FaMAS‘ selection of TOP active middle market transactions March 2022
In March we mark our 15 year anniversary advising foreign clients on doing deals in Germany. We meanwhile count more than 11000 individuals from >90 countries who have been in touch with us on some investment opportunity in the past. Frankly, most of these have had a romantic view about German business acquisitions. Some romantics are still on this mailing list. I am also a romantic business person and therefore, let me help you with a few lines. There are many good reasons why buying a German company makes sense. Valuation of German businesses is still lower than in other parts of the world, most notably USA, China and India. There are plenty of world class technology products designed and sold in Germany. However, there are also many German or local investors hunting for the same good deals that foreigners want. Therefore, for people living far away distance can be a big hurdle. Recently, I had a call from a billion-USD fund from Alaska who thought investing in Germany is a good idea. Professional, serious people. Some of the deals on our list are interesting for them. Yes, but can you execute these deals? From Alaska it takes 12 hrs to get to a meeting in Germany. Fly back another 12 hrs. Add the cost of travelling and it becomes clear that doing it from Alaska is not going to work unless you have a specific edge. Even then.. the first opportunity is likely not to work out. Some German investors we know have a ratio of 10:1 on LOI to closure. Can you want to fly-into Germany every time for a management meeting? Are you prepared to keep your motivation high even after 5 failed attempts? I am not saying it is pointless to try to buy a company from abroad. Clearly, this is partly the reason why FaMAS exists. We have helped people from Canada and from China to acquire companies in Germany. Yet it takes significant effort, focus, time and money to get it done. To give it a dollar value, perhaps USD 25-50k before you can get a deal done. You can be lucky and get a way with less, but it is unlikely. It could also cost you a lot more. Some of our investors have easily spent 250-500k EUR (incl. DD) before completing their first deal. In a nutshell, if you are far away and are not willing to invest significant time and money, then I suggest you should unsubscribe from this newsletter and focus on something else. That is my advise.