What shall we do in this environment? War in Ukraine, high inflation, supply chain problems, energy crisis? I get this question asked more often recently and hey, I do not know. A Managing Director from CINVEN, a globally leading PE firm, told me that he is not worried about the global market at all. Nobody […]
Die letzten Monate waren wieder turbulent: Inflation, Ukraine, Zinserhöhungen… aber immerhin können wir wieder verreisen. Die Tourismusbranche boomt, hat nun aber weltweit ein akutes Personaldefizit. In manchen Bereichen sind ca. 30% der Stellen unbesetzt. Was heisst das für meinen Urlaub? Ich hoffe, es gibt keine Schlacht am kalten Buffet. Vielleicht bleibe ich doch zu Hause und arbeite weiter… Es gibt auch viel zu tun. Unsere fast 12.000 Investoren aus 90 Ländern haben zwar auch von Inflation, Ukraine und Zinserhöhung gehört, aber liquide Mittel scheint es immer noch sehr viel zu geben. Reisen darf man ja jetzt wieder fast ungehindert. 80% unserer Investoren benötigen einen Flieger, um eine Betriebsbesichtigung in DACH zu machen. Das hat in den letzten 2 Jahren einiges erschwert. Heute freuen sie sich auch mal wieder nach Deutschland zu kommen. Lassen Sie mich wissen, ob Sie sich auch freuen würden, einen unserer Mandanten-Investoren kennen zu lernen. Falls ich nichts mehr von Ihnen höre, wünsche ich Ihnen einen schönen erholsamen Urlaub ohne Service-Defizite!
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.
Last Friday someone wished me a Happy New Year. To me it feels more like Happy Old Year. The first month has virtually passed and everything continues as it was the last 6 months. Inflation has risen in Germany to highest level (5.3%) since 1993 (5.8%) and corporate transactions are at all time high. Will it continue? Instead of creating a wave of insolvencies (my expectation in 2020 – I am a bad prophet) Corona has lead to pretty much the opposite. Most businesses (in Germany) in our monitoring had a bumper year. What does this mean for corporate acquisitions in Germany? Inflation generally impacts negatively on valuation of companies. Some of these effects can already be seen on German stock exchange, which dropped by about 10% this month until Thursday (recovered a bit meanwhile). My personal observation from speaking to many German companies is that almost everyone has either increased or plans to increase prices. Most complain about shortage of labor. I think inflation is going to last for next 5 years at significantly higher levels than in the past 10 years. Let me know what you think about price increases in your company and labor shortages. What do you think is going to happened to the currency exchange? What do you think about your pricing?
Today, I had an interesting conversation with an MD of a large German electronics group. He said, one of the biggest challenges in the last 12 months was supply chain disruption. His company had suffered from it in every month since February. He indicated, had he been prepared for it with local suppliers as second […]
I hope you started well into the year and I wish you, your family and your team a healthy, prosperous and happy year 2021! After 7 years of stable pricing we have now decided to increase our annual service fee by 25% for 2021. Sounds a lot. On 2nd glace it is not. It comes […]
In Deutschland sind Internationale M&A / Finance Transaktionen bei KMU um ca. 80% zurückgegangen. Das ergab unsere Auswertung von ca. 3000 internationalen Investorenkontakten. Dies ist in Summe gut für deutsche Investoren und Käufer. Diese konnten mit weniger Konkurrenz bessere Konditionen durchsetzen. Allerdings ist dies wiederum schlecht für kapitalsuchende Unternehmen und Verkäufer, die manchmal auch kein […]
As you know FaMAS screens hundreds of transaction per year and communicates with thousands of M&A professionals. Corona impacted in many ways how M&A and Private Equity deals are done. Last time I wrote about changes in valuation. Today I want to shed some observations on deal flow numbers. Here is what happened: Clearly, March, […]
The last weeks I had a fair number of conversations with Private equity Investors and target companies in Germany. Many argued almost the same to market themselves to a respective target company: We are entrepreneurial We are very fast decision makers We work closely with management We focus on x Mio deal size, but we […]
Recent discussions with German M&A firms show that the number of SME deals have significantly dropped in the last few months. A survey in May showed that 85% got stalled or stopped. Partially because business plans have turned havoc with Corona, partially because price expectations have diverged. Any other reason also works for an explanation. […]