Private Equity Firms in Germany: Can they Change the Corporate Landscape?



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Code :BSM0022

Year :
2005

Industry : Banking, Insurance and Financial Services

Region : Germany

Teaching Note:Not Available

Structured Assignment :Not Available

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Private Equity Firms – A Brief History The firstmajor PEF,Warburg Pincus was established in the late 1960s, to raisemoney frominvestors for buying shares of privately held companies to sell themlater at higher prices. Till late 1970s, the investment arms of a fewwealthyAmerican families controlled the activities ofPEFs. Prominent among themwere theRockfellers and theWhitneys.Even in 1985,when Steve Schwarzman and Pete Peterson founded the Blackstone Group, the private equity industry was considered just a cottage industry, which few people had heard about...

Corporate Landscape in Germany:Attitude Towards Private Equity According to experts, the origin of theGerman private equity industry could be traced back to 1965with the founding of first four organised venture capital funds. More funds were started in the following years, but as a result of disappointing performance, most of them wound-up. 1975 was the year when the first real attempt to set up a proper private equity investment vehicle was made. That year saw the creation of Deutsche Wagnisfinanzierungsgesellschaft mbH (WFG), founded by a consortium of all the leading German financial institutions and supported by the Federal Government...

Private Equity Firms: Redesigning German Corporate Landscape? Corporate governance had been gaining importance in the German corporateworld.German corporates also started changing the way they were financed. Analysts suggested that the PEFs were the entities solely responsible for bringing aboutsuchchanges. They pointed out that PEFs had certain corporate governance capabilities because of their supposedly superior corporate governancemodel.Many analysts opined that PEFs broughtmanagement expertise to the companies they took over. The firms could perfectly align their ownership, capital, asset and organisational structure to the requirements of the acquired companies and therefore could bring about growth of these companies...

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