Ort, Datum

1. Current German Legislation on Improving the Financing Environment for German Enterprises 3rd Norface Seminar on „Entrepreneurial Finance“ Berlin, May 21st, 2007 Univ.-Prof. Dr. Christoph Kaserer Lehrstuhl für Finanzmanagement und Kapitalmärkte & Center for Entrepreneurial and Financial Studies (CEFS) Technische Universität München Anlass Ort, Datum

2. Largest PE Firms worldwide by capital under management (2006) Capital under management in US$ mm No. Name Location

3. Largest European PE Firms by capital under management (2006) Capital under management in US$ mm No. Name Location

4. Largest VC Firms worldwide by capital under management (2006) Capital under management in US$ bn No. Name Location

5. Largest European VC Firms by capital under management (2006) Capital under management in US$ bn Location No. Name

6. Private Equity Investment in Europe Private Equity investment 2005Volume: EUR 47bn Country of destination Country of management United Kingdom France Sweden Germany Spain Netherlands Italy Denmark other Source: EVCA (2006)

7. Private Equity Fundraising in Europe Private Equity fundraising 2005Volume: EUR 71,8bn Country of origin Country of management United Kingdom USA other Europe France Germany Asia Netherlands other Source: EVCA (2006)

8. Private Equity Investment in Europe Economic Significance of Private Equity Investment(Dest.)/GDPPE Environ.(right scale) Investment(Mgmt)/GDPPortfolio/Market Cap. Sweden Denmark Netherlands EU 15 France Euro zone Norway Portugal Italy Finland Switzerland Germany Ireland Belgium Poland Austria Greece United Kingdom Spain Source: EVCA (2006), Eurostat

9. Equity Ratios in Europe Small companies Mid-size companies Spain Finland Belgium France Netherlands Portugal Sweden Denmark Italy Germany Source: BACH-Datenbank, Eurostat

10. Equity Ratios in Germany Small Mid-size Large All companies Small Mid-size Large All companies

11. Importance of Geographical Distance (Martin et al. 2005) Importance of close distance for Venture Capital firms (mean) Portfolio company Investors Other VC firms Other external sources of capital for portfolio company Research institutes Large urban area Highly important Unimportant Germany (N=107) United Kingdom (N=60)

12. Employment Effects after Buyout Transactions Buyout in family firms Secondary Buyout Going private buyout Spin off buyout Turnaround buyout All buyout target companies Source: CEFS (2005)

13. Median Return (IRR) and Risk of Private Equity Investments Source: CEFS (2005)

14. Median Return (PME) of Private Equity Investments Source : CEFS (2005)

15. Valuation and Financial Structure in European LBOs Source: Standard&Poors (2006), Thomson Financial, Eurostat, CEFS

16. Purchase Price Multiple Europe Purchase Price Mult. Germany Debt Multiple Europe Debt Multiple Germany Leverage Germany Leverage Europe Valuation and Financial Structure in German LBOs Source: Standard&Poors (2006), Thomson Financial, Eurostat, CEFS

17. Valuation and Financial Structure in European LBOs Source: Standard&Poors (2006), Thomson Financial, Eurostat, CEFS

18. Taxation of Carried Interest

19. VAT on Management Fees

20. Recommendations for Taxation • Guaranteed tax transparency for Private Equity Funds. These funds may be structured in different legal forms as corporations or partnership. • Exemption from taxation for all services rendered between the fund as separate assets and its management companies, which will be comparable to EU-regulated OGAW / UCITS • Continuation of tax rules regarding Carried Interest with an internationally competitive tax rate • Amendment to § 8 Abs. 4 KStG (resp. § 8c KStG-E) to allow loss carry forward. • Tax exemption for capital gains resulting from Seed- or Start-up-financing for a closely defined group of young technology companies and for specified holding periods

21. Recommendations for Company Law • Amendment and revision of UBGG • Minimum capital requirement of EUR 1 million. • Object of the company: Direct or indirect equity investments (including fund-of-funds) and mezzanine capital • Restriction of each single investment to 30% of the fund’s assets (but not applying to the first three years from the funds’s vintage year) • Permit investments in listed companies, if at least 5% (2%) of nominal capital is acquired • Holding period restriction for investments (e.g. 12 years) • After 5 years no single shareholder should own more than 40% of the fund

22. Recommendations for Sector Supervision • Registration (certification) of Private Equity Funds combined with • Registration of fund managers • Implementation of (voluntary) commitment of funds and fund managers to industry-wide common rules of conduct and continuing education • Supervision by central supervisory authority • Fund shares may be marketed to qualified investors only (e.g. minimum investment EUR 125k; EUR 10k in the case of fund-of-funds) • Revision of rules regarding a Pension Fund’s ability to invest in alternative assets

23. Technische Universität München Center for Entrepreneurial and Financial StudiesTU München | Arcisstrasse 21 | 80333 München    Tel: +49 89 289 25483Web: www.cefs.de www.ifm.wi.tum.de Email: contact@cefs.de Univ.-Prof. Dr. Christoph Kaserer Tel: +49 89 289 25489 Email: christoph.kaserer@cefs.de