Private Equity and Venture Capital
Strong large-cap market gets the personnel carousel moving
Lawyers in the competitive large-cap market enjoyed their busiest year for some time. There were more than enough headline deals to go around: Permira’s acquisition of GFKL from Advent and CVC buying Douglas were just two. The market was dominated by such secondary deals; original buyouts are rare nowadays. But it is still a strong revival and means that law firms have to position themselves strategically to cement client relations, hence the increased movement of well-known lawyers over the past year. The major headline was Oliver Felsenstein’s move from Clifford Chance to global PE powerhouse Latham & Watkins. This was probably the most significant move of the past few years and demonstrated Latham’s determination to achieve in Germany what has already been done in London. The firm will invest considerable money to buy the best talent.
Staff moves at Clifford Chance and Latham & Watkins
But the move caused waves within Latham as well. Not long after, the firm’s leading PE lawyer in Munich and closest contact to Bain, the highly regarded Dr. Jörg Kirchner, was captured by Bain’s house firm in the US, Kirkland & Ellis. Many outsiders presumed that Clifford would struggle after the departure of Felsenstein. Its ability to haul in a stream of major deals showed that brands do count for a lot in the PE market. The Clifford Chance brand was bolstered at the end of the year with the arrival of Dr. Anselm Raddatz from Freshfields Bruckhaus Deringer.
However, the Freshfields brand is still stronger than ever. For the first time, the firm is now seen as the sole market leader, with outstanding institutional relationships (e.g. to Permira and CVC) and a broad cross-section of younger PE stars.
Greater tempo in the mid-cap market
It is traditional for PE lawyers to moan about the lack of targets in the mid-cap market, but the number of deals in comparison to five years ago is astounding. As a result, firms such as Hengeler Mueller and Linklaters now seek a substantial share of the mid-cap market since it provides regular deal flow.
Likewise White & Case, which, thanks to a reinforced London office, now has better access to PE houses there. Hogan Lovells reinvigorated its practice with the arrival of Skadden Arps Slate Meagher & Flom lawyer Dr. Matthias Jaletzke.
Venture capital boom brings new opportunities in Berlin and abroad
Meanwhile, VC lawyers are not complaining. They are enjoying the most lucrative market ever in VC, not least because a succession of high-profile exits have proven that the market is sustainable. This sucks in more money and lawyers are faced with huge demand from investors and startups, especially in the hothouse that is Berlin. It is now difficult for any firm to maintain a leading position in VC without a substantial Berlin office.
And where the market was once dominated by Noerr, now there is a relatively broad group of leading firms. Most remarkable of all is Vogel Heerma Waitz, which has within just two years gained a leading position. There is, however, an important new trend: international integration. Offices in London and the US, as well as contacts in Israel, are becoming more important. Thus firms like Noerr are more active in New York, and the Silicon Valley outposts of Taylor Wessing and Osborne Clarke have proven to be important in attracting US investors for their business in Germany.
Private equity includes all kinds of activity in the fields of venture capital and risk capital, be it advice to private equity houses or capital holding companies on large transactions (large-cap) or midsized transactions (mid-cap). Firms advise either the private equity house, the target company or its shareholders, and these transactions are similar to M&A deals. Due to the increased market segmentation, there are now separate rankings for mid- and large-cap transactions.
Venture capital (VC) is taken to mean the early investment at the beginning of a company’s development (startup or seed capital). Private equity (PE) refers to larger deals, including those with a large proportion of debt finance (leveraged buyout or LBO).
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