Current developments in private equity transactions

Private equity has grown into a very mature market in Germany. It is true that the financial crisis led to a prolonged market slump and focused everyone's attention on financing issues since 2008. In the meantime, however, the willingness of banks to provide debt capital for corporate acquisitions has risen sharply again and the number of transactions has grown significantly since the beginning of 2011.

Against the backdrop of the current debt crisis, however, the following reporting may already be outdated by the time you read it. The following article can therefore only take stock of the current (mid-September 2011) transaction practice in the acquisition of companies. It is impossible to derive from this a forecast of how this transaction practice will develop over the next six months. However, the darkening business outlook for German companies suggests that the number of transactions will decline due to uncertain earnings prospects of the target companies and larger valuation differences between seller and buyer. In mid-September 2011, the number of transactions is still high. However, the pressure to complete ongoing transactions in the face of a looming escalation of the debt crisis has increased sharply.

Purchase prices and financing environment

With all due caution about making sweeping statements about the valuation of companies of widely differing sizes and sectors, purchase prices equivalent to seven to eight times EBITDA are at any rate not unusual at present in industries that are subject to only minor cyclical fluctuations.