Corporate Finance 2020
Speaker
Steinbeis
Christian, in the last 12 months you have again flanked a number of companies with institutional debt and smart money venture capital. What is your outlook for the current year?
Christian
In 2020, companies will continue to benefit from the favourable interest rate level in the debt capital sector, even if the risk premiums have become higher due to the economic environment in the DACH region. We are flanking young, growing companies with "smart money venture capital" and companies in the upper midmarket with equity and debt capital.
Steinbeis
Many of the companies you flank need capital for acquisitions and expansion. They then receive institutional financing.
Christian
That is correct. In the context of growth financing, institutional funding from e.g. foundations and family offices, has many advantages for the companies financing. The financing funds can be structured flexibly and on a long-term basis and therefore supplement the existing financing from the house banks or existing investors.
Steinbeis
Can you give a current example?
Christian
We recently flanked a company from the manufacturing industry in acquisition financing. The existing bank consortium was unable to provide any further financing due to the companies’ leverage. The solution: institutional funding in the form of a mix of long-term debt and economic equity.
Steinbeis
How long did it take to implement?
Christian
In this case exactly 10 weeks, because the date for payment of the purchase price had been fixed in advance. Normally, we need 3-4 months for the implementation in cooperation with the company.
Steinbeis
You very often work with owner-led companies, why is that?
Christian
Owner-led companies tick very similarly to us. It's not just about the pure financing transaction, but in the institutional financing sector it's about establishing long-term relationships with the companies and providing real support. In addition to the conditions of the financing, discretion is very important for the majority of companies. A major advantage is that the transaction does not have to be published.
Christian
Christian, some industries in the DACH region, such as mechanical engineering and automotive suppliers, are clearly feeling the economic slowdown and have reduced their investments accordingly, also due to the current situation in China. What effects does this have on the area of corporate financing?
Steinbeis
Across all industries, we have not seen any significant changes in corporate financing activities in our sector so far. We are currently seeing a significant increase in corporate financing investments in areas such as personnel, including training, digitization and research and development. In our opinion, this will lead to many companies expanding their competitive advantages.