Trends in the M&A market – private equity funds looking towards Denmark

Foreign private equity funds have awakened to investment possibilities in the Danish market. This
is well in line with global M&A trends with markets reaching record levels in Q1 2018.

Private equity funds have increased their activities in the Danish market significantly. According
to recent figures from the Danish Venture Capital and Private Equity Association (DVCA), the number
of private equity funds that are active in the Danish market has increased from 33 in 2005 to 75
today. The CEO of DVCA, Henriette Kinnunen, concludes that “Den- mark is an attractive market”.

The transfer of ownership in Danish family enterprises used to be quite tradition-bound and
was often implemented through the sale of shares to e.g. children or employees as part of a
succession for tax purposes. Today, private equity funds have gained recognition as ownership
platforms, and Danish companies have become increasingly attentive to the fact that private equity
funds may take a company to a new level.

A recent statement of Danish business sales prepared by M&A advisors Oaklins for Q1 2018 shows an
increase in the number of Danish business transfers of 10 % as compared to last year’s quarter (Q1
2017), and an increase of an impressive 18 % as compared to the quarter before that (Q4 2017). A
total of 49
% of all Danish business sales involved foreign buyers.

Increasing investment activities in Danish businesses should be viewed in the context of the
positive trends that charac- terise the global M&A environment, and the M&A market was generally
off to a great start in the first quarter of 2018. In the European market, the Oaklins report shows
an increase in European business transfers of 5 % as compared to last year’s quarter (Q1 2017).
According to Thomson Reuters’ most recent Survey of Deal Making Professionals, the increase in the
general willingness to invest is caused by factors such as regulatory compliance, strong equity
capitals and solid cash positions with busines- ses in general. Danish companies also keep well up
with de- velopments in this respect since the largest Danish players have been quick to exploit the
economic upswing to their advantage, thus adding to their capital reserves.

The Danish newspaper of Berlingske Business have been co- operating with Bloomberg in a recent
analysis showing that over the last 10 years, Denmark’s 25 largest listed companies (C25 companies)
succeeded in cutting more than DKK 100 billion of their debts, meaning that they are almost
exclusi- vely in the black today.

The legal professionals of Holst, Advokater Limited Liability Partnership have extensive experience
in advising on M&A transactions in all sizes. Please feel free to contact us if you would like to l
arn more about our expertise and how it could
work for you.