Highlights from SuperReturn: German Private Equity Summit
Last week Rebecca Liebel, Head of Munich, Daniela Braemisch, Head of Frankfurt and Nadja Essmann, Head of CFO attended the German Private Equity Summit at SuperReturn in Berlin and summarised the key insights that they took away from the panels and their discussions throughout the event.
The German market
Germany's economic landscape was a prominent topic at the SuperReturn German Private Equity Summit. Despite the headline, is Germany the "sick man of Europe," the discussions revealed a more nuanced reality. Germany's growth rate is currently among the slowest in Western Europe, with contributing factors such as high energy costs, increased wages (an increase of 10% over the past year), and extensive bureaucracy and regulation.
Sector resilience and opportunities
However, Germany's strengths lie in its robust engineering capabilities and global leadership across multiple industries. Moreover, Germany's integrated supply chains offer a competitive edge in the AI-driven market. While Germany remains reliant on China as an export market, the USA and European neighbours remain key trade partners, offering a stable and positive outlook for the future.
The conference shed light on the resilience and opportunities within specific sectors. Software, technology, and healthcare continue to be strong segments, characterised by companies that generate inherent value, are cash-positive, profitable, and exhibit growth.
The conference shed light on the resilience and opportunities within specific sectors. Software, technology, and healthcare continue to be strong segments, characterised by companies that generate inherent value, are cash-positive, profitable, and exhibit growth.
Leadership and succession planning
Succession planning and leadership team development were key themes. LPs increasingly scrutinise succession planning within funds, including interviewing mid-level team members. In the DACH region, there is also a growing opportunity for deals driven by a new generation of company succession, business owners aged 50+ who are more savvy working with and selling to investors. This marks a shift from the traditional multi-generation family-run business.
Evolving strategies in co-investment and value creation
The panels discussed evolving co-investment and value-creation strategies amid a shifting market. While buyouts have decreased, co-investment deals remain stable due to funds holding onto dry powder or needing more equity. Despite slowed PE market activity in 2023, careful deal selection and operational efficiency are critical. Large firms focus on improving topline, costs, strategy, and ESG impact. There's a shift towards larger funds, with smaller funds facing consolidation or a deal-by-deal approach. LPs are more selective, prioritising larger, resilient investments.
ESG factors and diversity
ESG factors and diversity issues were also crucial points of discussion. While the green transition remains a hot topic, many European funds question the need for Article 9 due to its restrictive nature. LPs appear more interested in classical PE funds with a strong thesis for incremental improvements. Succession and diversity remain critical issues, with a notable lack of female leaders in the industry.
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