IFLR 1000
The Guide to the World's Leading Financial Law Firms

A mood of cautious optimism prevails among private equity lawyers after a series of successful exits, but it may be ill-founded. There is financing available and there has been renewed activity in terms of secondary exits but the primary market is still virtually non-existent. "It's mainly secondary buyouts not primary; we are still lacking that in the market. We are waiting for it and holding our breath but the fact still remains that the large German corporates they are loaded with money and there is no direct need for them to off-load non-core business," explains a private equity lawyer.

A clear indication that normal service is resuming, at least on the sponsor side, is that the acquisition of targets that do arise are fiercely contested by private equity houses and investment banks. "Sellers have been very successful in stimulating a competitive process for exits. More and more, strategic investors find themselves in competition with financial investors," observes one partner.

An interesting development on the financing side of equity transactions has been the rise of the bond: "We're seeing an increased element of bond financing put in to the structuring. It's largely pricing and availability. It's something you can tap at extremely short notice," says one partner.

Lawyers point out that high-yield is definitely on the rise, having been making segues into the German market since the first were issued under the German law in July 2010 and are expected to be utilised more frequently in future. One partner heralds "the renaissance of high-yield bonds which had been practically non-existent in acquisition finance at least in Germany. There's been quite a significant appetite for them recently".

With $73 billion in acquisition financing due in Germany in the next few years there is expected to be a wave of restructuring and this trend towards bond financing is expected to continue. "Our finance, high-yield and restructuring experts expect an increased need for advising among private equity sponsors and portfolio companies with a view towards restructuring, renegotiating credit lines and conditions for converting debt to other financial instruments such as high-yield bonds," explains one private equity lawyer.

One note of caution for lawyers and sponsors however, is that tax authorities are reputedly taking more of an interest in private equity structures in Germany which are being heavily scrutinised: "The tax authorities are keeping a closer eye on acquisition structures for private equity companies. There have been some articles by members of the tax authorities who have indicated that they would want to keep some targets under a closer watch," explains one lawyer.

Private equity is one of the firm's strengths and the feedback from the market on the German practice is accordingly positive. "They are very strong. They are certainly at the top of the private equity market," says one peer.

A sign of the market recovery came in October 2010 for the firm, as Kerstin Kopp was mandated to advise 3i on the sale of MWM Holding to US construction and mining industry manufacturer Caterpillar for €580 million. MWM Group provides eco-friendly complete plants for decentralised power supply with gas and diesel engines.

Christopher Kellett acted for Kohlberg Kravis Roberts & Co (KKR) on its strategic partnership with the privately owned Wild Flavours Group.

Secondary buyouts have been the mainstay for most firms and in this capacity the team advised Nordic Capital Fund VII on the acquisition of a majority stake in SiC Processing, which recovers and processes sawing slurry in the production of silicon wafers for the photovoltaic and semiconductor industries. The acquisition was the largest private equity deal in Germany when it signed 2010.

Another notable deal saw Oliver Felsenstein advising private equity investor HgCapital on the acquisition of Lautsprecher Teufel Gruppe from Riverside..

In 2010 the firm also developed new client relationships with Apollo, BC Partners, Chequers Capital, Nordic Capital and Trito and expanded its funds work with Isthimar and Mubadala.

"I think Freshfields are undeniably strong," says a competitor. The firm, alongside Clifford Chance, is viewed as the clear leaders in the private equity field when it comes to large transactions.

Most of the firm's recent notable work has been on the side of the bidders. Nils Koffka advised Berggruen Holdings Group on the acquisition of Karstadt Warenhaus, the insolvent German department store chain. The deal, which was complicated by the outstanding lease agreements that Karstadt still held with real estate agents, closed in September 2010.

Another deal on the side of the buyer saw Markus Paul counselling private equity house Bridgepoint on the acquisition of CABB, a global provider of speciality chemicals, from Axa Private Equity.

Arend von Riegen acted for One Equity Partners (OEP) on its voluntary public takeover offer for the TecDAX-listed Smartrac (ST). ST, a Dutch company, is listed in Germany which meant matters relating to the takeover offer process were subject to German law but matters relating to company law were subject to Dutch law.

Competitors question Hengeler Mueller's position in the top tier. There is a consensus that the firm does not share the capacity of its tier neighbours and that it is losing ground. "I generally see them having a decreasing market share. What I think is their problem is they don't have a dedicated private equity team," says one peer. Another agrees: "I would probably see Clifford as stronger than Hengeler, they have some individual practitioners but they don't really have a depth in private equity."

Despite criticism from its competitors the firm has been active on several notable mandates. Munich based Hans-Jörg Ziegenhain advised long-standing client Advent International on the sale of German fashion retailer Takko to Apax Partners in December 2010.

Stefan Richter was also active for the firm. He advised Hamburg-domiciled equitrust Invest on the sale of bomb disposal robot manufacturer Telerob to listed British aerospace leader, Cobham, for €78 million after buying it for €8 million in 2007.

Another notable deal saw the firm acting for Cinven, the European buyout company, on acquiring lighting product manufacturer SLV Group from HgCapital.

Market opinion is undecided on Gleiss Lutz. Some feel the firm deserves its place but others say it lacks visibility in comparison to the other firms in the second tier.

The firm's corporate team has significantly expanded since its merger with Rittstieg welcoming the boutique's name partner Andreas Rittstieg and partners Patrick Mossler, Jörn Wöbke and Rüdiger Zell to the practice.

One thing the market does agree on is that the firm's most important relationship is with client Blackstone. The firm have been active for the asset management firm on restructuring the existing financing for The Hilton Hotel Group with was acquired by Blackstone in 2007 for around $26 billion with the firm's advice. It was the largest acquisition of a hotel chain to date anywhere in the world. Partners Helge Kortz and Jan Bauer enabled the chain to reduce the existing financing by $4 billion by means of an early repatriation and conversion of parts of the mezzanine tranches into equity in 2010.

Another notable deal saw Bauer advise Ripplewood and RHJ International on the restructuring of the Honsel Group in autumn of 2010 and subsequently on its insolvency.

"Milbank are definitely the strongest of that group," reflects one competitor on the second tier. "Milbank is a small operation but very successful in Germany. It's all about this guy [Norbert] Rieger," says one corporate competitor.

Unanimously praised and respected by the market, Milbank's private equity practice does not have a head, instead it is governed equally by the two corporate founding partners of Milbank's Munich office, Peter Nussbaum and Norbert Rieger, and Frankfurt partner Peter Memminger.

Known for his strong long-standing relationship with The Carlyle Group, Rieger was active for the private equity house on acquiring six specialist shopping chains of Primondo Specialty Group from the insolvent German retailer Arcandor in November 2010.

Again active for the buyers, Memminger and Nussbaum advised Levine Leichtman Capital Partners on the acquisition of Luminator Technology Group, a global supplier of LED products.

On the sell side, Memminger led a team involved in the sale of Loyalty Partner Holdings, a marketing services company that operates in Germany, Poland and India, to American Express Loyalty.

Commended for its expertise and extensive experience in representing management on deals, competitors say on the flip side that the firm is rarely mandated on the sponsor's side of larger transactions. "They have huge market share in representing management teams, probably one of the best two funds practices in Germany, but you barely see them on the transactional side," says one.

Market feedback on the firm is positive and lawyers feel it deserves its ranking: "Pöllath is well placed, you certainly see them lot," says one peer. Another recommends Matthias Bruse: "There is one specific guy that is really driving their business there and that is Bruse. He is certainly a big name and a good partner."

On the management side the firm has been active on several headline deals. Jan Wildberger, who joined the firm from Simmons & Simmons in February 2011, headed a team advising the authorities at CABB when the company exchanged hands between private equity houses Bridgepoint and Axa in March 2011. Another notable deal saw Benedikt Hohaus and Barbara Koch-Schult represent the management of German fashion retailer Takko, which was purchased by Apax from Advent International..

Wolfgang Grobecker acted for Amergion on the takeover of WET Automotive Systems for €150 million in February 2011 and Jens Hörmann advised Citrix Systems on buying fellow software company Netviewer in the same month.

Another IT related transaction saw the firm advise Hasso-Plattners-Ventures as the main shareholder of RIB Software which went public. Partner Christian Tönies lead the team advising the private equity house on the €90 million IPO which closed in February 2011.

On the fund side, partner Andreas Rodin advised Deutsche Beteiligungs on the structuring of a €250 million Expansion Capital Fund in May 2011 and he also worked with partner Patricia Volhard on structuring a private equity real estate fund with a target of €887 million.

Kirkland & Ellis has had a solid year and at leats one competitor feels the firm had been more noticeable then its direct rivals.

A sizeable deal saw Erik Dahl advise TowerBrook Capital Partners on the sale of its asset PolymerLatex Deutschland, a developer and producer of polymer products, to Yule Catto for €443 million in February 2011.

Dahl also lead the firm on Sun European Partners', the European adviser of Sun Capital Partners, acquisition of the Reuther Group, which produces packaging for pet food and has branches in the US and Poland in October 2010.

Volker Kullmann acted for Dutch private equity fund Gilde Buy Out Partners on the public to private takeover of German listed Teleplan International and advised HIG European Capital Partners, on the acquisition of a participation in Der Grüne Punkt – Duales System Deutschland from Kohlberg Kravis & Roberts (KKR) in February 2011.

Not traditionally as focused on private equity, rivals say Linklaters has made a concerted effort to gain ground in this area over the last 12 months.

In an ongoing deal, Rainer Traugott and Franz Schaefer advised German private equity house Deutsche Beteiligungs on the sale of its majority interest in electronic automobile component supplier, Preh, to the Ningbo Joyson group, a private supplier of automotive components from China.

Traugott also worked with Stephan Morsch to advise Apax Partners on the takeover of the Takko Fashion Group from Advent, on what was the largest leveraged buy-out transaction in Germany in 2010 and the biggest since 2007.

The firm advised private equity sponsor Triton on two notable transactions in 2010: its acquisition of the European water business from Tyco International in regards to its management participation and the purchase of the Wittur Group from Goldman Sachs, Cerberus and Credit Suisse in December 2010. Following the last takeover the firm was retained by Triton to advise on management participation.

Another notable deal saw Ralph Drebes acting for Macquarie on the acquisition of utility RWE's gas pipeline network operator Thyssengas in December 2010.

The firm also promoted Sebastian Daub to the partnership in May 2011.

Consensus is that Skadden Arps Slate Meagher & Flom is ranked appropriately in the third tier.

A highlight for the firm saw it advise British private equity sponsor Apax Partners in the €920 million sale of a majority stake in IFCO Systems to Australian company Brambles in a deal which closed in April 2011.

The firm was also active for AXA Private Equity in its sale of GEALAN (Germany), a window maker, to private equity firm Halder.

The firm also represented long-standing client Barclays Private Equity in its sale of Siteco Lighting to Osram.

Another notable transaction saw the firm act for Silverfleet Capital, the European buy and build specialist, in its sale of European Dental Partners (EDP), a German dental consumables distributor, for €170 million to Lifco Dental International.

Weil Gotshal & Manges' private equity arm is respected particularly for its restructuring expertise and some competitors feel the firm suffered slightly from the recent dearth in this type of work. "Steady, doing pretty well. They lost put a bit because they are probably one of the best on the German market in terms of distressed transactions and there weren't so many this year so they weren't so present," says a competitor.

The firm advised the Gores Group, a Los Angeles-based private equity firm, on the sale of German solar power system manufacturer, Vincotech Holdings, to Mitsubishi Electric Corporation, the listed Japanese manufacturer of electronic equipment. Christian Tappeiner led the team which completed the deal in December 2010.

Another notable deal saw Frankfurt partners Gerhard Schmidt and Stephan Grauke working with the firm's New York and Houston offices to represent the trusts advised by financial investor J.C. Flowers in restructuring their investments in HSH Nordbank. The €375 million closed in February 2011.

For competitors, Willkie Farr & Gallagher's private equity practice is synonymous with Mario Schmidt, who is seen as the firm's most valuable asset. "In Schmidt they have a good lawyer," says one.

Schmidt headed teams advising on the majority of the firm's most notable deals, and recently advised 3i the acquisition of Amor Group in December 2010; the founder of RHM clinics on the €100 million sale of the company to Waterland Private Equity also in December; and AXA Group on the sale of CABB to Bridgepoint for €300 million April 2011.

Partner Stefan Jörgens led a team to advise Palamon Capital Partners on the €100 million sale of Dress For Less to Privalia in March 2011.

Allen & Overy hired corporate partner Christian Eichner from Hogan Lovells in April 2010. Eichner was active for his new firm in the last 12 months advising Pamplona Capital Management on its acquisition of a minority stake in WEPA Industrieholding. The firm also advised Pamplona on the sale of Amor Group to 3i.

Swiss real estate specialist investor Corestate group also mandated the firm to advise on due diligence, the acquisition and the financing of a portfolio of 153 residential buildings with a total of 2100 housing units in the Rhine-Ruhr region by a joint venture, which closed for €85 million.

Led by Joachim Habetha, Hogan Lovells has been active on the sell side. The team advised H.C. Starck, which is jointly owned by The Carlyle Group and Advent International, on the sale of the Clevios-business to Heraeus H.C in December 2010. The firm was also advising new client Marseille-Kliniken on the sale of its REHA-division.

More recenty HogLov counselled Genzyme Corporation on the sale of its pharmaceutics precursor business to International Chemical Investors Group in March 2011.

Shearman & Sterling's corporate team is led by Harald Selzner, who is also head of the firm's worldwide M&A practice group and co-managing partner of the German offices.

The firm advised the Qatar Holding Group, the Qatari government's investment arm, on to the acquisition of a 9.1% stake in the share capital of construction company Hochtief and on the purchase of the pharmaceutical intermediates business of Genzyme by International Chemical Investors.

In an ongoing deal, which began in 2009, the firm has been advising Aabar Investments on the creation of an investment joint venture, ABAG Aktiengesellschaf, with Austrian company Berndorf.

White & Case's private equity team had some changes in personal in 2010. Lars Böttcher joined the firm's partnership from Oppenhoff & Partner as did Henning Fischer but as a local partner, while Florian Hirschmann was hired as a local partner from Ashurst in July 2010. Partner Philipp Windemuth, who joined Orrick, Herrington & Sutcliffe in October 2010, was the one notable loss.

Between July and December 2010 Christoph von Einem and a team were active for client 3M New Ventures advising on a series of investments in Germany, including the acquisition of stakes in txtr, Printechnologics, ZV3 - Zircon Vision and MotionID Technologies.

Von Einem also acted for European energy company Entelios on the successful completion of its Series A financing round led by Yellow&Blue Investment Management, a Dutch clean energy investor and High-Tech Gründerfonds, a German venture capital investor, in January 2011.

The firm's biggest recent transaction saw the team advise SiC Processing, a leading supplier in the recovery and processing of sawing slurry in silicon wafer production, on the sale of a majority stake to Nordic Capital Fund VII. The €477 million transaction was designed as a dual track process with the option of an IPO.

For private equity clients of Heisse Kursawe Eversheds the firm's most valuable asset is managing partner Matthias Heisse, who they consider proficient on a professional and personal level: "I think he's outstanding, he's highly intelligent, highly experienced and very commercial in his approach. He is a lawyer but he understands the underlying business - he knows how to read a balance sheet, he's good with the people, he's good in tactics so I would give him an A in all dimensions," is one's reference.

Heisse led a team on two deals, one on the behalf of BAVARIA Industriekapital. The practice head acted for the holding company, which specialises in investing in manufacturing companies, on the acquisition of Trelleborg's business area Fluid Solutions. The second deal saw Heisse act for MCH (Management Capital Holding) in the purchase of a publishing house for the food sector, LPV Lebensmittel Praxis Verlag, from Georg von Holtzbrinck.

A further deal saw Christof Lamberts act for Servtag and its founders in connection with the sale of the company to DuMont Venture Holding.

US firm McDermott Will & Emery's corporate department is led by Konstantin Günther who is based in the Düsseldorf office.

The practice head acted for Rogers Corporation in the €115 million acquisition of Curamik Electronics group from DZ Equity.

Salans' private equity team consists of three counsels, one senior associate and two associates led by partner Holger Scheer.

Scheer was at the front on all the firm's most notable transactions which were all management buyouts on the side of the acquirer. One transaction saw a team act for EQT Expansion Capital on the non-sponsored management buy-out of the Roeser Group which closed in August 2010. In another matter the firm acted for AXA private equity on the purchase of Strack/Phönix Group. Most recently, in December 2010, the firm finalised the buyout of a company operating in the convenience food sector for its client BayernLB Private Equity.