Is there a threat of distress in private equity funds?
I think that is unlikely. Every crisis also represents an opportunity. The portfolios of established private equity (PE) companies in particular have already proven to be extremely robust during the Covid 19 crisis. The current geopolitical situation in Europe and the energy crisis will also be dealt with by the private equity industry accordingly. Funds continue to be launched and successfully placed on the market.
Basically, I expect two developments in the coming years. First, that technologies as well as purchasing, production and supply chain processes will become even more of a focus for PE houses. Here we are talking about the optimization of operational processes, which can be used to further increase efficiency and cost savings. Second, I think private equity firms will increasingly make acquisitions that strategically complement their portfolios. The aim is to create synergies among the portfolio companies and thus be even better prepared for crises.
Among our clients, our transaction teams have continued to record a high number of investments and transaction volumes to date. However, we are actually noticing a certain reluctance among investors at the moment. In my opinion, this is merely a snapshot. I interpret this as a short phase of market observation before investments are made again.
The time for PE lenders remains quite promising. However, as far as the donor mentality of investors is concerned, the investment decision depends on the individual case. Recently, company valuations have often moved upwards, making purchases less attractive — this dynamic has sometimes been incomprehensible to investors. The current interest rate level corrects this trend. It again weakens company valuations and, over time, makes companies lucrative targets for patient investors. I currently see great opportunities for investors and portfolio companies alike in the areas of private debt and distressed equity.
On the one hand, we see that internationalization will play a central role. This is because we expect the trend to continue and U.S. private equity houses to invest more in the German market; investors from the United States are benefiting from a strong dollar. — On the other hand, I see the potential for an increasing number of medium-sized companies to choose private equity capital as a financing option in the coming year. Rising interest rates make this alternative seem more attractive. We see this very clearly in our role as a corporate service provider for numerous medium-sized companies, which we support in their international expansion with our Global Payroll and HR Services, among other things.
is Head of Commercial at Vistra (Germany) and a member of the management of Vistra Germany. He is based in our Frankfurt office and is responsible for sales in Germany. Before joining Vistra, Marc-Oliver was Head of Sales at Creditshelf AG, the first listed FinTech company in Germany offering digital financing for small and medium-sized enterprises (SMEs). Prior to that, he was Head of Deal Sourcing at PartnerFonds AG, a private equity firm based in Munich.