GERMANY Law and Practice Contributed by: Georg Linde and Kamyar Abrar, Willkie Farr & Gallagher LLP
Tax indemnities, if granted, may extend to 100% of the purchase price with longer limitation periods, fre - quently up to seven years. Disclosure of the data room against warranties is standard and typically allowed. W&I insurance policies generally adopt the same disclosure framework and carve out known issues, which must be separately negotiated or excluded. Overall, limitations on warran - ty liability in German private equity deals are defined by quantum caps, time limits, knowledge qualifiers, and the exclusion of known or insured risks, with the buyer assuming residual commercial risk post-closing. 6.10 Other Protections in Acquisition Documentation Additional contractual protections include materiality thresholds, knowledge qualifiers, as well as negotiat - ed “sandbagging” clauses that limit claims for issues known to the buyer before closing. W&I insurance has become quite prevalent in German M&A transactions and is particularly dominant in sell- side private equity deals. This insurance is generally utilised to cover both fundamental and business war - ranties, protecting buyers while minimising significant liability for the seller. Furthermore, W&I insurance can and frequently does encompass tax issues (includ - ing tax indemnities), especially in transactions where the parties aim to circumvent lengthy negotiations. Enhancements favouring the purchaser are largely standard in contemporary W&I-insured transactions. Additionally, purely synthetic tax indemnities have seen increased usage in recent times. It is recognised in the market that purely synthetic catalogues of rep - resentations and warranties may also be provided by W&I insurers under specific conditions; however, this concept remains relatively novel in the German mar - ket. Escrow accounts or retention mechanisms have been relatively rare in German private equity transactions and the broader German M&A landscape in recent years. Nevertheless, when utilised, they are generally employed to secure warranties or particular indemni - ties, offering an extra layer of protection for the buyer. In these instances, the escrow amount is typically a minor percentage of the purchase price and is retained
in escrow for a limited duration, often corresponding with the warranty periods. 6.11 Commonly Litigated Provisions Litigation in connection with German private equity transactions is relatively rare, owing to comprehensive due diligence, arbitration clauses, and widespread use of W&I insurance. However, disputes may still arise, most commonly in relation to earn-outs, pur - chase price adjustments, and warranty breaches – particularly where undisclosed liabilities or financial underperformance are alleged. Tax indemnities and indemnities for specific known risks may also become contentious. Increased deal complexity and heightened valuation pressures, par - ticularly under 2024–2025 market conditions, may lead to a moderate uptick in disputes over consid - eration mechanisms in the future. Public-to-private (P2P) transactions involving private equity bidders are increasingly observed in Germa - ny, albeit still representing a modest portion of the overall M&A activity. Recent examples include the takeovers of Encavis, Compu Group, Software AG, OHB, Covestro, and Synlab, as well as the ongoing acquisition efforts concerning Gerresheimer. Notably, in March 2025, a consortium led by KKR and War - burg Pincus submitted a non-binding takeover offer for Gerresheimer, valuing the pharmaceutical pack - aging and medical technology company at approxi - mately EUR3.1 billion. Following the collapse of this bid, market speculation has arisen that KPS Capital Partners may step in to pursue a joint offer with War - burg Pincus. This development illustrates a renewed appetite for P2P transactions in Germany, particularly in capital-intensive or specialised sectors, despite heightened regulatory scrutiny in prior years. 7.2 Material Shareholding Thresholds and Disclosure in Tender Offers Under the German Securities Trading Act ( Wertpa- pierhandelsgesetz – WpHG ), material shareholding thresholds trigger mandatory disclosure obligations 7. Takeovers 7.1 Public-to-Private
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