GERMANY Law and Practice Contributed by: Marc Löbbe, Michaela Balke, Oliver Schröder and Martin Kolbinger, SZA Schilling, Zutt & Anschütz
SZA Schilling, Zutt & Anschütz Rechtsanwaltsgesellschaft mbH Otto-Beck-Straße 11 68165 Mannheim Germany Tel: +49 621 4257 0 Fax: +49 621 4257 280
Email: info@sza.de Web: www.sza.de
1. Trends 1.1 M&A Market
In terms of negotiation dynamics, the market is increasingly turning to a purchaser market and away from the extremely seller-friendly set-up of the past. This entails a renewed emergence of purchase price adjustments, earn-out schemes, vendor loans, escrows and material adverse change (MAC) provisions, for example, which had been virtually absent for years. In addition, the average duration of transactions continues to increase, with in-depth due diligence being performed and a high degree of regulatory scru - tiny being present. Market participants expect the positive trend to continue in 2025, with the mid-cap segment expected to be more active than large-cap transactions. Corporate divestments of German blue-chips are likely to play a major role for M&A activities, with AI and ESG impacts on business models driving transactions. Cross-border activ - ities, particularly from and/or to the US, are likely to continue to have a major impact. 1.2 Key Trends Digital/Technological Transformation Processes and ESG Digital and technological transformation con - tinue to be key deal drivers. The German auto - motive industry (the traditional stronghold of
2024 saw a modest recovery in the M&A market, with a global transaction value of approximately USD3.5 trillion, an increase of 15% compared to the previous year. The number of transactions increased by 7%. This development applies to the German M&A market as well, which wit - nessed a slight uptick of approximately 5% in deal volume. The market was mainly driven by cross-bor - der transactions, with the US dominating both inbound and outbound activity by a solid margin, followed by the UK. In contrast, domestic activi - ties remained essentially flat. TMT continued to be the most active industry sector, followed by general industrial activities and automotive, con - sumer and retail, with the latter driven mainly by the fundamental challenges for German original equipment manufacturers in connection with electrification and international trade. Strategic deals continue to prevail, as financial investors showed their first reactions to decreased interest rates in the second half of 2024. Holding periods remain long, however, and are not expected to decrease in the near term.
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