3 questions to smart minds

Peak season for exits in 2015?

For this 3 questions to Dominik Stühler

DLA Piper
Photo: D. Stüh­ler | DLA Piper
24. Febru­ary 2015

In the current low inte­rest rate envi­ron­ment, it is impres­sive that such a high propor­tion of private equity inves­tors expect annual returns in excess of 11 percent, commen­ted Jeremy Coller, chief invest­ment offi­cer (CIO) at Coller Capi­tal in late 2014. One even fore­casts further upward poten­tial. Inves­tors are confi­dent that private equity returns could pick up further as fund provi­ders (Gene­ral Part­ners, GP) conti­nue to improve in terms of their opera­tio­nal capa­bi­li­ties and due to more specia­li­zed funds. — Does this fore­cast hold true in Germany as well? 

For this 3 ques­ti­ons to Part­ner for Private Equity at DLA Piper in Munich

1. How do you assess the “weather situa­tion” for exits among private equity compa­nies and inves­tors in the current year?
The weather situa­tion for private equity in Germany is indeed better than it has been for a long time. For exam­ple, the inves­tor group of EIS Aircraft mana­ged a bravura exit with an impres­sive multi­ple in just over 3 years. Private equity firms have a lot of ‘dry powder’. In addi­tion, the available liqui­dity in the markets faci­li­ta­tes effi­ci­ent and successful fund­rai­sing. Over­all, howe­ver, there are still too few take­over candi­da­tes (prima­ries), espe­ci­ally from the midmar­ket. Combi­ned with the ample avai­la­bi­lity of debt capi­tal, this status quo natu­rally conti­nues to drive up prices, espe­ci­ally for mid-cap secon­da­ries. This makes it an ideal time for exits of opera­tio­nally strong compa­nies with an intact growth story.
2. What proce­dure prece­ded the sale? Was there an auction? How many bidders were involved?
The sellers had opted for a quiet process with pre-selec­ted bidders. As expec­ted, inte­rest was extre­mely high among a large number of stra­te­gists and finan­cial investors.
3. Can you tell us about the inves­tors? Are there any more deals to be expec­ted here? What is the leverage at EIS Aircraft?
It was a very successful deal for ever­yone invol­ved. The stra­tegy of brin­ging about funda­men­tal, opera­tio­nal chan­ges with a great deal of effort has paid off in full. EIS Aircraft is expec­ted to conti­nue to grow dispro­por­tio­na­tely. Leverage contri­bu­ted only margi­nally to the double-digit money multi­ple. The sellers have a strong opera­tio­nal back­ground with deep expe­ri­ence in stra­tegy consul­ting and private equity. It is likely that we will see this successful stra­tegy in their next deals as well.

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