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Economic Impact of Private Equity in Germany: How buy-out investments influence the German economy – an empirical analysis.12/11/2004. Source: Deutsche Beteiligungs AG (DBAG).
 In a buy-out, a company’s managers give up their salaried positions and become entrepreneurs. The change means more risk and increased motivation for the management team, says Deutsche Beteiligungs AG. With the help of a financial sponsor who can improve the operation’s financial situation and contribute know-how in the areas of structured financing and internal organizational improvements, the team can create momentum that will fuel increased growth. That is the theory, anyway. But how do private-equity companies perform in the long run?
Do they truly grow faster than their competitors? How do sales develop over a longer period of time? And what about job creation? For the first time in Germany, we have conducted an empirical, long-term study on the development of private-equity buy-out companies.
The project, conducted by Financial Gates GmbH for Deutsche Beteiligungs AG, covered both large and small volume buy-outs between 1997 and 1999 in various industries. To compare their performance, a representative benchmark group was established.
The study results are not just relevant to the financial community and the Mittelstand. They also have significant political implications: The call for improved framework conditions for financial sponsors and companies gains added weight if the evidence shows that private equity truly does promote growth and contribute to economic growth.
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With a track record of nearly 40 years, Deutsche Beteiligungs AG is a particularly experienced private equity partner and a first address in the German market. In 1996, we realigned our strategy and have since been concentrating our resources on majority acquisitions with management participation (management buyouts). Jointly with the parallel funds under our management, we have invested more than 500 million euros since 1996. In German-speaking countries alone, more than 400 million euros have been invested in 21 enterprises. For more information, visit www.deutsche-beteiligung.de
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