Every day counts - Deutsche Beteiligungs AG

This performance is founded on six premises.
We concentrate on one theme: management buyouts
As a financial investor focused on majority acquisitions in partnership with management,
we pursue one primary goal: to appreciably build the value of our investments
within a time horizon of approximately five years. Following a management buyout,
former group subsidiaries are transformed from a perpherial activity to a core business.
Decentralizing the accountability for performance and introducing new organizational
structures mobilize new drive within a company. Our capital creates opportunities for
investee enterprises to quickly develop their businesses. For example, it puts management
in a position to realize long overdue capital expenditure programs, bring products to
market, or enter new markets. Furthermore, it enables the managements of spin-offs to
make important decisions on a timely basis without having to compete with other divisions
for the funds, as is often the case in large conglomerates. Additionally, a financial
minority investment on the part of management ensures that its objectives coincide
with ours.
We will persistently pursue the strategy change toward management buyouts which
we initiated in 1996. This means that our second business field of expansion financing,
currently accounting for 40 percent of the total portfolio, will decline in the coming
years.
We adhere to a disciplined investment process
Through our investment strategy, we have developed an approach that has made us
a leading address in the German private equity market. As a long-standing Old Economy
investor, we are exclusively interested in mid-sized enterprises that generate annual
sales of 50 million to 750 million euros and operate in manufacturing or processing
industry or in selected service sectors.
Potential target companies must have seasoned managements who have done excellent
work in those companies in the past and are willing to financially invest in the buyout.
Moreover, target companies must boast a prominent market position and verifiable
profitability with significant potential for earnings growth. Prudent due diligence scrutinizing
the risks and opportunities of a transaction achieve quick clarity on this. Start-up
businesses and enterprises requiring a high degree of restructuring to survive in the
market will not be considered.
The debt-free purchase price of a target company should range from 50 to 250 million
euros. Of this, we provide equity of up to 60 million euros jointly with our managed
co-investment fund. To shoulder larger equity requirements, we draw upon the readiness
of our fund investors and our contacts to other financial investors pursuing similar coinvestment
strategies. This ensures that Deutsche Beteiligungs AG is able to act as a
majority investor – even though it may not always hold the share majority alone. The
final point in an investment process is the investment’s ultimate sale. Exit opportunities
are a a key part of our considerations from the very onset. We expect an investment to
generate returns of 25 percent annually on our invested capital.
Deutsche Beteiligungs AG · Annual Report 2002/2003
Corporate Review – Market and Strategy
Premise 1
Premise 2
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