Frankfurt is considered a gateway for hedge funds.
(Photo: Marc-Steffen Unger)
Frankfurt The investment bankers are already in a celebratory mood with a view to the New Year: According to their assessment, the boom in mergers and acquisitions (M&A) should continue at least into the summer. “With the strong business performance in many sectors, the focus is increasingly on inefficient balance sheets,” says Jens Maurer, Co-Head Investment Banking Germany and Austria at Morgan Stanley. This could be a gateway for activist investors “who want to see excess cash distributed”.
According to the investment bank Lazard, the activists named by Maurer, specialized hedge funds, launched 94 attacks worldwide in the first half of the year, although size does not necessarily offer protection, as the Exxon and Danone cases show. “Of course, activists also use inefficient capital structures in their campaigns to push for free capital to be returned to shareholders,” says Christopher Droege, Co-M&A boss at Goldman Sachs for Germany and Austria. In his opinion, however, they are more often pushing for parts of the company to be split up or split off in order to raise valuation discounts.
The advisors unanimously say that anyone who, as a managing director or board member, wants to arm themselves against such attacks is well advised to invest or at least to examine options for acquisitions in order to let the capital work. And that seems to be happening: “We are seeing that German companies are preparing to grow even more through takeovers,” says Wessel Heukamp, partner at Freshfields.
Financial investors are also sitting on record levels of uninvested funds. This financial strength of the private equity funds is, in addition to the cash holdings of the companies and the generally favorable terms for takeover financing, another catalyst for the M&A business. “There will also be big deals in the double-digit billion range,” says Jens Kengelbach, Senior Partner at the Boston Consulting Group.
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Goldman banker Droege agrees: “We are currently seeing significant upheavals and consolidation tendencies in many industries. It can therefore make a lot of sense to use the current financial leeway for strategic acquisitions. “
More: When corporate spin-offs are worthwhile for shareholders