In this work the development of the young Private Equity market in Germany is analysed in order to form the base of comprehensive understanding of the market today. In the last decades, the private equity (PE) market in Germany has witnessed waves of rise and fall. But it surpassed, by the end of 2017, all the records of German PE history. According to Deutsche Beteiligungs (DBAG), the amount of transactions in the mid-sized businesses in the German market dramatically increased and hit €4.4 billion in 2017 which was the highest during the last 15 years.
But in contrast, the competition in the German market has been recently high with a steady number of companies which led to high prices and overvalued companies. PE firms target the mid-sized businesses since they are more likely to accept financial investors than bank loans or credit lines. However, this problem can now be countered with the help of PE in the context of alternative corporate financing. It should be noted that PE business has been a concern of German politics and businesses since the 1960s where the financial system was basically based on banks which is not appropriate for the development of PE industry.
The government intervention was the base to build a stronger PE industry away from bank-based financial systems. Recently, the stock market segment was a key driver for the dynamic development of PE market. The price falls and the collapse of the overheated and overvalued companies were also clearly felt in the PE segment and generated a great deal over scepticism on the capital markets.
Table of Contents
1. Introduction
1.1. Problem Description
1.2. Scope of Work
2. The Private Equity Background: Terms, Data and Structure
2.1. Definition and Product Categories of Private Equity
2.2. The Structure of Private Equity Business
2.3. The Origin and History of Private Equity Market in Germany
3. The Private Equity Market in Germany since 1990
3.1. The Private Equity Market in Germany from 1990 to 1996
3.2. From the Stock Market Hype to the Stock Market Crash
3.2.1. Private Equity Record Years in Germany since 1997
3.2.2. The Consolidation Phase after the Rapid Growth since 2002
3.2.3. The boom after the Consolidation Phase since 2007
3.3. Current Situation of German PE Market Compared to the US.
3.4. Major Players in the German Private Equity Industry
4. Opportunities and Challenges of the German Private Equity Market
4.1. Future Opportunities
4.2. Challenges and Current Influencing Factors
5. Outlook and Conclusion
Research Objectives and Themes
This work aims to provide a comprehensive understanding of the development of the young private equity (PE) market in Germany by chronologically analyzing its evolution since the 1990s, examining key structural changes, and evaluating current challenges and future opportunities within the industry.
- Historical evolution of the German private equity market since 1990.
- Structural analysis of the private equity business and its core stakeholders.
- Comparative analysis between the German and US private equity markets.
- Impact of digitalization and regulatory frameworks on market dynamics.
- Identification of major industry players and their investment strategies.
Excerpt from the Book
3.1. The Private Equity Market in Germany from 1990 to 1996
After the boom of the 80s, the 1990s began with a slight consolidation phase. This development was characterized by stagnating new business of approx. €0.5 billion per year. The attempts of PE companies to come out of this low were mainly due to realignments of the investment strategies as new investment opportunities came up. Therefore, some focused more on specific financing phases, such as Early Stage or Buyouts to build up in-depth funding expertise. Others often acted as universal investment companies to avoid new business and diversification in the portfolio.14 The reasons for this low growth rate back to the emerging balance between new inflows and outflows of investments as well as general economic reasons represented by the long-lasting upturn in economic development subsided and passed into an ongoing period of stagnation or only slight growth in overall economic development.15 The first 1990s are therefore not to be seen as a break with the upturn observed in the previous decade. Rather, it is more or less a stopover to a much earlier stimulated development, with an intermittently unfavourable economic environment and other challenges for the German banking sector.16
Summary of Chapters
1. Introduction: Outlines the problem description regarding the rise of the German PE market and defines the scope and structure of the work.
2. The Private Equity Background: Terms, Data and Structure: Explains the definitions of PE, its product categories, organizational structures, and historical origins in Germany.
3. The Private Equity Market in Germany since 1990: Analyzes the chronological development of the market, including growth phases, crashes, and a comparison with the US market, while identifying major industry players.
4. Opportunities and Challenges of the German Private Equity Market: Discusses future market prospects, the impact of digitalization, and regulatory challenges affecting the industry.
5. Outlook and Conclusion: Summarizes the findings and provides an optimistic outlook on the German PE market's growth, driven by SMEs and technological advancements.
Keywords
Private Equity, Venture Capital, Germany, Buyout, Mezzanine Financing, SMEs, Investment Strategy, Stock Market, Digitisation, Regulatory Framework, AIFMD, Market Consolidation, Corporate Finance, Portfolio Management, Economic Development
Frequently Asked Questions
What is the core focus of this research?
The research focuses on the historical and structural development of the German private equity market from the 1990s to 2018, analyzing its growth, major players, and the influencing factors for its current state.
What are the primary thematic areas covered?
The work covers definitions and structures of PE, the historical timeline of the German market, comparisons with the US, the role of SMEs, and emerging trends like digitalization and regulation.
What is the main research objective?
The objective is to form a base for a comprehensive understanding of the German PE market today by examining its chronological development and the specific events that shaped its current structure.
Which scientific methods are utilized?
The paper utilizes a chronological analysis, literature review, and comparative assessment of investment data and market events to evaluate the development of the industry.
What does the main body of the work address?
The main body examines the evolution of the PE market through different phases: the consolidation of the 90s, the stock market hype and crash, the post-2007 boom, and the current competitive landscape.
Which keywords characterize the work?
Key terms include Private Equity, Venture Capital, Buyout, SMEs, Market Consolidation, and Digitisation, reflecting the document's focus on finance, history, and strategic management.
How has the German PE market changed since the late 1990s?
The market transitioned from a phase of stagnation in the early 90s to a significant boom period starting in 1997, followed by a consolidation phase post-2000, and renewed growth after 2007 driven by later-stage financing.
What impact do recent regulations like AIFMD have on the PE sector?
Regulations like AIFMD and MiFID II have increased compliance costs and disclosure requirements, which significantly influence how PE firms operate and interact with capital markets in Germany.
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- Ayman A. (Autor:in), 2018, The German Private Equity Market. An Analysis of its Development, München, GRIN Verlag, https://www.hausarbeiten.de/document/516602
