The market for company sales and acquisitions in Germany remains dynamic. Because it is often impossible to find a successor within the family or among the workforce, many small and medium-sized businesses have no option but to sell. Currently, 42 percent of affected owners are therefore open to the idea of an external buyer—whether domestic or international.
Companies Seeking Successors—Sought-After Businesses Based in Germany
The chances of successfully selling a company are good, as studies by KfW Research show. SMEs between Kiel and Konstanz remain sought-after targets for a full acquisition or merger. Between 2015 and 2017, more than 1,100 M&A transactions were carried out annually in the SME segment. The findings are based on an analysis of the Zephyr transaction database, which includes companies with annual revenue of up to 500 million EUR. Most succession deals involved German investors, but the number of foreign buyers is rising. In 2017, they already accounted for 49 percent. This is clear evidence of Germany’s appeal as an industrial location. It also highlights that investors have confidence in the competitiveness and stability of German companies.
Business Succession Within Europe
A quarter of foreign buyers during the study period came from Europe. Leading the way were “buyers” from the United Kingdom (5%), including many private equity firms and funds based in the UK. They were followed by investors from Switzerland (3.9%), the Netherlands (3.0%), France (2.7%), and Austria (2.3%). However, the United States led the way in acquisitions of German SMEs, accounting for 8.3%. Although media coverage often links China to business succession, KfW found that only 2.2% of acquisitions during the period in question came from the Far East.
Full Takeovers Preferred
The majority of acquirers opted for a full company takeover (53%). 17% were minority stakes and 13% were majority stakes. Mergers play only a minor role (6%) when a successor is being sought. Which industries are the focus? Manufacturing companies, as well as IT and communications technology. In about 60% of M&A deals in Germany, the buyer and the target company come from the same economic sector.
