This panel featured the insights of Melville Mummert (Raymond James), Torsten Krumm (HQ Equita GmbH), Dr Jan-Mathias Kuhr (Kion Group AG), Samuel Wales (McDermott), Patrick Schaich (Riverside Europe Partners GmbH) and Dr Burkhard Weber (Lincoln International LLC).
Mr Mummert opened the discussion with questions revolving around the major themes of the 2016 conference, including digitisation, globalisation and disruption:
Each organisation represented on the panel is adapting to global requirements by expanding their international network and using technology (e.g., videoconferencing, virtual data rooms) to leverage their presence across a larger geographic footprint. Capital markets in Europe remain fragmented, and European institutional investors are focusing on the United States. Investors such as Kion Group, HQ Equita and Riverside remain focused on investment opportunities across Europe, with Germany becoming an increasingly important target market for financial investors. According to Mr Schaich, prices for European companies are approaching those paid in the United States, although lower leverage levels are common in Europe. Dr Weber has also noticed a slowdown in M&A in the United States because of the depressed energy sector. Ad ditionally, he has noted an increasing interest among German companies for acquisitions in the United States. Mr Wales, on the other hand, has observed more aggressive investment by US companies in Europe and South America as they try to penetrate global markets.
Digitisation is disrupting M&A processes by allowing more bidders to access information in virtual data rooms and thereby increasing the efficiency and number of bids in auction processes. The technology sector remains a growth sector in cross-border M&A. Mr Krumm reminded the audience of the significant capital raised by private equity firms in recent years. These investors are under pressure to invest their firms, which means the market will favour sellers in the foreseeable future. Key sectors include industry 4.0 suppliers and medtech companies.
The United Kingdom’s recent vote to exit the European Union “casts a shadow” over M&A, according to Dr Kuhr. The panellists raised concerns that Brexit could encourage other nationalistic political parties in Europe, which could impede the free flow of investments and trade. The United States is less affected by Brexit.
The panel highlighted other disruptive factors in cross-border M&A, including macroeconomic events (commodity prices), geopolitical events in Europe (the refugee crisis, Russian aggression) and the recent presidential election in the United States. Banking problems in the European Union and the indebtedness of several EU members, particularly Greece, create continued uncertainty. Mr Wales described the attitude towards Brexit as “wait and see”.
Mr Mummert closed the discussion with comments about the attractiveness of Germany in cross-border M&A among investors around the world.