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German venture capital funds - an attractive investment opportunity
09/07/2008. Founders and young companies in Germany continue to have a strong need for capital. Venture capital firms are now again investing more often in German start-ups, with the number of founders who have been financed this year up from the previous year's level. Whether this is a sustained trend or merely a short-term straw fire will predominantly hinge upon the ability of venture capital firms to raise sufficient new capital from investors in the coming months. This continues to be a major challenge for German early-stage investors. Yet there has been a further improvement in the situation by comparison with the years before. 
Protecting Germany?
27/02/2008. M&A and private equity activity in Germany has reached an all time high in recent years: BVK figures show that 2007 set a new record, and that deal values have increased dramatically over the last five years.
Modernisation in Germany
05/12/2007. Over the last decade, the German government has made some real improvements to the legal framework for commercial activity. Private equity has benefited from many measures and (although the connection may not be a direct one) deal volumes have reached an all-time high, writes SJ Berwin.
A new private equity law for Germany?
30/05/2007. After nearly a year and a half of discussion, says SJ Berwin, the German Ministry of Finance has published a key paper on a proposed private equity law and other private equity related issues. This paper was eagerly awaited, and could have offered a solution to a number of longstanding problems for the industry. But, unfortunately, it does not.
German institutions increase their private equity investments
28/03/2007. As well as demonstrating an increased professionalism toward the asset class, Adveq's second survey of the strategies of German institutional investors for private equity investment reveals that German institutional investors, of whom no less than 40 per cent have private equity investments, are rapidly implementing their planned increase in allocation. In 2003 private equity accounted for a 1.2 per cent share of total investments, with a target allocation of around 2.2 per cent.
Growth is unbroken
20/03/2007. 2006 was a good year for German mid-market buy-outs, finds Deutsche Beteiligungs AG, with more transactions and higher value than ever.
German private equity and venture capital on the up
22/11/2006. The German private equity and venture capital market saw a recovery in fund raising and an increase in investments in the third quarter of 2006, says the BVK.
The German VC Market
06/09/2006. The VC market in Germany displays a number of attractive characteristics, says Dr. Pablo Fetter of Neuhaus Partners in this white paper. The encouraging state of the market is attributed to one main factor: the present status and the dynamics of venture capital supply and demand are very favourable.
German private equity industry update
05/07/2006. New investments did not break a record last year, but fundraising in Germany has started anew, while portfolio sales have developed in a positive way, says the BVK.
BVK half-year statistics 2005
09/01/2006. The German private equity market temporarily loses strength, says the BVK, while fund raising and early stage investment increases - and total losses continue to decline.
A calm private equity market in Germany
21/11/2005. Investments in the German private equity market in the first quarter 2005 totalled €418.7m but did not reach the results of the first quarter 2004, says these statistics presented by the German Private Equity and Venture Capital Association.
Germany: minimising exposure thanks to the flexibility of the GmbH
09/11/2005. In order to monitor their investment in a German portfolio company, private equity investors usually appoint an investment manager to the 'board' of the company, says SJ Berwin. As portfolio companies are often structured as a limited liability company (GmbH), investors take advantage of the flexibility that the GmbH offers to reduce appointees' exposure.
German tax
10/08/2005. Structuring a pan-European private equity fund is already hard enough, so the tax shenanigans in Germany in recent years have been an unwelcome headache for funds with German teams, or German investors, says SJ Berwin.
Germany: KPMG Leveraged Finance Study 2004
16/05/2005. In this study, KPMG analyses the German leveraged finance market and relationships between equity and debt providers. Their conclusion? These are interesting times for private equity houses in Germany.
German carried interest rules: the new regime
18/11/2004. On 6 August 2004, new rules on the taxation of carried interest came into force in Germany. The new law is intended to improve the environment for private equity, says SJ Berwin. That is critical: according to an EVCA study published in May, Germany has the fourth worst legal and tax environment for venture capital and private equity in Europe, beating only Austria, Denmark and Slovakia.
Economic Impact of Private Equity in Germany: How buy-out investments influence the German economy – an empirical analysis.
12/11/2004. 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?
Bad reputation, good opportunity: An inside perspective on venture capital in Germany
27/09/2004. Historically, those who have doubted the attractiveness of German venture capital opportunities have pointed to a lack of leading edge technologies, the inexperience of the country's entrepreneurs, a lack of worthy track record among venture capital firms and a scarcity of exits. Joerg Ueberla of Wellington Partners argues that while this may have been true in the past, it is in no way relevant to the current German venture capital landscape.
Taxation of carried interest in Germany
05/08/2004. With the German legislature poised to resolve the controversy surrounding the taxation of carried interests, the tax outlook for German private equity professionals is looking good, according to Friedrich Hey and David Hickok of Debevoise & Plimpton.
Tax Reporting for Private Funds Sold in Germany: Moving in the Right Direction
01/07/2004. After much pressure from powerful industry groups, the German ministry of finance has now indicated that private equity funds should not fall within the definition of ‘investment funds’ as referred to in the German Investment Act. If confirmed by an official pronouncement, this means that private equity funds will now not be required to publicly report a detailed list of assets, according to Marcia MacHarg and Patricia Bauernfeind Volhard of Debevoise & Plimpton.
Buy-outs of small and medium-sized German enterprises emerge from the doldrums
14/05/2004. Just E1.5bn of private equity is currently invested in the German mid-market, compared to E6bn in the UK. For private equity firms with a genuine experience of this market, this means that there are real opportunities to realise interesting investments with expected returns well above the European average, according to Global Vision.
 The giant engine who could?
10/02/2004. The German private equity industry has struggled to live up to its much touted promise over recent years, but Brian Veitch of Electra Partners Europe believes that the market could finally be turning a corner. Here, Veitch examines the stumbling blocks that have held Germany back in the past and looks ahead to better times for those private equity firms prepared to roll up their sleeves and to really get involved in turning their portfolio companies around.
German private equity activity in 2002 / 2003
03/02/2004. The total volume and value of German private equity deals increased in 2003. But exit opportunities remain restricted, according to Ernst & Young.
Q4 2003: Private equity survey - Austria, Germany and Switzerland
28/01/2004. The German-speaking private equity market is displaying positive signals for 2004, according to the Q4 2003 Private Equity Survey conducted by Deloitte & Touche. But the overall confidence indicated by the majority of private equity managers has not extended to more optimistic fundraising expectations.
Will Germany ever live up to its private equity promise?
30/09/2003. The German middle-market still bears enormous potential if private equity firms are able to ‘wake up' the companies that they invest in, according to Ralf Huep of Advent International.
German Tax
30/07/2003. For private equity houses operating or investing in the German market, the uncertain tax environment has long been cause for concern. But a statement of practice on fund taxation expected to be released later this summer may finally be cause for some cautious optimism, according to SJ Berwin.
Germany as a technology powerhouse
09/07/2003. Germany's economy is characterised by technological leadership and a tradition of entrepreneurship, according to Wellington Partners. But investment in Germany's technology sector is hampered by an international perception of the country's sluggish economic growth and political gridlock.
M&A Review for Germany, Switzerland and Austria
26/03/2003. Germany, Switzerland and Austria's mergers and acquisitions markets have been unable to avoid the downturn felt by the rest of the world. Dealogic provides a detailed analysis of the M&A market in the region for the twelve months to January 2003.
German market for management buy-outs: a personal view
04/03/2003. The German market has long been touted as being ripe for private equity investment, particularly in the famed ‘Mittelstand', a breeding ground for buy-outs. But, argues Andrew Richards, previously managing director of 3i Germany, the country is unlikely to live up to expectations. Here he presents a personal view of the prospects for the German market going forward.
Tax planning for mergers and acquisitions in Germany
28/01/2003. Since the introduction of sweeping tax reforms in Germany in 2000, the most important changes being the taxation of corporations, their dividends and capital gains in corporation shares, it's important for investors to watch out for pitfalls, says Freshfields Bruckhaus Deringer.
Underpricing of IPOs and the certification role of venture capitalists: evidence from Germany's Neuer Markt
11/12/2002. Venture-backed companies that are underwritten by top banks are more likely to be underpriced than their non-venture-capital-backed counterparts, finds Tilo Kraus of the University of Warwick, in this study of Germany's Neuer Markt between 1997 and 2001.
Financing practices in the German venture capital industry: an empirical assessment
16/09/2002. Venture capital has become an important form of finance for start-ups in Germany. In the past decade, German venture capital has ceased to be a niche industry and has become an increasingly crowded market. In this study, Uwe Walz and Andreas Bascha of the Centre for Financial Studies discuss the predominance of convertible securities in venture capital contracts.
How the German foreign investment act applies to foreign private equity funds
23/07/2002. When marketing foreign funds to German investors, one of the first barriers is the foreign investment act (FIA). Alexander Vogts and Benedikt Weiser of Linklaters & Alliance discuss the effects of the act on foreign private equity funds and how such funds can avoid its application.
German tax issues for private equity funds
06/06/2002. Private equity funds attracted the interest of the German tax administration when it turned out that significant gains were tax-free under the existing rules. Since then, a debate between the tax authorities, private equity companies and advisers has taken place, with the tax authorities wanting to lay down their principles on the treatment of private equity funds in a public ruling letter. Although the publication of this ruling letter has been postponed several times and only a draft letter has been issued at the time of writing, in this article Christoph Lorenz of KPMG illustrates some of the key issues involved in the debate.
Turning public equity into private equity
04/06/2002. Germany's Takeover Act, introduced this year, provides a statutory framework for acquisitions. It could open the door to a string of public to private deals, says Markus Strelow of Ashurst Morris Crisp.
Financing LBOs under German law
15/05/2002. The global economic downturn and the Neuer Markt crash has left investors in VC funds wary of where their money is being deployed. Venture deals are declining as exit opportunities dry up. The resulting shift in emphasis to the leveraged buy-out market has brought with it a need for clarification of its processes and legal structures, as examined by lawyers in Lovells' Germany office.
Early-stage investments in Germany: new challenges and opportunities
10/05/2002. German start-ups have learned valuable lessons from the past and are now equipped with good quality teams and world-class business models. Friedrich Bornikoel of Techno Venture Management on why it is a good time to look to invest in Germany once again.
Private equity and venture capital rules lack focus
07/05/2002. As the German private equity and venture capital investment market has grown, so has the demand for clear rules for the tax treatment of such investments. The recently published draft guidelines address some, but by no means all, of the open questions in connection with private equity and venture capital activities in Germany. Christian Ehlermann of Deloitte & Touche explains further.
German tax reform - the never-ending story
30/04/2002. The German tax system continues to change, both as part of the formal ‘tax reform' process and a more wide ranging debate, with substantial implications for private equity in each case. It is clear that this will remain an area that is of key interest, with opportunities as well as risks for the German private equity industry, say Uwe Schimmelschmidt and Christopher Kellett of Clifford Chance Pünder.
Take-over season in Germany
03/04/2002. A new German take-over law, which came into effect on 1 January 2002, brings more transparency and clarity to equity transactions and could improve exit prospects for venture capitalists. Michael Roos and Christian Cornett of SJ Berwin explain the new regulations and how they will affect the private equity industry.
Privately placed closed-end funds for cross border investment from and into Germany
27/03/2002. Germany's closed-end funds, such as venture capital and buy-out funds, tend to attract foreign investment rather than capital commitments from its own domestic market. Reinhard Pollath and Andreas Rodin of P&P Pollath & Partners examine why Germany's business, tax and legal structures for such funds promotes this cross border investment trend.
Taxation of venture capital and private equity funds in Germany
12/03/2002. Taxation on Germany's private equity and venture capital funds will become more favourable to investors if proposals in a recent draft circular are brought into effect. Rather than treating funds as commercial partnerships, thereby making investment returns subject to taxation, the draft circular proposes that funds become tax-transparent, non-commercial vehicles. Goetz Wiese, John Walker and Jiyeon Lee-Lim explain the implications of the ‘safe harbour' intended to provide a comfort zone to fund investors and argue that its reach is far too limited.
Time to throw away the lifebelt?
05/03/2002. The increasing number of foreign private equity investors in Germany has long posed a problem for the tax advisers to private equity funds. These funds are typically structured as limited partnerships and the level of activity in Germany means that the management organisation will need a local team to help it to source deals there. The issue is, of course, how to structure a local presence without jeopardising the position of the fund and its investors under German tax law. John Watson and Klaus Herkenroth of Ashurst Morris Crisp offer some guidance.
Growth by transition: an overview of private equity in Germany
01/03/2002. A new model of German private equity is emerging out of a period of extraordinary transformation. The combination of domestic and external factors since the middle of the 1990s resulted in a highly compressed evolution and produced one of the continent's largest and most sophisticated markets. Almeida Capital presents an overview of the German private equity market in their speech at the Super Return Summit in Munich, February 2002.
One step forward...
01/02/2002. Germany's recent tax reforms will cause a surge in European M&A and buy-out activity – eventually. But in their current form they will also affect investors and the private equity industry in some rather unfortunate ways, says SJ Berwin
Investor report: Views on the German market from private and institutional investors
28/01/2002. After a period of strong growth in the 1990s, the private equity and venture capital sector in Germany is beginning to enter a phase of consolidation, according to this report from Golding Capital Partners. Confronted with the current challenging economic and political environment, investors have become even more demanding in selecting only the more experienced fund managers. And nowadays only the best business plans are able to convince investors to commit capital.
How to implement a standard US venture capital term sheet in Germany
21/01/2002. German corporate law is quite different from US corporate law, but all the material terms and conditions of a standard US venture capital transaction may be carried in a German VC investment. The mechanisms differ but the economic substance is the same, say Dr Hurbert Besner and David Ayres of Brobeck Hale and Dorr.
Taxation of private equity and venture capital funds
03/10/2001. German tax authorities recently agreed on certain rulings concerning the trade tax position of private equity and venture capital funds. Linklaters & Alliance outlines the main areas of agreement in this article.
The German road to innovation
24/08/2001. Germany's central position, highly efficient infrastructure and modern communications network means that the country is a perfect centre for new companies. However, as this article from McKinsey Quarterly explains, no companies founded since the early 1970s have become global market leaders.
German private equity investment up
16/08/2001. Prospects seem bright for the German private equity industry so far this year. These half-year figures from the German Venture Capital Association (BVK) indicate a marginal increase across all stages of investment.
Private equity overview
23/07/2001. The private equity market in Germany has experienced extraordinary growth over the last four years and this overview by the EVCA details some of the reasons for its success.
Revision to the German Takeover Act
01/06/2001. Expected to come into force next year, the German Takeover Act will affect M&A activity and private equity transactions in Germany. Here Clifford Chance Punder presents the main areas for change.
Single investor private equity fund of funds: why compromise?
29/05/2001. Fund of funds is a relatively new concept for private equity investments and makes this asset class accessible to a broad base of potential investors. But a new, even more flexible type of fund of funds has emerged. The single investor fund of funds allows institutions to customise their investments to suit their needs. Here FERI Private Equity presents the benefits of using this type of vehicle to invest in the asset class.
Thinking big
29/05/2001. There has never been a better time to be a private equity investor in Germany says Zephus Corporate Finance. The country has the largest small and medium-sized enterprise base in Europe and, after recent tax reforms, it's set to undergo unprecedented change.
Takeovers in Germany
29/05/2001. The new German Takeover Code is an important step forward for private equity there, says SJ Berwin.
The effect of German tax reforms on institutional investors in the German private equity market
29/05/2001. Everyone is talking about the wide-ranging German tax reforms – but what are they and why are they beneficial to institutional investors? Here, Arthur Andersen reviews the German taxation of domestic and foreign investors, both before and after the recent reforms. It highlights how and why the private equity market has become far more accessible to investors and details the investment structures available and their new tax status.
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