Record year for Chinese M&A in Germany
by Miriam Fritz, Consultant, Berners Consulting Stuttgart
In terms of transaction volume, 2012 was by far a record year for Chinese M&A in Germany. With the big transactions of Putzmeister (approximately 360 million EUR) and Kion (approximately 750 million EUR), the large Chinese enterprises now occupy a prominent place in German media. However, there is also a significant increase in activities in small and medium sized transactions, both from Chinese buyers and from German sellers.
Chinese buyers are becoming increasingly professional in their M&A activities. While the majority of Chinese potential buyers is still operating on the principle of "window shopping," looking for "opportunities," the number of Chinese companies who are systematically searching for targets is increasing. Especially in the automotive supplier and mechanical engineering industries, in which Chinese companies are highly developed and are looking to close specific gaps in their portfolios, the Chinese companies are aware that opportunistic behavior is not effective. Two examples: A Chinese automotive supplier has mandated us to find M&A targets in Germany; the detailed list of criteria for target selection fills three pages. On the other hand, a mechanical equipment company, whom we are supporting with finding a technology partner in Europe, rejected a German seller's advances, as M&A is not part of the company's strategy. We are, therefore, dealing with strategically acting companies who know exactly what they want.
German sellers are looking to China, especially in industries in which Chinese companies play a major role. Little suprise, these are again the automotive and mechanical engineering industries. Driven by largely positive media reporting in Germany and the large cash reserves of many Chinese companies, an increasing number of German companies is approaching us with sell-side interests. As with Chinese buyers, we differentiate between sellers "spreading the word" and targeted buyer searches. In our experience, "spreading the word" is not very promising, especially if the seller has an interested in seeing the company thriving after the sale. With targeted searches in which a single consultancy is mandated to find a buyer, the chances of success are much higher.
Based on the data from the last few months, we expect the trend to continue in 2013. The number of Chinese takeovers in Germany will continues to increase. No matter whether buyer or seller - our clear recommendation is: One should begin the discussion about one's own targets and requirements for the planned transaction as early as possible, and become active at the appropriate moment with decisive and consequent action.
For further information, pelase contact Ms. Miriam Fritz, mfritz@berners-consulting.net.