Publications

• The industry continues to grow worldwide, with the importance of exports for German medical technology companies increasing disproportionately.
• The current challenges facing the industry include rising prices for raw materials and components, supply bottlenecks, the shortage of skilled labour and the increasing bureaucratic burden, the potential PFAS ban and the waves of insolvencies among hospitals and care facilities in Germany.
• The multiples on which the company valuations are based have stabilised in 2023/24 and remain at a high level compared to other sectors.

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• High market dynamics due to increasing digitisation and extensive use of electronic devices.
• Ongoing consolidation process due to M&A transactions.
• The German EMS sector enjoys a very good reputation worldwide thanks to its use of advanced manufacturing processes, compliance with high quality standards, innovative strength and knowledge of the respective customer industries.
• In the meantime, German EMS players recovered from COVID 19-pandemic, supply bottlenecks were overcome. At present, increased interest rates as well as recruiting challenges have a dampening effect.

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• The industry continues to grow worldwide, with the importance of exports increasing disproportionately for German medical technology companies.
• High regulatory requirements (in particular the implementation of the MDR), the increasing outpatientization of medical services and advancing digitalization are key challenges for the industry.
• The driver of transaction activity is further concentration in some subsectors, with new sector leaders emerging through very large acquisitions.
• The multiples underlying the company valuations are lower in 2022 than in previous years, but are still at a high level compared with other sectors.

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The use of temporary work within the nursing care sector is no longer limited to the rather short-term compensation of staff shortages, but already represents an important component in the respective facilities‘ crew planning.

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But strategic investors in the industry are more selective nowadays with high requirements towards a target company, e.g. regarding its digitalization competences. New investors entered the market recently, providing new transaction dynamics for the players in the engineering services industry.

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In the past, the scope of delivery of foundries was limited to the cleaned castings, i.e. freed from sprue parts and molding sand residues, so the vertical range of manufacture has now been expanded. The trend to offer finished parts or to supply completely ready-to-install assemblies is becoming more and more apparent. Based on the sub-sector foundry parts for the windcasting industry, we explain specific challenges as well as potentials for a sector consolidation.

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• The COVID 19 pandemic has had a negative impact on the development of the medical technology industry as a whole, but the impact varies from sub-sector to sub-sector
• Regulatory requirements – especially the implementation of the MDR – and the trend towards digitalisation place high demands on companies
• The driver of transaction activity is further concentration in some sub-sectors, with new sector leaders emerging through very large acquisitions
• The multiples on which the company valuations are based have continued to increase slightly – after a brief decline in 2020

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Furthermore, the document addresses the market slowdown already observed prior to COVID-19, the impact of the pandemic on the temporary staffing industry as well as recent transaction activity

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An increasingtrend towards mobile care offers is clearly visible. A consolidation in the sector of mobile care with the formation of larger groups of providers – also with the participation of private equity investors – can be observed. This trend is likely to increase in the current pandemic situation.

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In this sector briefing, SSC Consult summarizes the challenges for automotive suppliers, highlights lightweight construction as one of the options for action and describes the possibilities associated with hybrid components (“the best of two worlds”) in the context of M&A.

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In the near future, a gap will open up between heavily digitised large companies and weakly digitised small companies. This development will largely depend on the level of investment by these companies in Industry 4.0 and the digitisation processes. It is already apparent that companies that are already active in the Industry 4.0 segment are generally valued higher on the stock exchange.

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• The industry continues to grow worldwide – even though sales in Germany declined for the first time in 2018.
• Regulatory requirements – in particular the implementation of the MDR – inhibit the development of the industry.
• The driving force behind the transaction activity is further concentration in some sub-sectors, with very large takeovers creating new sector leaders.
• The multipliers on which company valuations are based continued to increase slightly.

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• high demand due to the society’s and the industrial processes’ digitization
• a partially above-average share price development
• a significant shortage regarding the supply of certain components of strategic importance.

Also in 2019, a significant amount of M&A transactions were completed, which enhanced further consolidation within the industry.

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Thereby two product categories can be identified in the petcare market: pet food and convenience products. The pet food market is dominated by large suppliers, the latter one is fragmented and waits for consolidation. This market enjoys an increasing interest of financial investors in the last few years which documents its positive outlook.

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The author expects that through the facilities created by ESUG for the restructuring of companies, perspectives for successful M&A processes regarding the continuation of the company will be improved.  Hereby, creditors of debtor companies are able to attain higher dividends for their receivables, while simultaneously preserving as many small and medium sized companies and thereby jobs as possible.

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Market consolidation, already taken place in many other regions outside Germany, has now started as German market players without critical mass are increasingly struggling for profitability or want to broaden their skills spectrum or capabilities in foreign regions.

On the other hand, multinational market players are trying to expand their businesses into Germany to offer one-stop capabilities on a global basis, to ad technological or sectorial skills and to benefit from ongoing growth in one of the most important markets in the world.

This article examines the consolidation trends through an in-depth analysis of M&A-transactions with the involvement of German engineering service companies and provides an outlook on future M&A trends within this specific sector.

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The core of our consulting services in Corporate Finance/M&A is a continuous and trusting cooperation with small and medium-sized companies and their shareholders, multinational corporations and financial investors on the mid-cap market as well as insolvency administrators and public institutions. On the occasion of SSC Consult’s 10th anniversary a brochure has been published about completed Corporate Finance/M&A advisory projects.

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However, mid-cap-transactions are considered to be less dependent on market cycles. In a new survey, SSC Consult in Cologne analyses the extent of suffering by the mid-cap segment in the crisis year 2009. In total EV/Sales Multiples of 1,697 transactions in Europe were evaluated between 1 January 2007 and 1 January 2010. The survey concludes that during the crisis the valuation levels of smaller companies varied less than the valuation level of larger companies.

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For companies in crisis, the issue which needs to be addressed is that of an optimal strategy to avoid serious exposure. In the worst case this can result in a disadvantageous settlement in an insolvency. Common consequences include: drastic reduction of jobs, high losses for creditors, usually total loss of book value for the shareholders and high costs for public finances and social insurance agencies.

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which is also available within the S-Finanzgruppe. An important part of this product is project finance, which is used by the Sparkassen as well as their network partners. Due to the high execution expenses and the complexity of these products they are only recommended from a certain size onwards. However, the demand from corporate clients has increased.

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International players from abroad and increasingly financial investors are entering the market, thereby reorganising the current players. The key success factors required in order to survive in this market in the long term and to participate in the huge market potential are critical mass and market share. Strategic instruments besides organic growth include acquisitions as well as strategic partnership and co-operations, in particular with state colleges especially on an international level.

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flexibility suiting almost all corporate needs, return requirements based on profit and attained value enhancement, as well as proven increases in productivity and efficiency generated through investor involvement. On the other hand, investors are able to exert influence and control over the company, which may be unpopular with many, in particular owner-managed companies. Furthermore, due to complex transaction and deal structures on both sides causing considerable costs, private equity deals are only recommended above a certain deal size.

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Successful examples such as the spin-off of Lucent by AT&T highlight this potential which can liberate individual company departments and know-how from restrictive and interwoven structures of large corporate conglomerates.

Reasons for spin-offs are multifaceted. Considerations promoted by capital markets to raise the company value through carve-outs, e.g. the IPO of the DPAG subsidiary Postbank, are one reason. Anti-trust laws and regulatory requirements, the new structuring of business portfolios or a simple reduction of liability risks are further drivers. By taking into consideration the development of the IT outsourcing industry in Germany, this article examines whether the specific entry and exit patterns of this sector follow a pattern typical for the industry life cycle and which position IT spin-offs have taken within this development.

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The economic environment has improved, and favourable capital market conditions, as well as developments on the technological and regulatory side, have resulted in a significant rise in M&A activities in technology based industries.

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