Investment Banking

Germany's Number One Rainmakers

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Practicing the art of mergers and acquisitions.
  • Why it matters

    Why it matters

    M&A activity worldwide could be worth over $4 trillion this year.

  • Facts

    Facts

    • Berthold Fürst of Deutsche Bank and Rainer Langel of Macquarie Bank are Germany’s top two rainmakers: the bankers who have generated the most M&A activity.
    • Worldwide,  Goldman Sachs leads the M&A market with a 13 percent share. It is followed by JP Morgan at 9 percent.
    • Over the last three years, Mr. Fürst has handled deals worth roughly €30 billion, or $32.6 billion.
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When it comes to Deutsche Bank, everyone knows top leaders like Paul Achleitner and Jürgen Fitschen from the TV news or in glossy magazines.

But who is Berthold Fürst?

He’s Deutsche Bank’s main “rainmaker,” the man who has generated big money in Germany’s feverish mergers and acquisitions market. Over the last three years, Mr. Fürst has handled deals worth roughly €30 billion, or $32.6 billion for the bank. This puts him at the top of the M&A field, along with Rainer Langel, who manages the German division of the Australian bank Macquarie.

Statistics from Mergermarket, the financial news and analysis group, show that these two men are the two main deal makers in Germany. They have both engineered the most transactions – one in terms of volume and the other in frequency.

These financial specialists from Frankfurt are profiting from companies’ new tendency to pursue size as a competitive advantage. Corporations are sitting on enormous liquid assets and leveraged loans are as cheap as ever, thanks to the European Central Bank’s zero-interest policy.  There are few other investment alternatives, and all the while activist shareholders are calling for strategic deals.

These rainmakers are profiting from a global wave of mergers and acquisitions. And it’s no longer old, prominent names that are shaping the industry.

Mr. Fürst, for example, advised ZF Friedrichshafen on the acquisition of U.S. auto supplier TRW Automotive, a deal worth just over $13 billion. He also was involved in Siemens’ $7 billion takeover of U.S. oil and drilling services company Dresser-Rand.

Mr. Langel helped with the takeover of woodworking machinery producer Homag by auto supplier Dürr. He also advised Bosch on the sale of its solar energy business.

Paulo Pereira, who works for financial advisors Perella Weinberg, is another top performer. The former manager of U.S.-based Morgan Stanley advised Kabel Deutschland, the German cable company, when it was acquired by the British Vodafone Group.

These rainmakers are profiting from a global wave of mergers and acquisitions. And it’s no longer old, prominent names that are shaping the industry.

Some top bankers have left the game. The once-untouchable Alexander Dibelius of Goldman Sachs now works for a financial investor and others work for smaller independent boutiques.

The likes of Simon Robey and Simon Warshaw – longtime top dogs at investment banks Morgan Stanley and UBS – have opened their own investment bank boutique, Robey Warshaw. They were involved, for example, in Royal Dutch Shell’s big deal this April, on behalf of the BG Group.

Local investment bankers like Martin Reitz, head of Rothschild’s German division are also doing well. The bank most recently was involved in the merger of the scientific publishing houses Springer Science and Macmillan. Lazard, the institute co-headed by his colleague Ken Fritz, was involved in the TRW-ZF Friedrichshafen deal, as was Deutsche Bank.

top dealmaker

But there are still plenty of hungry M&A bankers out there and they all want a slice of the ever-growing cake. According to Deutsche Bank, deals could amount to well over $4 trillion this year, more than ever before.

A look at global banks indicates the most renowned players – such as Goldman Sachs, JP Morgan and even Citi and USB – take the top spots. Their deals not only earn them star status, but huge commissions as well.

The M&A pros under CEO Lloyd Blankfein at Goldman Sachs earned just under €1.4 billion in commissions worldwide in the first six months of this year, according to financial services provider Dealogic.

With a market share of 13 percent, Goldman is way ahead of the competition. It is followed by JP Morgan at 9 percent.

But JP Morgan’s chief executive, Jamie Dimon, can still be happy. Second place also pays very well this year.

M&A business has not run this smoothly since the record-breaking days of 2007.

Recently Austrian-Canadian businessman Frank Stronach acquired German transmission supplier Getrag through his automotive company, Magna International, for €1.75 billion. He used just one advisor: Stefan Jentzsch, a partner at Perella Weinberg, who supported Getrag’s owners, the Hagenmeyer family.

Mega-deals are coming back the world over. In the energy industry, Royal Dutch Shell and the British BG Group intend to merge in what will be the year’s biggest deal, worth almost €82 billion, or $89 billion.

 

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Heinz bought Kraft Foods for $45 billion. Source: reuters

 

Charter Communications’ takeover of Time Warner Cable is close behind, leading to radical change in the U.S. cable TV market. Heinz Ketchup and Kraft Foods are merging too, assisted by star investor Warren Buffet.

Goldman Sachs has cashed in with both these deals.

Dealmakers again rank as the stars among investment bankers. Even before the financial crisis, they were securing mergers and acquisitions by the bucket load, earning millions of dollars in bonuses.

Transactions under their supervision transformed entire economic sectors. You only have to think back to the acquisition of automotive supplier Continental by competitor Schaeffler, one of the most spectacular takeovers in Germany’s post-war history.

Now the rainmakers are back at it, seven years after the outbreak of the financial crisis.

“Overall there are fewer transactions, but more big complex deals usually earning higher commissions,” explained Severin Brizay, the European head of mergers and acquisitions at UBS.

There have already been 29 mega-deals with volume in the double-digit billions this year. There were also financings, capital increases and new bond issues to be managed. U.S. cable company Charter, for example, relied on a bridging credit of $6.5 billion in its bid for Time Warner.

 

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Charter Communications paid $97 billion for Time Warner Cable. Source: Bloomberg

 

“It’s a good time for acquisitions,” said consultant Stefan Jentzsch, delicately describing this best of all worlds for investment bankers.

For the financial institutions, anyway, it is payday. They earned a total of $16.8 billion in the first half of the year. There’s been nothing like that since the boom year 2007.

And M&A business this year offers only a taste of what’s to come.

Armin von Falkenhayn, the head of Bank of America Merrill Lynch in Germany, ticks off the positives: “Strong balance sheets at many potential buyers. Low financing costs. And fundamentally positive investor sentiment toward acquisition decisions.”

And what is next? Rainer Langel, the German boss for Macquarie, thinks the big DAX companies are now the next ones up for grabs. And then the big money will really roll in.

 

Robert Landgraf is the deputy head of Handelsblatt’s finance section and is based in Frankfurt. Peter Köhler has been working at Handelsblatt since 1996, covering finance and banking from Frankfurt. To contact the authors: koehler@handelsblatt.com and landgraf@handelsblatt.com

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