Much has recently been written about the private equity industry. Unfortunately, much of it, particularly in Germany, was outright critical, even hostile. Whilst the criticism of individual transactions and investment approaches may well be justified, much of the coverage was undifferentiated and failed to point out the vital contribution that Private Equity makes to the prosperous development of economies.
Independent research into the long-term effects of Private Equity in the United Kingdom - the most mature and advanced private equity market in Europe, suggests that Private Equity has a positive impact on
job creation,
growth,
investments,
R&D and
tax revenues.
While these research findings concentrate on the UK economy, they clearly demonstrate that it is important that economies have a professional and well funded private equity industry. There is no reason to believe that the beneficial effects of private equity are less effective in creating wealth for all stakeholders in other European countries.
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Private equity is a source of capital for many fast growing firms which don’t have access to capital markets or bank debt. As the current financial crisis highlights, this capital supply function is particularly important in times of financial turmoil, when private equity is often the only source of capital to finance the expansion of Mittelstand companies |
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Private equity often supports the continuous and prosperous development of Mittelstand companies in difficult situations of successions. For many families, a private equity facilitated Management Buy-Out or Buy-In is a preferred option to an outright sale to a large corporate entity as these buyers often change the culture and/or rationalise or integrate the target company. |
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Private equity often supports the execution of long-term business strategies outside the limelight and short-term result orientation of public ownership. |
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Private equity is a result oriented and supportive form of corporate ownership. PE firms actively work with their management teams to improve operations and execute ambitious business strategies. While this often involves painful restructuring work, it also results in viable, stronger and competitive companies in the end |
From our own experiences and expertise, we know that we can make a positive contribution to the companies we invest in. We therefore encourage an objective public debate on private equity and hope that more differentiated views will shape the future discussion. We also encourage you to visit the website of the Bundesverband der Deutschen Kapitalbeteiliungsgesellschaften (
www.wir-investieren.de; +49 (30) 3069820) for more information.
In the meantime, we will work hard to fund and support the growth of companies in vital sectors of the German, Austrian and Swiss economies, notably health, education, energy, environment, industrial technology and business services. We thus hope to make a small, but important contribution to the job and wealth creation in our chosen country of operations and encourage you to contact us with your views or investment ideas.
