Mid-market buyout segment defies economic environment in 2012

2nd half of year particularly strong /“Dynamism to persist”
Frankfurt am Main, 29 January 2013.

Irrespective of the sovereign debt crisis and the slowdown in the economy, Germany’s mid-market segment for management buyouts was robust in 2012 and reconfirmed the market level achieved the previous year. The data released today by Deutsche Beteiligungs AG (DBAG) substantiates that trend. The statistics relate exclusively to majority takeovers by financial investors in which the target companies’ managements co-invest and which have a transaction value of 50 to 250 million euros for the debt-free company. The data is based on publicly accessible sources and own estimates by DBAG in collaboration with FINANCE magazine.

MBOs in Germany's mid-market segment
(transaction value €50mn to €250mn)

MBO in germanys mid-market segment

Source: 1996 to 2010 “European Management Buy-outs Report – 1st half 2011 Review”, Centre for Management Buy-out Research (Nottingham University Business School); 2011 and 2012: Deutsche Beteiligungs AG

Although the number of transactions declined marginally from 31 to 29, the value of completed deals reached the preceding year’s level of approximately 3.5 billion euros. The market thus fell just slightly short of its 2007 level. Only the year 2006 saw higher levels of activity in Germany’s mid-market for private equity transactions.

TargetVendorFinancial investor
Hay Owner family Hay Gores
Bosch Basisbremsen Bosch KPS Capital
Wer liefert was? Bisnode Paragon
Weener Plastik Family owner Lindsay Goldberg
GEKA Halder 3i
360 Treasury Systems Brockhaus Summit Partners
Körber Paper Systems Körber Orlando
Polo Motorrad und Sportswear Creditor Paragon, Temous
Qundis Capcellence Hg Capital
Mackprang Owner family Hannover Finanz
Winkemann Founding family Equistone
Metabo Founding family Chequers
Tesch-Gruppe Siegward Tesch Avedon
Ondal Findos Capvis
Vivonio Furniture Orlando Equistone
Beinbauer Automotive Drosten Group Orlando
Frostkrone Argantis Axa Private Equity
Riemser Arzneimittel Founding family Braun, TVM Capital Axa Private Equity
Schustermann & Borenstein Founding families Axa Private Equity
VWD Dietmar Hopp, Dt. Balaton Carlyle
Klingel-Gruppe Odewald KMU Halder
Gehring Stargate Capital Penta
Schwanenmühle Founding partners, represented by
Wolfgang Reiser
Seebach Stefan Seebach Avedon
Sunrise Medical Vestar Equistone
Heytex Nord Holding Deutsche Beteiligungs AG
NSN Glasfaser Nokia Siemens Networks Marlin Equity Partners
Faist ChemTec Hannover Finanz Findos
LR Beauty Apax Quadriga

The outlook for the market segment is positive. Of the 29 transactions recorded in 2012, a total of 17 were completed in the second half of the year (same period in 2011: 16 transactions). The transaction value in the second part of the year surpassed that of the prior year’s comparative period by more than 15 percent and totalled nearly two billion euros. “We presume that this dynamism will persist and generate good transaction opportunities in the coming months,” said DBAG Member of the Board of Management Torsten Grede, presenting the latest market data.

The strongest activity was recorded among automotive suppliers with a total of five announced transactions, followed by the medical technology and health-care sector with three transactions. Chemical and mechanical engineering companies, sectors that were very popular last year, were not as strongly represented this year.

In 2012 as in the two preceding years, private equity firms were involved in almost every second transaction on the vendor side. In addition to twelve secondary buyouts, there was one quaternary acquisition by financial investors. One very noticeable development this year was the rise in transactions aimed at ushering in generational transitions. A total of seven transactions in 2012 related to succession issues, more than twice as many as in 2011, and more than ever before in the market segment monitored by DBAG.