The number and volume of global corporate transactions are at a new low. The stock markets are showing continued sideways movements. Large consulting and investment firms are reporting ever smaller ticket sizes (volume of the respective transaction) and the acceptance of higher and increasing risks. Traditional valuation models are being questioned more and more frequently. Dramatic for big capital - and an opportunity for medium-sized companies, including in the German creative industries. Sustainability and impact investments are high on the list of search criteria. Both can often be well represented in the creative industries.
As a member of the Federal Association of Mergers & Acquisitions with numerous direct investments of its own , International Film Partners has supported various companies in their sales. At the Federal Association's summit, experts presented the current challenges and trends in the takeover of companies, the sale of shares and mergers. Below you will find some impressions and the resulting effects on the creative industry.
The investment trend is moving away from disposable products and towards a circular economy. In the creative industry, this means fewer commissioned productions and more licensed exploitation on different platforms and in various forms of the same content. This is a fundamental change because valuations and thus the attractiveness of a company were determined by cash flow. Contract producers naturally often outperform in-house productions in this regard. Roughly speaking, in the past, the primary focus was on a positive balance between incoming and outgoing cash flows. Within the respective business model, the best possible sustainability values should then be achieved in comparison with standards or comparable companies. Today, the focus is primarily on the business model and its sustainability.
Circularity is the way out of the capitalist dead end and the contradiction between growth and resource conservation. When products are no longer originally appropriated, but their purpose is made available to multiple users, the principle of "use instead of having" prevails: a car spends most of its time parked unused instead of fulfilling its actual purpose of transportation. With shared car use, efficiency can be increased tenfold. Many new business models are based on the idea of offering the purpose as a service instead of selling the product to achieve the purpose.
"...as a service" is the hallmark of such business models. The subscription models derived from them initially flooded the consumer market. Today, this expanded range of services is also increasingly found in the B2B business. Computer infrastructure is no longer bought, but an IT workstation is rented. Nowadays, even services are offered as an "as a service" model. Whenever the service was previously offered exclusively and thus unused residual value, the circular approach results in new efficiency potential.
With the ESG (Environment, Social, Governance) classification, the capital market has already created a benchmark for classifying investment targets. Only offers that are sustainable, social and fair are given priority when making investments. Companies can then access financing more quickly, more easily and more cheaply. When selling company shares or entire companies, the effects mentioned above have a direct impact on the purchase price.
An exciting topic for anyone thinking about succession or selling a company.
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(Image: IFP Entertainment GmbH)