Publisher’s Preface | Tatjana Anderer — Founder of FYB Publishing

The number of Private Equity funds has mark­edly increased world­wide. All successful gene­ral part­ners are over­sub­scri­bed. Compe­ti­tion of Private Equity funds for poten­tial port­fo­lio firms has become more inten­sive with the conse­quence of higher valua­tions. Indus­try experts esti­mate earnings from shares at about 5% p.a. during the next ten years. Private Equity earnings may run from 9% to 10% p.a. – net of all costs.

Thus, in a zero-inte­­rest rate envi­ron­ment, Private Equity and Venture Capi­tal have become more attrac­tive than ever. And not only for insti­tu­tio­nal inves­tors. It is wealthy fami­lies that invest more and more often in company equity directly or via funds. Some of them have estab­lished profes­sio­nal orga­niza­ti­ons, incre­asingly offer venture capi­tal finan­cing and are popu­lar co-inves­­tors. Their moti­va­tion is multi-face­­ted – attrac­tive returns, access to new tech­no­lo­gies or inves­t­ing in other compa­nies permit them to remain entre­pre­neu­ri­ally active.

Family Offices have the most important goal of safe­guar­ding their wealth for future gene­ra­ti­ons: capi­tal preser­va­tion has highest prio­rity. Their acti­vi­ties are not geared to achie­ving maxi­mum profits in the short term, but rather to sustain and deve­lop the family wealth over time, to gene­rate value in the long term. They like to trans­fer their former entre­pre­neu­rial respon­si­bi­lity to the Family Office. As a family offi­cer put it: “Family means respon­si­ble ownership.”

Who will prevail in the direct invest­ment market? In a market, in which demand exceeds sellers‘ supply, Family Offices and Private Equity are likely to be inte­res­ted in the same target compa­nies. With their parti­cu­lar approach and goals, Family Offices may be a respon­si­ble ”better new owner“ for a company. From the view of inves­tors, there is the ques­tion of goals. Answers can be found from page 140 in the maga­zine section.

In the Maga­zine section, the FYB 2020 will again offer nume­rous promi­nent authors with inte­res­t­ing papers regar­ding the Private Equity and Corpo­rate Finance indus­try with the Family Office sector as a focal point. Are Family Offices the new Private Equity firms? Or is direct invest­ment by Family Offices a tempo­rary pheno­me­non that will soon disap­pear because of their alle­gedly lack­ing profes­sio­na­lism? This is discus­sed by Nadine Kammer­lan­der and Anto­nia Schi­ckin­ger (WHU – Otto Beis­heim School of Manage­ment), based on a study by the WHU Insti­tute for Family Compa­nies. – The importance, which Family Offices have mean­time achie­ved in the Private Equity sector, is analy­zed by the Private Equity vete­ran Jens Reidel, former Chair­man of BC Part­ners, today rela­ted to the RIGI Family Office, Rotkreuz (Switz­er­land).

Clas­sic due dili­gence is not enough! Fried­rich von Hurter (PwC Price­wa­ter­hous­e­Coo­pers) shows how tran­sac­tions must be scru­ti­ni­zed today to gene­rate value in deals while mini­mi­zing risk. – Chris­toph Ludwig and Thomas Unger (BLL Braun Leber­fin­ger Ludwig Unger) shed light on the topic of tax compli­ance for Private Equity funds, taking account of the most recent decis­i­ons of the Fede­ral Fiscal Court, conti­nuing their last year’s contri­bu­tion on “(Denied) Tax Neutra­lity of Capi­tal Repay­ments – The Hidden Intro­duc­tion of Taxa­tion of Capital?”

The treat­ment of employees as “key assets” in tran­sac­tions with Chinese inves­tors reve­als the diffe­ren­ces in company cultures between German and Chinese inves­tors. Available opti­ons are discus­sed by Florian Hirsch­mann und Tobias Schulz (Reed Smith LLP). – Crimi­nal tax procee­dings initia­ted by German tax autho­ri­ties, frequently due to unin­ten­ded mista­kes, have become common prac­tice, as some mana­gers have expe­ri­en­ced at their peril. The way in which a Tax Compli­ance Manage­ment System can result in avoi­ding liabi­lity and lowe­ring tax risk is explai­ned in detail by Thomas Jäger, Maxi­mi­lian Boden­ha­gen (LM Audit & Tax) and Miriam Rosen­thal (LM Law Rechts­an­walts­ge­sell­schaft mbH).

The DOs and DON’Ts in nego­tia­ti­ons with Venture Capi­tal inves­tors are listed and discus­sed by Mauritz von Einem (ARQIS Rechts­an­wälte). – The diffe­ren­tia­ted role that corpo­rate gover­nance can play for listed and non-listed compa­nies, espe­ci­ally those that are owned by finan­cial inves­tors, is presen­ted by Eva Nase und Ralf Seier (P+P Pöllath + Part­ners). – The way in which alter­na­tive finan­cing may support change proces­ses is explai­ned by Carl-Jan von der Goltz (Maturus Finance). – The deve­lo­p­ment of disrup­tive busi­ness models and the gene­ra­tion of tech­­no­­logy-based radi­cal inno­va­tions present great chal­lenges for estab­lished compa­nies. One solu­tion of how compa­nies may retain their role as leaders in this inten­si­fied compe­ti­tive envi­ron­ment is the “Corpo­rate Lab”. The func­tio­ning of such a corpo­rate lab is explai­ned by Max Ringl­stet­ter and Vinzenz Krause (IDM) by way of the exam­ple of the light­ing industry.

The FYB 2020 has contin­ued to grow, on more than 500 pages now, and conti­nues to enjoy great popu­la­rity. – There are also entries by foreign Private Equity compa­nies that want to be present in the FYB Finan­cial Year­book and the German market. The FYB 2020 offers close to 300 stan­dard entries, among them 120 Private Equity and Venture Capi­tal compa­nies, 40 law firms, 40 corpo­rate finance specia­lists, 33 busi­ness consul­tants and nine Family Offices. The FYB 2020 ther­e­fore remains the leading refe­rence book for alter­na­tive finan­cing in Germany. You can also find inte­res­t­ing news at www.fyb.de.

With best regards,

Tatjana Ande­rer