Despite the ongoing uncertainty caused by the pandemic, the company acquisitions business has picked up speed rapidly.
This is shown by a broad analysis of several transaction databases by the M&A consultancy Oaklins.
Accordingly, a good 63 percent more deals with participation of German companies were concluded in the first half of the year than in the same period of the previous year, which was heavily impacted by the corona outbreak.
What is particularly noteworthy, however, is that the current recovery is so strong that it has far exceeded the pre-crisis level.
Because compared to the first half of 2019, the increase is 19 percent.
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Florian von Alten, CEO of Oaklins, is therefore expecting an exceptionally good year for the German M&A industry. "The market came back very quickly after the coronavirus paralysis," says von Alten. He believes that 2200 transactions can take place this year. Transactions in which either the buyer or the purchased company is located in Germany are considered here.
The development of the M&A market is not only interesting for management consultants and lawyers who earn a lot of money from the deals. Thriving takeovers are also a sign of good mood in the economy as a whole. If vigorous investments are made again in company investments, that gives hope for the future. Or is the M&A business only booming because companies worn down by the crisis are being sold to opportunistic company hunters at bargain prices? This concern is apparently unfounded: "We hardly had anything to do with restructuring cases," says von Alten, a transaction specialist. In addition, the evaluation of databases and experience with our own projects showed that not only the number of transactions has grown significantly, but also the prices paid.
In many industries, according to Oaklins, the valuations of company shares are already back to pre-crisis levels, in some cases even higher.
This applies in particular to the business areas of digitization, mechanical and plant engineering and healthcare, which are coveted by buyers.
A seller's market prevails for good companies.
So owners can charge high prices.
"In view of the strong economic recovery, many buyers are now even losing hope of being able to take over ailing companies," says von Alten.
However, the situation of companies from sectors heavily affected by Corona, such as gastronomy, trade fairs or events, remains precarious.
Financial investors make records
Takeovers are not only made by strategists, i.e. companies that take over competitors or expand their business to other industries. Financial investors also buy companies on a large scale in order to be able to sell their holdings at a profit after a few years or to go public. In this way, the private equity industry increases the return on its investors, such as pension funds or insurance companies. Financial investors increased their share in German M&A transactions to 37 percent in the first half of the year. This is a record according to the Oaklins experts. They explain the development with the fact that financial investors are sitting on an extraordinary amount of capital and can take out loans at low interest rates to finance their company acquisitions.
The financial investor Ardian, which emerged from the French insurance group Axa and is now independent, made it among the ten largest transactions of the first half of the year with a takeover. Ardian bought GBA Gesellschaft für Bioanalytik, a German service provider whose customers include laboratories in the food, environmental and pharmaceutical industries, for just under 1.4 billion euros. By far the largest transaction, however, was brought about by a strategic buyer. It concerns the takeover of the real estate company Deutsche Wohnen by the major landlord Vonovia for 28.9 billion euros. Both companies are listed and belong to the leading index Dax.
The second-largest deal was strategically much more surprising: the shoe brand Birkenstock, once considered to be slightly narrow-minded, was worth so much in the eyes of the French luxury group LVMH that it paid almost 3.8 billion euros for the German company. The takeover of the Internet trading company SIGNA Sports United by the American acquisition vehicle Yucaipa also caused a stir. The transaction serves to bring the company to the New York stock exchange.
Investors had already provided large parts of the capital before it was even known in which participation the funds would be invested. Such so-called SPAC transactions have experienced a boom in the United States. On the German transaction market, on the other hand, this variant is unlikely to become a mass phenomenon in the opinion of Oaklins board member Florian von Alten.