High Prices, High Pressure
Prices for companies are as high as they were last before the financial crisis in 2008. Some experts are already warning of a downward spiral, others are much more relaxed. It is undisputed that certain sectors will be hit hard.
Prices for companies continue to rise - for how long can we expect this trend to go on?
The investments depend more on the business model and less on the current interest rate level.
Lars Härle for Unternehmeredition
The low level of interest rates and the high level of liquidity generally enable significantly higher company valuations, especially by private equity houses. In addition, there are currently only a few interesting takeover targets for this group of investors, so competition and prices are correspondingly high. More important is how the business models of companies are changing as a result of digitisation. Companies without sufficient answers to these questions will also be rated significantly lower. Companies with a high digital affinity will receive high ratings.
Is there a risk of a crisis if interest rates rise?
Not really. Investments are currently less dependent on current interest rates than on uncertainty about the business model affected by digitization. Other important influencing factors include the trade barriers caused by the new economic policy in the USA, but also Russia, China and Brexit, which is just around the corner, as well as the energy change.
Which industries are particularly interesting for investors?
The current focus is on software companies in the areas of artificial intelligence, virtual reality, smart data and data security, as well as platforms in the healthcare, proptech and mobility sectors. Internet of Things companies in the areas of sensor technology, connectivity and networking are also very interesting, as they have a significant influence on the way one produces, communicates and makes decisions.
This is a shortened version of the article "High Prices, High Pressure", first published in Unternehmeredition in August 2017. Header Pic © Philip via Fotolia