GERMANY Law and Practice Contributed by: Marc Löbbe, Michaela Balke, Oliver Schröder and Martin Kolbinger, SZA Schilling, Zutt & Anschütz
1. Trends 1.1 M&A Market
1.2 Key Trends Digital/Technological Transformation Processes and ESG Digital and technological transformation continue to be key deal drivers. The German automotive industry remains challenged by the transition to e-mobility, Chinese competition and tariff threats. Traditional business models, such as in retail and consumer finance, are becoming increas - ingly digital, while investments in green technology/ sustainability and those driven by ESG considera - tions will impact many transactions. ESG considera - tions, including the Corporate Sustainability Report - ing Directive (CSRD) and the Corporate Sustainability Due Diligence Directive (CSDDD), increasingly impact transactions, although European regulatory frame - works are criticised for creating competitive disad - vantages. The Draghi report suggests that competition policy should adapt to changes in the economy to support Europe’s objectives – eg, by giving greater weight to future innovation potential in critical innovation areas. Whether this will lead to a shift in the assessment of mergers and a boost of intra-European transactions, particularly in the technology sector, remains to be seen. So far, European competition authorities have remained cautious about incorporating broader indus - trial policy considerations beyond traditional competi - tion analysis. 1.3 Key Industries See 1.1 M&A Market and 1.2 Key Trends . As in pre - vious years, the German market will continue to be driven by global M&A trends, with TMT and advanced manufacturing leading activity. Large individual trans - actions, often not tied to specific industries (like those in AI and automotive), determined overall market vol - ume allocation across segments.
2025 saw a broad-based rebound in the M&A mar - ket, with a global transaction value of approximately USD4.9 trillion, representing the second highest value ever recorded and an increase of 42% compared to the previous year. The number of transactions increased by 12.4%. This development applies to the German M&A market as well, which witnessed a comparable uptick of approximately 39% in deal volume. Cross-border M&A remained a key growth driver in 2025. The US dominated both inbound and outbound activity by a solid margin. In Germany, domestic activi - ties also increased over the course of the last year. Strategic deals continue to prevail, as financial inves - tors have stepped up their activities due to the low interest rate environment. Holding periods remain long, however, and are not expected to decrease in the near term. Distressed M&A has also been contrib - uting a significant share of overall activity. In terms of negotiation dynamics, the market is more balanced than in the past and has seen a shift away from the extremely seller-friendly set-up of the early 2000s. This entails a renewed emergence of purchase price adjustments, earn-out schemes, vendor loans, escrows and material adverse change (MAC) provi - sions, for example. In addition, the average duration of transactions continues to increase, with in-depth due diligence being performed and a high degree of regulatory scrutiny being present. Market participants expect the positive trend to con - tinue in 2026. Corporate divestments of German blue- chips are likely to play a major role in M&A activities, with AI and ESG impacts on business models driv - ing transactions. The Deutschlandfond , introduced in December 2025, is a government initiative designed to mobilise public funds, guarantees and private capital in order to stimulate large-scale investment in Ger - many. By leveraging public resources to attract private investment, the fund aims to trigger a broader invest - ment push across key sectors.
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