A star among German law firms

Our growth is the result of a clear focus, the right posi­tio­ning and consis­tent quality. With the incre­asing profes­sio­na­liza­tion of tech and venture capi­tal, we were in the right place at the right time and have posi­tio­ned oursel­ves as a law firm along the entire value chain of private equity and venture capi­tal — from fund struc­tu­ring and tran­sac­tions to tax and regu­la­tory. As a result, a clear brand and exper­tise core emer­ged early on. 

We deli­bera­tely advise in an inte­gra­ted manner rather than in silos: fund law, tran­sac­tions, M&A, tax, GP/LP struc­tures, carry and incen­tive models as well as ESG come from a single source. Our clients appre­ciate this combi­na­tion of prag­ma­tism, speed and depth of content. Entre­pre­neu­rial spirit charac­te­ri­zes our way of working: quick decis­i­ons, early respon­si­bi­lity and targe­ted invest­ments in tech­no­logy, proces­ses and people deve­lo­p­ment. Quality crea­tes trust — and trust leads to recom­men­da­ti­ons, visi­bi­lity and growth. 

In short: focu­sed, inte­gra­ted, agile, profes­sio­nal — this is how YPOG is growing. This is reflec­ted in our loca­ti­ons, in our close coope­ra­tion with inter­na­tio­nal part­ner law firms and in the conti­nuous expan­sion of our inter­di­sci­pli­nary teams. And we conti­nue to invest: in people, tools and methods, so that growth leads to stabi­lity and projects become long-term relationships. 

We are curr­ently obser­ving seve­ral deve­lo­p­ments in the market. We are seeing a clear wave of conso­li­da­tion in the start-up ecosys­tem: Mergers and acqui­si­ti­ons are taking place much more frequently today than just a few years ago. This is trig­ge­red by inves­tors’ increased focus on profi­ta­bi­lity, runway and capi­tal disci­pline as well as a gene­rally chal­len­ging finan­cing envi­ron­ment in which inde­pen­dent follow-up rounds are often no longer feasi­ble. At the same time, comple­men­tary busi­ness models are incre­asingly merging in order to realize econo­mies of scale in product deve­lo­p­ment, sales or IT and to achieve the size requi­red for market leader­ship or sustainable compe­ti­ti­ve­ness more quickly. For exam­ple, we support SaaS provi­ders that bundle their plat­forms, health­tech compa­nies that gain access to regu­la­ted segments via M&A and indus­trial soft­ware start-ups that acce­le­rate their market coverage with buy-and-build strategies. 

A second, very clear deve­lo­p­ment is the change in menta­lity in the field of defense tech. Topics such as secu­rity tech­no­logy, cyber­se­cu­rity or dual-use appli­ca­ti­ons are no longer margi­nal pheno­mena or repu­ta­tion-sensi­tive terrain, but are seen as stra­te­gi­cally rele­vant infra­struc­ture. Funds that would previously have hesi­ta­ted to make such invest­ments are now acting compe­ti­tively, profes­sio­nally and with a long-term under­stan­ding of the geopo­li­ti­cal signi­fi­cance of these sectors. 

There is also a third trend that is often unde­re­sti­ma­ted: the strong profes­sio­na­liza­tion of fund struc­tures. We are seeing broa­der, inter­na­tio­nally compa­ti­ble setups, struc­tu­red side-letter archi­tec­tures and more flexi­ble vehicle struc­tures — from brea­kout and conti­nua­tion vehic­les to complex co-invest­ment programs and modu­lar, multi-juris­dic­tional fund fami­lies. Many mana­gers are adap­ting their fund mecha­nics more closely to insti­tu­tio­nal requi­re­ments: clea­rer ESG frame­works, more sophisti­ca­ted gover­nance, stron­ger report­ing stan­dards and incre­asingly data-driven proces­ses in due dili­gence, port­fo­lio moni­to­ring and inves­tor rela­ti­ons. Over­all, we see an indus­try that has become more mature, more tech­ni­cal, faster and more international. 

Alter­na­tive liqui­dity solu­ti­ons are curr­ently attrac­ting a lot of atten­tion because the tradi­tio­nal exit routes — IPOs and company sales — have come to a standstill in many places. Funds have inves­ted massi­vely in recent years, but the expec­ted returns have not mate­ria­li­zed. At the same time, inves­tors are under great pres­sure to main­tain liqui­dity — regard­less of the market cycle. 

The indus­try is ther­e­fore incre­asingly turning to instru­ments that were rarely used a few years ago. Fund inte­rest secon­da­ries and tender offers give inves­tors the oppor­tu­nity to sell fund units in an orderly manner. At fund level, NAV finan­cing is gaining in importance because it crea­tes liqui­dity without having to sell port­fo­lio compa­nies prema­tu­rely . Prefer­red equity struc­tures work in a simi­larly flexi­ble way: an exter­nal inves­tor provi­des capi­tal and recei­ves a prio­ri­ti­zed repay­ment posi­tion in return. In addi­tion, annex or top-up funds allow selec­ted invest­ments to be supported in a targe­ted manner without drawing fresh capi­tal from the main fund. 

Conti­nua­tion funds are deve­lo­ping parti­cu­larly dyna­mi­cally. They make it possi­ble to trans­fer very good port­fo­lio compa­nies into a new vehicle — with two advan­ta­ges: Inves­tors who need liqui­dity can exit while others conti­nue to perform. And fund mana­gers gain time to conti­nue holding attrac­tive assets instead of having to sell them under time or valua­tion pressure. 

In our consul­ting prac­tice, we can clearly see that these solu­ti­ons are no longer the excep­tion, but an inte­gral part of modern fund stra­te­gies. Funds use them to manage port­fo­lios more actively and make value growth easier to plan. Inves­tors use them to adjust allo­ca­ti­ons or increase liqui­dity in a targe­ted manner. And the port­fo­lio compa­nies bene­fit because they can be deve­lo­ped in peace. Alter­na­tive liqui­dity solu­ti­ons make the market as a whole more flexi­ble, more resi­li­ent and more profes­sio­nal — and they are incre­asingly defi­ning how modern capi­tal manage­ment works beyond tradi­tio­nal exits. 

Dr. Stephan Bank is co-foun­der and part­ner of the law firm YPOG and is one of the most promi­nent German advi­sors at the inter­face of invest­ment funds, private equity and venture capi­tal. He advi­ses asset mana­gers, insti­tu­tio­nal inves­tors and funds on all aspects of coll­ec­tive asset manage­ment — from fund forma­tion and carried inte­rest struc­tures to complex secon­dary tran­sac­tions and reca­pi­ta­liza­ti­ons. Another focus of his work is on venture capi­tal and M&A tran­sac­tions, where he supports dome­stic and foreign inves­tors, compa­nies and start-ups in finan­cing rounds, exits and joint ventures. For this work, Bank is regu­larly reco­gni­zed by renow­ned rankings such as JUVE, Wirt­schafts­Wo­che, Cham­bers & Part­ners and Best Lawy­ers as a leading lawyer for venture capi­tal, invest­ment funds, M&A and corpo­rate law. — www.ypog.law