The six panelists in this discussion, Dr. Florian von Alten, Managing Partner at Oaklins Germany; Carsten Hagenbucher, Managing Director at Charterhouse Capital Partners; Dr. Sven Oleownik, Partner and Head of Germany at GIMV Germany; Norman Rafael, Chief Corporate Development & Investor Relations Officer of Armacell International; Dominik Schwarz, Director at EMH; together with panel head Dr. Nikolaus von Jacobs, Partner at McDermott Will & Emery, discussed the development of the M&A and the Private Equity Market in 2019.
The transaction numbers in the first half-year compared to the numbers last year are showing that the activity has decreased by close to 40% in the European Market. Especially transactions with German participation have gone down 18% in the first halfyear of 2019 in comparison to the previous year. Many uncertainties such as Brexit and trade tensions are the main reasons for this decrease. The automotive industry in particular is concerned regarding this alarming trend. Ignoring these facts led to a tough awakening for some investors this year.
Nonetheless, the panelists agreed that the music is still playing, albeit less aggressively. If there are no deals to be done in Germany/Europe, investors are looking elsewhere (e.g. in Asia). To cope with this negative economic trend, many investors are focusing heavily on the digitalization industry as these companies have a great need for funding so they can develop and implement new technologies.
The current economic situation in Europe results, among other things, from the political situation in the US. Politics have an impact on M&A. The Trump administration continues to make it more difficult to do acquisitions in the US. Uncertainty about new tariffs are making things worse.
The panel turned towards the situation on the Chinese market, where just a few years ago, the structures were not quite competitive. But over time the Chinese have improved their systems significantly. As a result of trade tensions between the US and China, many Chinese companies and investors are turning their attention to Europe, also with the view to conquer the Chinese market with German products, especially in the Chinese consumer market. The Chinese are seen as partners rather than as competitors in Germany.
However, it is of essence to find the right partners for your particular business. In this context, some specific and challenging acquisitions made were discussed on the panel. Furthermore, light was shed on the differences between state owned and private companies, the main difference being that state-held companies are less flexible and more difficult to understand regarding their processes than private ones.
Overall, the panelists agreed that in spite of some crisis symptoms, one could still be optimistic about the economic future, noting especially how the Chinese market has significantly changed over time being more attractive now.
Dr. Nikolaus von Jacobs,
McDermott Will & Emery