LIFE SCIENCES, HEALTH AND PRIVATE EQUITY: LICENSING AND STRUCTURED M&A TRANSACTIONS

Christoph Brandenberger (Healthios Capital Markets), Dr Irina Staatz-Granzer (Staatz BD & Strategy), Dr Sven Oleownik (Gimv Germany), Dr Erich Tauber (Themis Bioscience), Charlie Troup (Duke Street) and Kristian A. Werling (McDermott) discussed licensing and structured M&A transactions. Emmanuelle Trombe (McDermott) mod­erated the panel, which focused in particular on the conver­gence of M&A and licensing, structured transactions in pri­vately held companies versus public M&A, and litigation risks related to due diligence obligations.

In discussing the convergence of collaboration/licensing and M&A, the panel pointed out that an increasing number of collaborations between start-ups and industrials include an equity component. Alternatively, such collaborations, with or without an equity component, often pave the way for an M&A transaction. The speakers described the role of strate­gic investors both from an institutional investor’s perspective and from a company’s perspective. They agreed that strate­gic investors are no longer seen as hurdles for the exit, even though the ideal scenario is to have more than one strategic investor on board.

The panel also discussed the convergence of M&A payment structure and licensing transactions, given the fact that many M&A deals in health care and life sciences have contingent payments upon development, regulatory or sale milestones, similar to licensing deals. Such contingent payments are often more significant in biotech M&A than in medtech or other health care M&A. The panellists also briefly discussed the notion of contingent payments in public deals, i.e., the so-called contingent value rights (CVRs).

According to the panel, contingent payments are a way for a purchaser to share risk and for a seller to obtain a portion of the upside. It is good practice, however, to limit such con­tingent payments to short-term milestones, since longer term milestones have little probability of being paid in an envi­ronment that is exposed to a variety of risks (e.g., develop­ment, regulatory, market access, intellectual property, compe­tition). In addition, the purchaser’s obligation to work toward achievement of milestones is often contractually qualified by a variety of factors, including the notion of “commercially reasonable efforts”, and, depending of such factors, it may be difficult to enforce. The risk of litigation will also depend on the way the milestones are structured: the more objective and the shorter term, the fewer risks of legal challenge.

M&A AND PRIVATE EQUITY MARKET 2016
This session featured Dr Michael Drill (Lincoln Internation­al AG), Dr Andreas Fendel (Quadriga Capital Beteiligungs­beratung), Philipp Haindl (Serafin Group), Jan Mayerhöfer (Mayerhöfer & Co Corporate Finance Beratung), Tristan Nagler (Aurelius Investments) and Steve Roberts (PwC Germany), and was moderated by Dr Nikolaus von Jacobs (McDermott). Diving into an evaluation of the current market, the panel found that the overall mood is good despite large amounts of money continuing to chase a limited number of opportu­nities, leading to a very active, if not crowded, market place. More strategic players are active in the market than in recent years, including many from the United States and Asia, and China in particular. A multitude of new market players, in­cluding newly established fi...
J.P. MORGAN KEYNOTE: CROSS-BORDER M&A IN THE SHADOW OF BREXIT
Callum Mitchell-Thomson, head of investment banking for Germany, Austria and Switzerland for J.P. Morgan, led the MuMAC audience through the expected consequenc­es of Britain’s exit from the European Union (Brexit). Mr Mitchell-Thomson pointed out that whilst the immediate reactions to the vote were quite dramatic, within a week they had quieted substantially. Similarly, at first it appeared that the outlook for economic growth in 2017 for the Europe­an Union, the United States and, in particular, the United Kingdom itself would be worsened materially. Within three months of the referendum, however, the equity capital mar­kets had recovered. On average, cross-border M&A makes up 30 per cent of the overall M&A market. Within Europe, the United Kingdom historically has represented 30...
AUTOMOTIVE, DIGITAL TRANSFORMATION AND PRIVATE EQUITY
Florian Kähler (ECM Equity Capital Management), Dirk Liedtke (Raymond James), Martin Schwarzer (PwC), Alexan­der Sixt (Sixt), and Fabian Wasmus and Thomas von Werner (Penta Investments) discussed the impact of digitalisation on the automotive sector. Dr Joachim Koch (IMAP M&A Con­sultants) moderated the panel. The automotive industry is changing like never before as a result of digitalisation. In an environment where volume growth will decrease in the next decade, digital leadership in the automotive industry is expected to translate into growth. The panel first discussed the impact of digitalisation on small and medium-sized automotive suppliers. By implementing a homogenous and connected IT system within a company and between companies along the value chain (industry 4.0), companies ...
INVESTMENT FROM THE GULF REGION INTO EUROPE AND THE UNITED STATES
Raed Fakhri, vice president of investments at Bahrain Mumtalakat Holding Company (Mumtalakat), presented the company’s investment strategy and showcased some of its re­cent international investments. Mumtalakat, the investment arm of the Kingdom of Bahrain, is focused on growing and diversifying its portfolio through commercially sound and sustainable investments across multiple industries and geog­raphies. Its key sectors of focus are logistics, technology, me­dia and telecommunications; real estate and tourism; health care; consumer; industrials and manufacturing; and financial and general services. In the past two years, Mumtalakat completed nine interna­tional investments, including the acquisition of a stake in PRO Unlimited, a leading provider of software and services in the United S...
CROSS-BORDER M&A ASIA AND EUROPE
This session addressed the growing M&A activities of Asian investors in Europe, with a focus on Germany. Wei Wang (PwC Germany) led the panel, which included Dr Mei Wu (Joyson Holdings Europe GmbH), Jacob Hoyeon Won (Locus Capital Partner, the ally of Global M&A Partners), Dr Qing Ding (Shentou Capital) and David Dai (MWE China Law Offices). All panellists agreed that the current trend of Asian investors conducting transactions in Europe will be long-term. This is particularly true of Chinese investors, which have been con­sistently reaching new heights in terms of deal intensity and volume during the years following the last global economic crisis. The panellists also shared the view that, contrary to the overwhelming public consensus in Europe, the governments of both Korea and C...
CROSS-BORDER REAL ESTATE
Tobias Huzarski (KKR Kohlberg Kravis Roberts), Frank Müller (Corpus Sireo), David Poremba (Eastdil Secured) and Dr Jens Ortmanns (McDermott) hosted MuMAC’s first real estate panel and discussed current trends in the European real estate private equity market. As panel head, Dr Ortmanns started the discussion by high­lighting the diversity of real estate as an asset class and the broad range of market participants in Europe, including pri­vate equity funds, hedge funds, pension funds, insurers, and other national and international institutional investors (re­cently including many Asian buyers), as well as family offic­es, developers and high-net-worth individuals. Mr Huzarski initiated a lively discussion about the role real estate plays for private equity funds as part of their overall inv...
CROSS-BORDER M&A USA AND EUROPE
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: What role will Brexit play in cross-border M&A? What are the implications of digitisation/digital trends for M&A processes? How will disruptive macroeconomic, geopolitical, capital markets and banking trends affect cross-border M&A? Are Europe and the United States currently buyers’ or sellers’ markets? What were the valuation trends of 2016? Each organisatio...
ACTIVIST SHAREHOLDERS: EXPERIENCES IN THE UNITED STATES AND EUROPE

Bilal Sayyed, McDermott Will & Emery, moderated a thrilling panel of acitivist shareholders from three juristdictions: Roy Katzovic of Saddle Point Group, United States, Till Hufnagel, Petrus Advisers, London and Dr Olaf Marx of MCGM, Munich. They were joined by A&M Managing Director Germany, Thomas Kolaya. Mr Kolaya advises companys how to avoid to become a target of activist shareholders. The panel was a fabulous finale of the conference.