NEWSLETTER of July 2, 2021

The following content has been added at finexpert:

PwC
EMISSIONSMARKT DEUTSCHLAND: STÄRKSTES ERSTES HALBJAHR FÜR IPOS SEIT 2000
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 June 25, 2021. 14 companies made the leap onto the Frankfurt stock exchange floor in the first six months of the year. Ten IPOs alone took place between April and June - the last time there were so many IPOs in one quarter in Frankfurt was 20 years ago. The issue volume achieved at the end of June was 8.8 billion euros - also a record level. By comparison, in the strong IPO year of 2018, the 18 initial listings in Frankfurt raised a total of 11.3 billion euros. >more

BCG
DOES YOUR IPO NEED AN ANCHOR OR CORNERSTONE INVESTOR?
Companies entering the hot IPO market are looking for an advantage in their pursuit of a successful listing. Among the actions that issuers should systematically consider is onboarding a supporting investor. We distinguish two types: anchor investors buy a stake before the IPO process begins, while cornerstone investors acquire shares after the process is initiated but before the formal book building. Supporting investors are typically known and respected players — whether large corporations or financial investors. A company should consider taking on supporting investors whenever it plans to sell a relatively large equity stake in its IPO. Their presence as shareholders helps to mitigate the risks of an IPO by building other investors’ confidence in the issuer, boosting the IPO valuation, and, ultimately, driving higher total shareholder return (TSR). >more

BCG
DON’T LET CARVE-OUT COSTS COMPROMISE VALUE CREATION
A simple warning should be top of mind for all executives when planning and executing a divestiture: Beware of separation costs. Carving out a business’s operations from the parent company while still running daily operations is tremendously complex and, in most cases, quite expensive. Companies often incur unexpectedly high one-time costs, as well as ongoing costs that arise from transitional services, loss of scale, and inefficient post-divestment cost structures. Moreover, the demands on all levels of the organization can elevate stress and distract from delivering business results. >more

Aztec Group
CONQUERING COMPLEXITY: HOW EUROPE'S PRIVATE EQUITY CFOS & COOS ARE SETTING THEMSELVES UP FOR SUCCESS
This report provides insight into the state of the private equity (PE) market in 2021, and highlights how GPs are prioritising the many pressures they face in delivering their fund management and investment services. The PE market has been confronted by many COVID-19-related challenges over the past year. Leading executives in the PE industry have come out on top, having risen to the occasion and dealt with these countless disruptions. PE activity has rocketed as a result, and this is only set to continue, with more than €185bn of dry powder estimated to be available in Europe alone. >more

Invest Europe
2020 CENTRAL AND EASTERN EUROPE PRIVATE EQUITY STATISTICS
This report was compiled with the help of Invest Europe’s Central and Eastern Europe Task Force. It provides annual activity statistics for the private equity and venture capital markets of Central and Eastern Europe (CEE) in 2020 and prior years. Central and Eastern Europe occupies a unique position in the European investment landscape. A region with fast growing economies and increasing economic influence, CEE benefits from long-term trends in convergence and integration that make it an unmissable opportunity for investors. >more

SEXISM, CULTURE, AND FIRM VALUE: EVIDENCE FROM THE HARVEY WEINSTEIN SCANDAL AND THE #METOO MOVEMENT
Karl V. Lins, Lukas Roth, Henri Servaes, and Ane Tamayo
2020
During the Harvey Weinstein and #MeToo events, firms with a non-sexist corporate culture, proxied by having women among the five highest paid executives, earn excess returns of 1.6%. These returns are followed by positive revisions in analyst earnings forecasts. Returns for female-led firms increase to 3.2% in industries with few women executives, and 2.1% and 2.7% if headquartered in states with a high level of sexism or gender pay gap, respectively. Firms in industries with more women executives or headquartered in less sexist states also earn positive abnormal returns. Our evidence attests to the value of having a non-sexist culture. >more

HOW LARGE ARE PRE-DEFAULT COSTS OF FINANCIAL DISTRESS? ESTIMATES FROM A DYNAMIC MODEL
Redouane Elkamhi, and Marco Salerno
2020
We estimate the costs of financial distress prior to default (pre-default costs) separately from the loss incurred at default (the loss given default) using a dynamic trade-off model of capital structure. We document that pre-default costs are on average equal to 6.5% of firm value per year. We show that pre-default costs account for a large fraction of total distress costs, approximately 68.5%. Last, we show that the expected pre-default costs of financial distress vary significantly across industries with a range between 3.75% and 8.75%, and are higher for firms with highly tangible assets. >more