Frankfurt / Main. According to a recent CMS survey, the corona crisis is having a massive impact on the German private equity market: around 86 percent of the PE managers surveyed report an “extreme level” of failed deals.
Although no concrete figures are given, more than two thirds of the respondents also indicated that planned add-on acquisitions also had to be put on hold for the time being, according to the law firm. In the eyes of the PE managers surveyed, the purchase prices for M&A processes are also said to have “massively lost attractiveness”, according to the results of CMS and the FinanceMagazine conducted a survey of around 50 private equity houses from medium-sized German companies.
The effects of the corona crisis are also noticeable in the availability of buyout financing: on a scale from 1 (bad) to 10 (very good), the average value dropped from 7.96 to 4.30 points.
According to the survey, the conditions deteriorated less strongly: this value fell from 6.96 to 5.00 points. For the first time since the panel was surveyed, the terms of the financing were rated more positively than the availability of credit.
“The interest rate environment itself has not changed, but there is great uncertainty as to how the corona crisis will affect the business models of the targets – and most of them stay covered and wait,” said Jacob Siebert, partner at CMS.
Pessimism is spreading
On the buyers’ side, the panelists only rate the prospects for their business in the next twelve months with a value of 3.48 points (previously 6.16 points) and thus significantly more pessimistic, they say.
More than three quarters of the respondents favor the use of MAC clauses, earn-outs and other purchase price adjustment clauses. 70 percent of those surveyed also attach great importance to secured financing as a closing condition, they say.
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