisis has left deep scars on the German mid-market private equity market, and the leveraged finance and private equity M&A markets have collapsed. But there is also a ray of hope. >more

STUDIES > Performance

Andersch - This publication reviews consequences of the C-19 pandemic for German key industries. For each sector, it discusses how supply chains and sales are affected as well as interdependencies with other branches and macroeconomic developments. The outcome is a detailed projection of how soon sector recovery is possible contingent on several economic scenarios. >more

We updated the capital market data (Betas, Multiples, Returns) as to April 15, 2020. For data access, you must be a basic finexpert member. In addition, premium members have access to the archive for our capital market data from 2007 onwards. >more

We welcomed our 2000th member! (March 2020) >more

finexpert | ValueTrust
3 Market Overview
11 Capital Market Reaction
15 Statements & Fairness Opinions
21 Success Rates
27 Takeover Case Study: OSRAM Licht AG
30 Transaction Details 2019
The Report covers covers all takeover offers and delisting tender offers of the year 2019 according to the German takeover code WpÜG and provides extensive information on relevant variables like bid types, premia offered, market reaction of target’s and (if available) on bidder’s stock prices. In addition, our extensive database allows to compare last year´s figures of these variables against the moving average of the preceding years and thus to highlight trends and long term developments. Finally, the finexpert German takeover report contains a unique and extensive analysis of fairness opinions and statements of management and supervisory board of the target company (§27 WpÜG), allowing for a detailed analysis of the relationship of these factors upon target stock price reaction and success rates of the takeover bid. Along with the “traditional” success definitions of takeover offers, we analyse an alternative success measure that takes potential bidder toeholds into account. Our results reveal high public M&A activity in 2019 with a large number of offers many of which were unsuccessful. None of the offers’ volume exceeded EUR 5bn, and the takeover offer of EP Global Commerce VI GmbH to the shareholders of Metro AG was the largest (EUR 4.8bn). Most of the bids were launched by foreign investors. This report contains a detailed description of events surrounding the takeover attempts for OSRAM Licht AG from a joint entity of private equity investors: Bain Capital, and Carlyle Group, and later from an Austrian company ams AG. >more

Questions of doubt in corporate valuation QoD#23: Is there something wrong with unicorn valuation?

Bernhard Schwetzler
This video highlights potential flaws from applying simple post money valuation metrics on growth companies in VC financing rounds: Ignoring special cash flow rights like liquidation preferences yields significant overvaluation.(November 10, 2019). >more (videoarchiv QoD#1-23) 

SAME, SAME BUT DIFFERENT: HOW PREFERENTIAL CLAIMS SKEW RETURNS OF VENTURE CAPITAL INVESTMENTS

Julian Kaboth, Arnd Lodowicks, Maximilian Schreiter, and Bernhard Schwetzler
2019
Venture capital often involves complex equity contracts, which affect the allocation of cash flows among shareholdings at an exit liquidation. To facilitate economic impact analysis, we structure exit relevant preferential rights by their economic impact in a two-dimensional framework. Based hereon, we provide a model that allows to assess ex-ante value of such shares. We apply our model to a selected sample of ventures and find an average overvaluation on a share class basis of 22.1% (median 23.9%), where overvaluation is particularly severe for common and early-on investments. >more