Foreword by the Editor 2011

Three years after the outbreak of the financial crisis, things are looking up again. Investors are again much more optimistic about new investments in private equity and venture capital. The difficult market phases of the last three years not only brought numerous problems for private equity funds, but recently also the extremely important realization, especially for institutional investors, that private equity yields more lucrative returns than equities. Investments made during recessionary periods yield the highest profits (study by HEC School of Management & Golding Capital Partners). According to these findings, due to the lack of correlation with equity markets, private equity can cushion losses for institutional investors when stock markets are down.

According to the latest estimates (Preqin), the private equity industry will raise around USD 260 billion from institutional investors worldwide in 2010. A growing share of this is flowing into minority investments and small, fast-growing companies. - A decisive factor for investor confidence is that, contrary to fears at the height of the crisis, good funds were able to get their investments through the crisis passably. From January to October 2010, financial investors acquired companies across Europe for 40 billion euros, an increase on the previous year. The record of 197 billion euros set in 2007 is nevertheless a long way off. The wave of lucrative company sales hoped for by the industry also failed to make much headway, and IPOs remained scarce.

The motto remains: Break the Cycle. It is important for the industry to keep a sense of proportion and not allow itself to be pushed by the banks. It should be careful not to repeat the mistakes of the past. Prices for acquired companies are already heading for pre-crisis record levels. In 2010, an average of 8.1 times operating profit was already paid, of which 4.5 times EBITDA was financed via loans.