FINANCE mid-market buyouts 2024: Recovery after a difficult year?

Even in a challenging economic environment, the German small- and mid-cap buyout market remains highly dynamic. The current buyout list, put together jointly by Deutsche Beteiligungs AG (DBAG) and FINANCE magazine, analyses the most recent transactions and reveals the trends shaping the market. After a challenging 2023, the German private equity mid-market has picked up noticeably in 2024, despite the persisting economic and geopolitical uncertainties. But is this merely a short-term upswing or the start of a sustained market recovery?

A changing market
Market conditions for private equity investors in the mid-market remained difficult in 2024. Negotiations between buyers and sellers were complicated due to diverging valuation expectations. At the same time, the more restrictive financing conditions caused by high interest rates and a reluctant banking sector created additional hurdles. On top of this, geopolitical tensions and economic uncertainty hampered investment decision-making. 

Despite these general conditions, the current buyout list shows a clear market recovery. The analysis covers all majority acquisitions of German companies by private equity investors with an enterprise value of between 50 and 250 million euros.

Tom Alzin, Spokesman of the Board of Management of Deutsche Beteiligungs AG, said: “The current figures show that the German private equity mid-market is stabilising after a difficult previous year. It is particularly encouraging to see that transaction activities have not only picked up but are even back to 2022 levels. This demonstrates that the private equity sector is still an important partner for small and mid-sized companies – especially in times of economic uncertainty and given the hesitance of non-domestic investors.”

Market recovery with significant growth
In 2024, a total of 42 transactions with a cumulative market volume of just under 4.8 billion euros were recorded. This is equivalent to an increase of 24 per cent in the number of deals and 20 per cent in volume compared to the weak previous year. This means that the market has almost reached the level of 2022, when 43 deals were concluded with a total volume of 4.1 billion euros.

As Jannick Hunecke, member of Deutsche Beteiligungs AG’s Board of Management, explained: “The figures make it clear that German mid-market companies are still a highly attractive proposition for financial investors. Private equity not only provides companies with capital but also with strategic expertise in phases of growth and transformation. The increased activity in the market is a positive signal for the months to come.”

Method of analysis
The FINANCE mid-market buyout list covers all majority acquisitions of German companies by private equity funds of the aforementioned size. It includes primary buyouts, secondary and tertiary buyouts, and transactions regulating company succession.

Only completed deals with a transaction size of between 50 and 250 million euros are taken into account. Minority investments and transactions effected without the involvement of a financial investor – e.g. management buyouts without private equity support – are not included in the analysis.

The latest figures show that, despite challenging market conditions, the German private equity mid-market is still active, offering attractive investment opportunities for financial investors. It remains to be seen whether this upward trend will continue, but current developments are very encouraging.

Click here for the complete 2024 buyout list (in German only; paywall): https://www.finance-magazin.de/research/midmarket-buy-outs/