New private equity panel set up by CMS Hasche Sigle and FINANCE

Frankfurt/Main – Private equity investors still regard external financing as almost unobtainable, but nonetheless feel that excessively high company valuations are the main factor holding the German private equity market back. Despite an improvement in business prospects and more transparent business plans, stable sectors remain top of the private equity shopping list: pharmaceuticals/healthcare, services and the food industry. The three industries currently least favoured are construction, automotive and the financial sector.

Those are the key findings of the first survey by the FINANCE Private Equity Panel set up by specialist magazine FINANCE at the start of the year in conjunction with law firm CMS Hasche Sigle. The panel includes leading representatives of 58 different private equity funds that invest in Germany, 47 of whom took part in the survey – ensuring broad coverage of the German private equity market. The panelists will be surveyed anonymously three times a year to obtain their assessment of the market.

Dr Joachim Dietrich, partner at CMS Hasche Sigle: "Private equity investors are increasingly confident that banks will resume lending to them on acceptable terms before long, but the results of the current survey show that obtaining external financing remains a challenge at present."

72% of the respondents saw valuation issues as the main reason for transactions failing to progress beyond due diligence. "This demonstrates that vendors' price expectations have dropped only slightly compared to the boom years, despite the economic crisis," says Dr Tobias Schneider, partner at CMS Hasche Sigle. "A lack of transparency in business plans definitely plays a role here. At the moment this makes it difficult for private equity investors to accept the high valuations sought by vendors," continued Schneider.