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EVERGREEN/INDUSTRY HOLDING INVESTMENT

The panel featured Philipp Haindl, Founding Partner at Serafin Group; Torsten Krumm, Chairman of the Investment Committee and Managing Partner at HQ Equita; Thomas Racky, Co-Founder and Managing Director at Strategic Family Office Advisors; and Richard G. Ramsauer, Co-Founder and Managing Partner at VTC Industriebeteiligungen. Dr. Carsten Böhm, Partner at McDermott Will & Emery, headed the expert group.

In contrast to previous panels, which discussed the investment side of evergreens and industry holdings, this year’s discussion focused on looking behind the scenes, i.e., how do they incentivize their partners, managers and employees?

Immediately it became clear that very different models exist, all of which bear the risk of being over-incentive and over-ambitious as well as in-flexible.

When asked which motivation structures have proven beneficial in the past, the panelists agreed that there are numerous models, but classic structures are still the most reliable. Drawing on the panelists’ different experiences, the discussion focused on tools such as net-asset-value-based models (NAV; 

accumulated equity value), bonus payments based on individual goals and targets and buy & hold-returns. PE fund structures with carries and hurdle rates are also common in the market today. Undoubtedly, it is important to avoid schemes where assets remain in-house for a long time after exit, accumulating negative interest rates.

The panelists observed that management equity participation schemes also prove to be effective mechanisms for incentivizing as does management retention by means of redeemable participation and dividend payment. Notably, an equity participation is an ideal binding force which can be customized individually (i.e. limited to a particular portfolio company). Bonus payments in combination with direct participation schemes are most common.

Overall, the panelists agreed that the early implementation of an incentive scheme is key and predicted that new participation models will come about, especially on the secondary market, as incentivization is not only a monetary issue and needs to be addressed on a case-to-case basis.

Chaired by
Dr. Carsten Böhm,McDermott Will & Emery

From left to right: Thomas Racky, Strategic Family Office Advisors; Richard G. Ramsauer, VTC Industriebeteiligungen, Torsten Krumm, HQ Equita; Philipp Haindl, Serafin Group; Dr. Carsten Böhm, McDermott Will & Emery
M&A AND PRIVATE EQUITY MARKET 2019
The six panelists in this discussion, Dr. Florian von Alten, Managing Partner at Oaklins Germany; Carsten Hagenbucher, Managing Director at Charterhouse Capital Partners; Dr. Sven Oleownik, Partner and Head of Germany at GIMV Germany; Norman Rafael, Chief Corporate Development & Investor Relations Officer of Armacell International; Dominik Schwarz, Director at EMH; together with panel head Dr. Nikolaus von Jacobs, Partner at McDermott Will & Emery, discussed the development of the M&A and the Private Equity Market in 2019. The transaction numbers in the first half-year compared to the numbers last year are showing that the activity has decreased by close to 40% in the European Market. Especially transactions with Germa...
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OPENING STATEMENT: PUTTING THE TRANSATLANTIC ECONOMY ON A FREE AND FAIR FOOTING019
The honor of opening the ninth Munich Cross-Border M&A and Private Equity Investment Conference was given to Meghan Gregonis, General Consul of the United States in Munich. The topic of the opening statement—putting the transatlantic economy on a free and fair footing—aptly complemented the focus of the conference: “10 Years of Growth – What Comes Next?”, as trade tensions these days seem to have an enormous impact on the markets. Consul General Gregonis’ remarks focused on the state of the trade relationship between the United States and the European Union, a partnership with a rich history of more than 70 years. After World War II, the institution of a free trade system not only lifted millions out of poverty and increased economic&nb...
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END-TO-END M&A PROCESS DESIGN FOR THE 21ST CENTURY: THE CHALLENGES AND LEVERS OF DIGITALIZATION AND BUSINESS MODEL INNOVATION
In his keynote, Prof. Dr. Thorsten Feix, Professor for M&A, Corporate Finance and Strategy in Augsburg, Munich, Harvard and Geneva, focused on End-to-End M&A Process Design for the 21st century and the challenges and levers of digitalization and business model innovation. Prof. Feix identified that new business designs and players, especially platform builders, on the market are unified by the fact that they all do not actually own the assets their business model is based upon, be it mobility, digital business designs, the accommodation industry, retail, communication providers or even the Fintech sector. This development of the M&A market requires concentrating on its true driver: Innovation. When comparing M&A volumes...
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CASE STUDY: AUTOMOTIVE SUPPLIER—KEY FACTORS FOR A SUCCESSFULL RESTRUCTURING
In the final session of MuMAC 2019, we provided the audience with a snapshot of the typical issues facing automotive suppliers when undergoing restructuring as well as approaches for dealing with them. We worked through the classic starting points in the automotive supply industry and the main factors for a successful outcome. Typical Starting Points With automotive suppliers undergoing restructuring situations in the German market, a consistent pattern of complex interactions is common. First, smaller and mid-sized suppliers, at least, are focused on the automotive industry only. Consequently, the customer base is mainly comprised of automobile manufacturers and other automotive suppliers—only in rare cases you can also find other business areas which may allow for a wider approach to res...
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INTERVIEW ON PITFALLS AND CHALLENGES OF TAX GUARANTEES IN M&A TRANSACTIONS
Prof. Dr. Wilhelm Haarmann, Partner at McDermott Will & Emery, and Dr. Nils Wighardt, Associate at McDermott Will & Emery, discussed risks and challenges of tax guarantees in M&A transactions and talked about ways to prevent trouble related to tax law in these transactions. To start the interview, Mr. Haarmann gave a short insight on his first nine months at McDermott Will & Emery and spoke about the IBA conference in Seoul in which he participated in a panel about tax war the day before the MuMAC. The first question of the interview aimed on the definition of taxes in an M&A deal, and the problem that a specific tax doesn’t fall under this definition. As buyer and seller have different interests in a deal, there can be also different ways to interpret what a tax is and...
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KEYNOTE: THE WORLD IN DISORDER— END OF THE GROWTH CYCLE?
With her keynote speech, Dr. Daniela Schwarzer, director of the German Council on Foreign Relations, gave the audience an overview on the current geopolitical development in Europe and the world, and its impact on the economy. Following is a summary of the keypoints. To make sure that a dialogue between companies and policy makers is actually happening, institutions like the German Council on Foreign Relations are needed to react to the fast-developing world. This dialogue is important, as we live in a world that gets more and more risky and insecure. Business is already adjusting to these geopolitical and geo-economics challenges and changes; politics has to do so, as well. But, currently, German and European politics are struggling&n...
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PRIVATE EQUITY AND PUBLIC MARKETS: HOW DO THEY GO TOGETHER?
The four panelists in this discussion: Nadja Picard, Partner at PwC Germany; Christoph Großekämpfer, Managing Director at Mutares; Christian Kolodinski, Director at Rothschild Advisors; together with panel head Simon Weiss, Partner at McDermott Will & Emery, discussed how private equity and public markets go together. First, the panel focused on the recent developments in the IPO market in 2019. They asserted that the number of IPOs decreased by about 40–45% compared to 2018 at the same time. The reasons for this trend can be found in relatively weak expectations for economic growth in Europe. Uncertainty of Brexit and trade wars, especially between the United States and China, generated this reserved mood. The big evidence fo...
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CRISES AND PRE-CRISIS MANAGEMENT

Together with the panel lead, Dr. Rainer Bizenberger from AlixPartners in Munich, seven panelists discussed current issues on Crisis and Pre-Crisis Management.

The panelists in this discussion who participated were Dr. Uwe Goetker, Partner at McDermott Will & Emery in Düsseldorf; Jan Groß, responsible for restructuring at UniCredit Bank; Andreas Jaufer of Robus Capital Management; Daniel Jürgenschellert of Helbing Business Advisors in Düsseldorf; Alexander Reus, Partner at anchor Rechtsanwälte and active in insolvency advice; and Samuel E. Dewey, Counsel at McDermott Will & Emery in Washington.

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CROSS-BORDER M&A FROM AND TO THE UNITED STATES AND WITHIN EUROPE

William F. Detwiler, General Partner at Fernbrook Capital Management; Dr. Michael Drill, CEO and Managing Director at Lincoln International; Tom Sauermilch, Partner at McDermott Will & Emery; and Heather M. Schroder, Director, Senior Legal Counsel Mergers & Acquisitions, Corporate Governance at Robert Bosch together with panel head Sarah Antor, Managing Director and COO Investment Banking Europe at Raymond James, discussed Cross-Border M&A from and to the United States and within Europe.

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LIFE SCIENCES, HEALTH AND PRIVATE EQUITY
During this breakout session, moderator Sharon Lamb, Partner at McDermott, was joined by Georg Ganghofer, Head of Investments at Brockhaus Capital; Christoph Brandenberger, Managing Director at Brown Gibbons Lang; Tiemo Grimm, Principal at Nordic Capital; André Seidel, Senior Investment Manager at Nord Holding, and Dr. Ulrich Wandschneider, Operating Partner & Senior Advisor at Trilantic Europe. The first of the three key themes the panel discussed was the status of the life sciences and healthcare industries and opportunities for private equity firms on both sides of the Atlantic. After the financial crisis in the late 2000s, US private equity firms focused on healthcare and life science have experienced strong growth. Globally, private equity deals in healthcare in 2018 and 2019 have...
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TRANSACTION FINANCING
Ralph Betz, Managing Director at EQT Partners; Benjamin Blumenschein, Senior Director at Crescent Capital; Paul H. F. Kim, Managing Partner at Herter & Co.; Michael-Franz Müller, Head of Leveraged Finance Germany at NIBC Bank; Oliver Wolter, Head of Leveraged Finance DACH and Managing Director at SMBC Frankfurt Branch and panel head Dr. Oliver K. Hahnelt, Partner at McDermott Will & Emery discussed transaction financing. The panel gave insight into the latest trends on the corporate finance market in Germany, particularly in the continuing rise of market shares of private debt funds in the MidCap leverage finance sector. In terms of leveraged finance, panel head Dr. Hahnelt stated that it has been quite an active year so far, though not as active as 2018, when the market share of p...
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M&A IN THE FINTECH INDUSTRY

Thomas Hürlimann, Board of Directors at Hiscox; Roman Rittweger, CIO and Founder of ottonova Holding; Dr. Gerrit Seidel, Managing Director at yabeo; Nikolaus von Taysen, Founder of Payworks & Circula and Pay.On, as well as Kilian Thalhammer, Advisor, Investor, FinTech Expert at Wirecard discussed the current status and developments of M&A in the FinTech Industry with Julian Ostertag from Drake Star Partners leading as the moderator of the panel. Together, they discussed the impact of digitalization on the FinTech industry as well as the reasons and fundamental issues that make a FinTech successful and attractive for investors. The discussion then moved to an exchange of opinions about the current state of fundraising and the ongoing M&A activity within the industry.

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DIGITALIZATION IN EUROPE – THE CHALLENGE IN BETWEEN THE US AND CHINA
Todd Albright, Chief Revenue Officer of Merrill Corpo­ration; Fabian Wasmus, Partner at Vitruvian Partners; Carsten Burger, Managing Director of DC Advisory; together with panel head Frank Steinherr, Partner at McDermott Will & Emery discussed digitalization and artificial intelligence as a driver of M&A. The panel began by noting that there is more computing power in the smartphones that are used today than in the computers used by NASA during the Apollo 11 lunar mission that put the first man on the moon just 50 years ago. As technology advances, so too does the rate of our technological advancements. Digitalization – that is the system of converting text, pictures, sound and other analog information into a digital machine readable form capable of being processed by computers - h...
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CROSS-BORDER M&A FROM AND INTO ASIA

Jin Chen, CEO at SINO-CEEF EUROPE; Yao Sun, Investor Relations Manager at Haier Smart Europe, Mei Wu, Managing Director at Joyson Europe and Hui Zhang, Managing Director at Nio; together with panel head Ding Han, Foreign Counsel at McDermott Will & Emery discussed recent developments in Cross Border M&A from and into Asia.

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KEYNOTE: CHALLENGES FOR THE AUTOMOTIVE INDUSTRY— STATUS AND OUTLOOK
Jens Haas, managing director and automotive expert at AlixPartners, spoke about the ongoing and anticipated future challenges for the automotive industry regarding current struggles and serious changes. Mr. Haas based his keynote speech on the challenging year of 2019 for the automotive industry, as global volumes have gone down by 5% since 2018. However, he explained that despite challenging markets in 2019, a slow recovery was still possible from 2020 onwards, which is strongly dependent on China. Mr. Haas explained that China’s automotive capacity utilization is trending down below healthy levels (70%) since 2016, with significant overcapacity. Due to current regulations, original equipment manufacturers will struggle to make the 2021-set CO2 targets and a disruptive pace is required to...
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POST-TRANSACTION VALUE CREATION
The panel discussion consisted of Sascha Günther from Oakley, Philipp Marquardt from AlixPartners, Arne Otto from Siemens Portfolio Companies, Dr. Karl Popp from SAP, and moderator Jens Weber from PwC. The discussion kicked off with the question of how the panelists are working with 100-day plans in the post-sale transition period. Interestingly, all the panelists shared the same opinion, more or less, despite their diverse professional backgrounds. From the panel’s perspective, it is important to create and have a 100-day plan when it comes to a transaction since it would provide great support for the structure and procedure of the post-transaction integration. However, it should be used as a guideline instead of hard rule, as in most cases three months are just not enough to achieve a su...
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W&I INSURANCE AND COMPLIANCE IN M&A TRANSACTIONS
Michael Gaul, Managing Director at Acquinex Germany, Felix Rettenmaier, Partner at Rettenmaier & Adick, Jacob Kuipers, Associate at McDermott Will & Emery, Dr. Barbara Roth, Chief Compliance Officer at UniCredit Bank AG, Simon Tesselment, Chief Broking Officer EMEA at AON, together with panel head Dr. Nadine Hartung, Counsel at McDermott Will & Emery, discussed issues around compliance in M&A transactions and the respective questions arising for obtaining W&I coverage. The panel started by discussing recent trends across M&A transactions, including the filing of criminal complaints if compliance issues surface in the wake of a transaction. Mr. Rettenmaier stated his belief that the initiative for a more rigorous corporate criminal law will be implemented in some for...
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