GERMANY Law and Practice Contributed by: Marc Löbbe, Michaela Balke, Oliver Schröder and Martin Kolbinger, SZA Schilling, Zutt & Anschütz
2. Overview of Regulatory Field 2.1 Acquiring a Company Private M&A – Acquisitions of Non-Listed Companies Private M&A transactions are generally struc - tured through (bilateral) negotiations, which can vary widely in terms of form and process. In competitive M&A scenarios, well-established auction processes administered by M&A advis - ers are often employed. Usually, interested par - ties must sign a non-disclosure agreement before gaining access to an information memorandum containing basic financial and legal information about the target company. They will then be invited to submit non-binding offers setting out purchase price and other key transaction items. Bidders who submit the best indicative bids will subsequently have access to a data room for due diligence; usually, the seller also provides legal and financial as well as tax fact books or even vendor due diligence reports in this context to help bidders assess the data room. Indica - tive offers for W&I insurance are also sometimes made available in the data room. The due diligence process is followed by binding bids, often requiring a first mark-up of the key legal documentation; the seller then enters into negotiations with those bidders who have sub - mitted the most attractive bids. Sometimes, the seller grants (temporary) exclusivity at this stage. The negotiation process concludes with the exe - cution of a sale and purchase or merger agree - ment. Core elements of an agreement are: • the determination and structuring of the purchase price, which typically follows a locked-box model or a cash-free/debt-free
the nation’s economy) is struggling with the transition to e-mobility, lack of attractive model portfolios, Chinese competition and, last but not least, the recent tariff threat. Traditional business models, such as in retail and consumer finance, are becoming increasingly digital, while invest - ments in green technology/sustainability and those driven by environmental, social and gov - ernance (ESG) considerations will impact many transactions. While the shift to clean energy will likely continue, it has been challenged by recent political opinion in the US and a perception of an over-engineered regulatory framework in Europe that puts European and German companies at a competitive disadvantage. The Corporate Sustainability Reporting Directive and supply chain regulation under the Corporate Sustain - ability Due Diligence Directive are of particular concern here. 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, particular - ly in the technology sector, remains to be seen. So far, European competition authorities have been reluctant to embrace industrial policy goals beyond competition on the merits. 1.3 Key Industries See 1.1 M&A Market and 1.2 Key Trends . As in previous years, the German market will continue to be driven by global M&A trends. Large indi - vidual transactions, which cannot necessarily be assigned to specific industries, will be decisive for the allocation of the total market volume rela - tive to industry segments.
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