Private equity house EQT invests despite the crisis

Berlin skyline with the TV tower

According to the Berlin company Got Photo, it has 4,000 customers in several countries.

(Photo: Moment/Getty Images)

Frankfurt Private equity firm EQT is acquiring software company Got Photo, which operates a platform for photographers. The parties involved do not provide any information about the transaction value. As a rule, however, the financial investor – backed by the Swedish Wallenberg family – invests around 100 million euros from its EQT Growth fund. In financial circles it is said that this is also the case with Got Photo.

Dominik Stein, partner at EQT, told Handelsblatt: “The market trend is towards fast-growing companies that are profitable at the same time. The market leader Got Photo also falls into this category.” This year, EQT made two investments from its growth fund, which has a volume of 2.4 billion euros: Integrity Next and Got Photo. Stein says two or three more could follow this year.

The focus is on European tech companies in the areas of software, consumer internet, health tech and climate tech. Stein believes that in times of crisis there are often opportunities for lucrative deals. “A lot of hot air has escaped from the market, valuations have returned to fair levels after several corrections.”

The collapse of the Silicon Valley Bank (SVB) has led to serious uncertainty among managers in the growth financing market. It is becoming more difficult to set up new funds, and there is also a risk of value adjustments in the portfolios.

According to the Berlin company Got Photo, it has 4,000 customers in the USA, Great Britain and the German-speaking market. The focus is on small and medium-sized companies as well as freelance photographers. Market growth is estimated at 24 percent annually until 2027.

Lowest level since 2016 for M&A in Germany

“With the new partner, we also want to promote internationalization, organically and, if we see a strategic fit, through company acquisitions,” explains Benedikt Greifenhofer, CEO at Got Photo.

The mergers and acquisitions market suffered a setback in the first quarter. Volume in Germany has fallen to its lowest level since 2016, according to the latest data from information service provider Refinitiv.

The pillars in the market include medium-sized deals like that of EQT, mega-transactions hardly take place anymore because of the difficult loan financing.

According to a study by management consultancy EY on the M&A market (“Mergers and Acquisitions”), a total of 203 start-ups were taken over in Germany last year – more than ever before. The year before, the number of acquisitions was 171.

But the boom is over for now. Many investment bankers and financial investors are currently not expecting a noticeable recovery in the M&A market until the second half of 2023.

More: Hardly any mega deals in the M&A market

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