This blogpost is the result of the combined efforts of Julian Coley, Hristina Marcheva, and Leonardo Severino. We created this article together, since we believe that this way, we were better able to capture and present the many exciting impressions we had during the insightful day at the „M&A und Private Equity Conference 2015“, which took place at FS on October 7th.
The conference is designed not only for professionals from the M&A and PE industry, but also for Master students who aspire to pursue career in these sectors and are about to graduate soon. Currently in its 9th edition, the event focused on the topic „When is the next bubble coming – or is it already here? “. For those of you who are eager to know the answer outright, we won’t keep you long in suspense – the answer is “no”, well at least according to the expert consensus.
Based on the discussions, despite the current high valuations experienced in the markets, the M&A and PE industries are not expected to experience any bubble any time soon. In stark contrast with the exorbitant valuations experienced in the 2000 Tech bubble and the 2008 Subprime Mortgage crisis, which were driven by “irrational exuberance”, current valuations seem to be driven by fundamental demands from Strategic and Financial buyers. For instance, some of the factors influencing the upward trend in both volume and total value of M&A deals in Europe are the low cost of financing, as well as an increase in optimism in the financial markets post-2008. On the other hand, a word of caution from some experts, especially those who speak legalese, in in order. For instance, they were able to show us that the reliance on clauses ensuring seller protection, such as Earn-Outs, Locked Box and de Minimis has been increasing over the past few years. We do not want to bore you with the details of what those things mean, but the take away here is that a seller-friendlier environment may be caused by an increase in competition among buyers, which in turn may be causing an increase in valuations and the advice to attach greater importance to legal counselling.
The conference was an exciting opportunity to get in touch with experienced practitioners and gain first-hand insights about the most current topics prevailing in M&A/PE. Here is just a glimpse of what was discussed in the conference M&A and Private Equity in Europe – current market developments and deal-points; Frameworks, trends and success factors for M&A transactions; Perspectives and chances for cross-border company transactions between the USA and Europe; Frankfurt as a location for FinTechs.
“It was interesting to listen to Dr. Friedrich Georg Hoepfner, CEO and 5th generation of the family brewery Hoepfer Bräu. His experience in selling his own firm gave me a different perspective to the process of an M&A transaction. We often discuss such transactions from the Investment Banker’s perspective in the Masters of Finance program. We discuss things such as the right valuation method and assigning value to synergies. However, it was the first time I had the opportunity to see the family owner’s perspective in such deals and to look at what factors are most relevant to them. Surprisingly (to me, at least), more often than not, family business owners forego finding the highest bidder for his business and put a lot more emphasis in finding a buyer that he/she trusts can embrace his family’s values and be in the best position to continue the legacy his or her family has created.”
“Especially for Master students with interests in M&A and PE, the participation in such practice-oriented conferences offers exciting possibilities not only to deepen their understanding of the most recent developments in both industries, but also to network in an informal setting with bankers, investment professionals, PE managers, M&A lawyers, and other Master students. This exchange of opinions and impressions was indeed quite valuable to us three as students who wish to pursue successful careers in the M&A/PE fields. I personally remained particularly impressed by the talk of Dr. Lutz R. Raettig, Chairman of the Supervisory Board of the Morgan Stanley Bank AG and spokesperson of the executive committee of Frankfurt Main Finance e.V., about the role of Frankfurt as a strategic location for FinTecs – the latter having gained in importance during the recent years. The city is indeed an important competitor to another major player, Berlin – where, in turn, many start-ups have been found – due to Frankfurt’s accomodation of the three success factors discussed in the talk: finance, IT, and communication. Hardly any other German city can currently offer any better conditions for FinTecs to thrive.”
“Personally I was impressed by the symbiosis of science and practical application. In this context I have enjoyed the presentations on the role of family offices in the market for shareholdings by Prof. Dr. Yvonne Brückner and Philipp Bierl, in which the intensified competition of investments in promising companies was discussed. In order to facilitate a better understanding of the subject matter, for example the important role of entrepreneurial skills, the large network and a reliable answer to succession problems were described in detail as reasons for a different investor orientation of family offices. During the breaks there was a lively exchange with all participants, which made it possible to enter into discussions easily. In this context I was surprised of the level of interest delivered to us and the positive resonance of our Master programs. For me the strong tie to local peculiarities made this conference very valuable. Based on our international curriculum, it is from high importance to identify what distinguishes the German markets from especially the American. This topic has been dealt with intensively during a panel discussion regarding the challenges of transatlantic acquisitions. “
We are so much looking forward to the 10th anniversary of the M&A and PE conference in 2016 and strongly encourage interested students to visit next year’s event – not only for networking reasons, but mostly to be offered a chance to expand their knowledge and understanding of the complex and exciting opportunities related to M&A and Private Equity.