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THE GERMAN PRIVATE EQUITY AND VENTURE CAPITAL

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									THE GERMAN
PRIVATE EQUITY AND
VENTURE CAPITAL
ASSOCIATION (BVK)
INTRODUCTION




     PRIVATE EQUITY: CREATING VALUE

     Trusting in a business idea, showing the courage to
     innovate, helping to achive goals – private equity firms
     finance more than 6,000 companies in Germany and
     play an increasingly important role for the German
     economy. In 2009 alone, private equity firms invested
     EUR 2.7 billion in more than 1,200 companies.

     There are about 250 private equity firms in Germany,
     and more than 220 of them are members of our as-
     sociation. In addition to private equity firms, the BVK
     represents institutional investors (banks, insurance
     companies and pension funds) that invest in private
     equity.

     The German private equity market is split into three
     segments: venture capital, growth capital and buy-
     outs. Venture capital firms finance start-ups in all
     sectors. Google and Amazon were two such success
     stories that started out with the help of this type of
     financing. Once a company has realised its vision and
     can stand on its own two feet, investments are sold
     again. SME investors acquire shares in small and
     medium-sized companies, mostly holding a minority
     interest. These SMEs are therefore able to expand, tap

                                                                |1
                   INTRODUCTION




     into new markets and develop new products. The              private equity and also in private equity funds that
     advantage for the companies is that they gain access        invest in Germany. Billions of foreign money finds
     to capital and also new knowledge, and therefore            its way into German companies via private equity.
     are able to keep their businesses up to date. Many          Once a company has been able to increase its value
     German SMEs used this opportunity to prepare for            thanks to private equity, the private equity companies
     globalisation. Buy-out firms acquire majority shares        then sell their shares or list the company on the stock
     in established companies. For instance, get called          market. The return thus generated then goes back
     upon when there is no one to take over the manage-          to the investors, which in turn ensure an appropriate
     ment of a family business. Buy-out companies also           interest rate, insurance and annuities for their con-
     act as buyers when a company wishes to sell one of          tributors of capital.
     its divisions that is no longer part of the core business
     activities. They in turn shape the purchased division       The BVK is proud to represent a sector that plays
     into an independent company that can operate suc-           such an important part for the development of the
     cessfully on its own.                                       German economy. Germany needs growth and
                                                                 private equity is able to provide the required capital
     Private equity collects capital in order to help com-       for this. The BVK supports its members in success-
     panies grow, restructure themselves and found               fully mastering this task. You can find out what the
     new companies. Most of this capital is provided by          BKV does on the following pages.
     institutional investors wishing to invest the monthly
     contributions and savings deposits of their employees
     and customers for profit. Their advantage: Private
     equity generates high returns compared with other
     asset classes. In turn, investors accept that their
     capital is invested for a fixed term of 10 years and
     cannot be cancelled. An increasing number of insur-
     ance companies, banks and pension funds invest in




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     COMMITTED TO ENHANCED TRANSPARENCY

     BVK exemplifies transparent business practices. We
     operate at the interface between policymakers and
     the public on the one hand and the private equity
     industry on the other. It is essential that all involved
     parties are transparently informed about our interests
     and approaches at all times.

     BVK is included in the Public List of Associations
     lodged with the German Bundestag as well as the
     Register of Interest Representatives /Lobbyists of the
     EU Commission. A step we are clearly committed to.
     We have also developed a code of conduct, which
     defines the principles of political advocacy for BVK
     delegates. BVK documents meticulously, which legis-
     lative processes in Berlin and Brussels are being
     supported. The brochure you are currently holding
     in your hands is one of the many measures under-
     taken by BVK to secure the transparency of its
     activities. We are dedicated to ensuring that our
     actions are clear, unambiguous, transparent, and
     to supplying anyone interested in our industry with
     high-quality information.




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     WHO WE ARE




     With the Bundestag around the corner, the Chancellery only a
     stone’s throw away, and key ministries within walking distance,
     BVK is in the heart of political Berlin and committed to promot-
     ing the interests of the German private equity industry.

     This is undoubtedly a strategic base to address key issues. It’s
     from here that we also successfully impact on issues in Brussels.
     As a German association we have a footprint on an EU level.

     For more than 20 years, private equity companies have opted
     for a BVK membership. This is something we are greatly proud
     of, since we are dedicated to representing the interests of our
     members. Currently, the BVK membership consists of more than
     220 private equity companies and around 100 consultants with
     those numbers rising.




                GIVING THE INDUSTRY A VOICE

                A voice which is heard. We are taken seriously as
                representatives of our members and their interests:
                With our members behind us, we have more leverage
                and are more effective, and we speak with ONE voice.

                Our direct contact with political decision-makers is in
                constant improvment as we maintain close dialogue
                with them. Our concerns and positions are well known
                to the Bundestag and ministries.




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                    WHO WE ARE




       QUANTIFYING THE INDUSTRY

       … and making it tangible. BVK uses statistical data,
       which are recorded several times a year to map the
       development of the industry for the research commu-
       nity, the media and the public. This provides industry
       outsiders with an exact reflection of the private equity
       business in Germany and the economic significance
       of this sector.




       SETTING STANDARDS

       Effective self-regulation, transparency and ethical
       conduct, these are the cornerstones of a BVK member-
       ship. The industry has imposed an extensive set of
       policies on itself, which govern the relationship be-
       tween private equity companies, their professional
       investors, and the companies they are funding. These
       are internationally accepted professional standards
       which are enhanced by the BVK code of conduct
       which is obligatory for all BVK members. BVK trans-
       parency policies were accepted by BVK members
       long before the debate about new regulation on
       transparency surfaced.




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     WER WIR SIND




                GIVING THE INDUSTRY A PLATFORM

                Issues affecting the private equity industry is our fo-
                cus. We initiate communication and debate, and then
                forward facts, requests and ideas to decision-makers.
                A good example of this is BVK’s German Equity Con-
                ference. Every spring, this renowned event fosters
                communications between the German private equity
                community and policy makers, researchers, the
                media and the public.




                FOSTERING DIALOGUE

                As an association, we are committed to maintaining
                open dialogue with different groups of stakeholders. In
                the past 20 years, we have established extensive net-
                works. Our members benefit because we bring them
                together with interesting dialogue partners.




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                     WHO WE ARE




       THE MANY DIMENSIONS OF PRIVATE EQUITY                         Buy-outs are assumed in succession planning or in
                                                                     corporate spin-offs. Usually investors acquire a major-
       The industry we represent breaks down into three              ity stake in an unlisted company. The objective is to
       market segments venture capital, growth funding and           increase the operation’s value and then to sell or float
       buy-outs. All three groups share the same priorities          the company a few years later.
       in our activities – they all strengthen the German
       economy.                                                      These different forms of private equity make an impor-
                                                                     tant contribution to strengthening German compa-
       Venture capital is used to fund companies at a very           nies and subsequently enhancing economic growth.
       early stage with the focus mainly being on innovative         Private equity makes companies better, improves their
       technology businesses. Company founders generally             competitive edge and raises their value. This is also
       find it difficult to raise finance for their ideas as banks   backed up by a number of independent studies. Sales
       prefer not to assume risks or lack of understanding           generated by private equity backed companies in
       for the business proposition. Venture capital firms are       Germany amount to around 8.5% of GDP. They em-
       the perfect partners. They invest equity into compa-          ploy about 1.2 million people. The significance of
       nies and support the budding operations during the            private equity is set to increase and that will boost
       first years of business.                                      the German economy. Germany needs growth and
                                                                     growth needs capital. Private equity can provide this
       Growth funding mainly relates to taking a minority            capital.
       interest in small and midsized companies. In many
       cases these companies are highly successful and               Find out more about our work on the following pages.
       keen to promote further growth, but lack the required
       capital. This is where private equity firms come in.
       As financially strong partners they support companies
       with capital and their extensive know-how.




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     HOW WE WORK




     Our communications activities are versatile and to the point,
     allowing us to address different target groups with messages
     tailored to specific needs. Information of interest to a member
     of the Bundestag may be irrelevant to the owner of a small or
     medium-sized company. Internal member news is typically
     interesting for the entire private equity industry, but in many
     cases has to be reworked completely for the media.

     Our experience has shown that every target group has to be
     addressed with the same sincerity, detail and professionalism.
     We act as a point of contact for all issues relating to private
     equity.

     Please read the following chapters to find out about our different
     activities.




     TARGET GROUP – POLICYMAKERS


                DENSE NETWORK INVITING DIALOGUE

                The role of associations as industry representatives
                is to be actively involved in political processes. Know-
                ing the key players at the political interfaces between
                Berlin and Brussels is more than a necessity, it’s
                our day-to-day business. We maintain close relation-
                ships with political decision-makers relevant to the
                private equity industry in the Bundestag, EU Parlia-
                ment, German Federal and State level ministries, the
                EU Commission and other political institutions and
                foundations.


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                    HOW WE WORK




       “PRIVATE EQUITY BRIEF”
       ON YOUR DESK REGULARLY

       Our focus is not limited to establishing and main-
       taining these contacts: We continue to develop new
       channels to provide policymakers with up-to-date
       information.

       One example is the “Private Equity Brief,” a four-page
       newsletter, dispatched to our political contacts every
       two months. It covers everything from the latest
       industry developments, research studies and facts
       relating to private equity, providing the reader with
       an insight into the status quo of the industry. In opin-
       ion pieces, public figures from outside the industry
       have their say. It also provides answers to questions
       relating to private equity. Not to forget: Under the
       heading “Successes”, every issue of the Private Equity
       Brief also features the story of a private equity funded
       company. It outlines the initial situation, the devel-
       opment of the company and cooperation with the
       investor.




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       HOW WE WORK




                     TARGETED INFORMATION FOR SELECT GROUPS

                     Providing information in these publications is essen-
                     tial, however, it does not replace personal dialogue.
                     We stage regular information events to meet politi-
                     cians, their aides and ministry employees personally.
                     These vary from round table meetings with 10 to
                     15 participants to smaller workshop-like events.
                     The issues addressed are of particular relevance to
                     the attending group.




                     BUSINESS OWNERS SHOW POLITICIANS
                     THEIR WORK

                     At BVK roadshows, we demonstrate how private
                     equity works, a concept highly appreciated by poli-
                     ticians. Members of the European Parliament and
                     the German Bundestag are invited to visit a German
                     private equity backed company. A Q&A session
                     follows a guided tour through the company and in
                     the majority of cases politicians are very impressed.
                     This is mainly due to the fact that politicians gain the
                     insight that the differences to other companies are
                     extremely limited and because the management and
                     employees have plenty of positive things to report.




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                    HOW WE WORK




       FROM NEWSPAPERS INTO THE PUBLIC EYE

       Policy makers read newspapers and magazines
       and browse the internet to find out about markets
       and industries. We share information about private
       equity with journalists as they are important opinion
       formers. They receive numbers, data and background
       information about the private equity industry. If de-
       sired we provide them with interview partners from
       our members and are of course more than happy to
       answer any interview questions ourselves. We are
       not limited to addressing politicians. We also aim
       to reach the general public and those interested in
       private equity.




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     WIE WIR ARBEITEN




     TARGET GROUP – COMPANIES


                INFORMATION SERVICE FOR THE GERMAN
                MEDIUM -SIZED BUSINESS SECTOR

                More and more German companies are discovering
                private equity as a funding alternative to bank loans.
                Equity is a necessity for every business idea and com-
                pany growth. It raises creditworthiness and contrib-
                utes to strengthening business against crises.

                Since private equity is relatively young in Germany,
                German companies require valid information about
                private equity. In our publications, at events and
                on the internet, our mission is to provide information
                about the private equity business model and to
                answer frequently recurring questions raised by
                business owners.




                INTERNET FEATURE ASSISTING COMPANIES

                Finding the right private equity company can be
                challenging for businesses. Not every investor is
                suited to every company or business idea, as private
                equity companies have very different areas they
                focus on. German companies looking for private
                equity can find support and guidance on our website
                (www.bvkap.de). Here German company founders
                and business owners can select different criteria to
                find suitable private equity companies and then get
                in touch with them.




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                     HOW WE WORK




       BVK PUBLICATIONS COVER THE LATEST ISSUES

       How does financing with private equity work and
       what’s the best approach for business owners to take?
       What’s the connection between green technologies
       and private equity? Which German companies are
       private equity backed? These and other questions
       are answered in a broad range of publications, which
       business owners can use to gain an exact insight into
       private equity. This information is also available on
       the BVK website.




       PRIVATE EQUITY IN ACTION

       Practical relevance is at the forefront of events staged
       in cooperation with partners such as the Christian
       Democratic Party’s Council of Economic Advisers
       (CDU Wirtschaftsrat): Business owners attending
       events at private equity backed companies receive
       a first-hand impression of private equity investments
       and speak to those responsible from the company
       and the investment firm.




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       HOW WE WORK




                     TARGET GROUP – INSTITUTIONAL INVESTORS


                              COMMUNICATIONS FOCUSSING ON
                              FOREIGN MARKETS

                              Capital invested by institutional investors, i.e. pension
                              funds, foundations and insurance companies are
                              central to private equity funding for companies. It is
                              only with these funds raised by private equity firms
                              that long-term investment capital can be made avail-
                              able to companies. Investments into private equity
                              funds present an interesting proposition for institu-
                              tional investors as they promise attractive returns.
                              Institutional investors generate premium income from
                              their customer base which they pool and invest in the
                              capital market.

                              The majority of the capital inflow into private equity
                              funds comes from pension funds. As their number is
                              very limited in Germany, our members raise funds not
                              only in Germany but around the globe. BVK therefore
                              also promotes investments into German private equity
                              abroad.




                              ROADSHOWS: BVK PROMOTES GERMAN PRIVATE
                              EQUITY INTERNATIONALLY

                              The objective of international roadshows is to present
                              the asset class German private equity to institutional
                              investors abroad. We also use these opportunities to
                              enhance our global network of investor contacts on
                              behalf of our members. BVK recently visited the United
                              States and Asia on that mission, giving institutional in-
                              vestors there an overview of Germany as an investment
                              location, German economic policy and the opportuni-
                              ties presented by German private equity. The federal
                              government of Germany supports BVK in its task to
                              promote German private equity as an asset class to
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                     HOW WE WORK




       INVESTOR BRIEF: INFORMATION ABOUT THE
       INVESTMENT CATEGORY GERMAN PRIVATE EQUITY

       The Private Equity Investor Brief is designed to
       provide brief and concise information tailored to
       the needs of institutional investors. The newsletter
       is published twice a year in German and English.
       It contains valuable information about Germany as
       an investment location and the asset class German
       private equity. This newsletter has a circulation of
       10,000 and it is sent to investors around the globe.

       In addition to foreign investors, institutional investors
       in Germany also gain significance in BVK’s com-
       munication activities. Since the beginning of 2009,
       they are also eligible for full BVK membership. They
       not only benefit from BVK membership because of
       the excellent networking opportunities, but also due
       to common issues and shared interests. The asso-
       ciation keeps institutional investors informed about
       the latest developments and trends in the German
       private equity market. To give investors and venture
       capital managers an opportunity to meet, BVK
       organises the so-called LP Day, which follows the
       German Equity Conference (“Deutscher Eigenkapital-
       tag”). Delegates from pension funds, banks and
       insurance companies can find out about the invest-
       ment focus of the companies represented by BVK
       and meet their managers personally.




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       WIE WIR ARBEITEN




       TARGET GROUP – BVK MEMBERS


                  COMPREHENSIVE SERVICE FOR ALL MEMBERS

                  As the representatives of the German private equity
                  industry, we dedicate ouselves to the communication
                  with our members. Our work hinges on knowing
                  exactly which issues are of primary concern to the
                  German private equity industry. We pick up on these
                  issues and communicate them to policymakers, the
                  business community and the media.

                  We are committed to regularly updating BVK mem-
                  bers about our activities as well as events in Berlin
                  and Brussels. In addition to receiving information,
                  members also benefit from networking opportunities
                  and events dedicated to specific topics as well as
                  BVK’s educational and training courses.




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                     HOW WE WORK




       REGULAR POLITICAL AND INDUSTRY UPDATES

       Since the association was founded, “BVK News” has
       been informing members about the association’s
       activities, events, people in the spotlight, funds and
       a host of other relevant issues. Members can also
       retrieve this information in the members’ section
       of the BVK website.

       Our members take care of their operating business
       and BVK takes care of political issues. The “BVK
       Political Update” covers whatever happens in Berlin
       and Brussels. It highlights the developments and
       trends in German economic and financial policy as
       well as relevant political issues affecting the private
       equity industry. The Political Update is published
       on a weekly basis, exclusive to BVK members. The
       new “Politics Gateway ” on the member website also
       includes important documents and details on events
       relating to key political processes.




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       HOW WE WORK




                     CUTTING-EDGE DESIGN: EXTENSIVE
                     MEMBERSHIP DIRECTORY

                     After publishing the latest issues of the “BVK Year-
                     book”, we also improved the BVK member profiles
                     both in terms of content and design. All associated
                     and full members have two pages to present their
                     business, including a picture and logo. In line with
                     our new corporate design, the yearbook has now
                     been made more accessible for people from outside
                     the industry, offering interested parties an in-depth
                     insight into the German private equity industry.




                     ANNUAL CONFERENCE OF THE PRIVATE EQUITY
                     INDUSTRY IN THE POLITICAL HEART OF BERLIN

                     Once a year, BVK stages the German Equity Confer-
                     ence (“Deutscher Eigenkapitaltag”), the annual meet-
                     ing of the private equity industry in Germany. In the
                     political centre, right in the heart of Berlin, speakers
                     and representatives from politics, business, society,
                     academia and the media debate the latest develop-
                     ments and challenges faced by German private equity
                     companies. At its annual conference, the association
                     is keen to promote broadly-based dialogue and as
                     a result the event is also directed at the general
                     public. The conference closes with an evening event,
                     which is a great networking opportunity in a relaxed
                     atmosphere. The “Private Equity Dinner” is another
                     outstanding networking opportunity, which BVK
                     stages in a different city every year.


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                    HOW WE WORK




       Proven event formats also include specialist group
       conferences: The members of the four platforms
       mid-market, Venture Capital, Large Buy-outs and
       “Mittelständische Beteiligungsgesellschaften” (SME
       Private Equity firms) meet regularly to debate current
       issues and share ideas. BVK cooperates closely with
       German universities to offer further education courses
       for its members. These not only convey practical con-
       tent, but also include an academic view and the latest
       research findings on specific issues. The association
       is already offering basic seminars for budding manag-
       ers on the issues risk capital, growth funding and
       majority interests. BVK also runs specialist seminars
       on certain issues, such as company valuation method-
       ologies.

       We also offer support in PR activities. If members
       have questions relating to communications with the
       media or any other target group, we are an expert
       contact.




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                     HOW WE WORK




       PRIVATE EQUITY STIFTERKREIS FOUNDATION
       PROMOTING SOCIAL RESPONSIBILITY

       Increasing numbers of private equity companies are
       committed to social responsibility in addition to their
       regular business activities. The rising significance of
       social responsibility has prompted BVK to establish
       the Private Equity Stifterkreis foundation. Stifterkreis
       members promote projects that help young people
       get into working life. These projects were carefully
       selected by the UK Private Equity Foundation.




       SERVICE RANGE UNDER REGULAR REVIEW

       We conduct annual surveys among our members to
       ensure that our service range delivers on the needs
       of our members and other interested parties. It helps
       us reexamine and adjust the BVK service range
       on a regular basis. At regional meetings, we discuss
       current issues with members and report on our
       activities. It’s their feedback, ideas and suggestions
       for improve-ments that make BVK better every day.




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     BVK STAFF




          Our BVK staff consists of seven employees
          who work in different sections:

          Dörte Höppner        Managing Director
          Julia Elsner         Office Manager
          Attila Dahmann       Consultant for market, analysis and research
          Friederike Seliger   PR specialist
                               (focus editorial and website content)
          Martin Bolits        PR specialist
                               (focus events)
          Marleen Köppe        Assistant to Dörte Höppner
          Monika Anthony       Secretary




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       CONTACT

       Bundesverband Deutscher
       Kapitalbeteiligungsgesellschaften –
       German Private Equity and
       Venture Capital Association

       Residenz am Deutschen Theater
       Reinhardtstraße 27c
       10117 Berlin

       Phone +49 30 306982-0
       Fax   +49 30 306982-20
       bvk@bvkap.de
       www.bvkap.de


       Please feel free to contact us any time.


       LEGAL

       Published by
       Bundesverband Deutscher
       Kapitalbeteiligungsgesellschaften –
       German Private Equity and
       Venture Capital Association e.V.
       (BVK)

       Editor
       Friederike Seliger

       Design
       Christine Bokelmann

       Photos
       Jenny Baese




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