{"id":138606,"date":"2026-04-08T11:29:06","date_gmt":"2026-04-08T11:29:06","guid":{"rendered":"https:\/\/my.legal500.com\/guides\/?post_type=comparative_guide&#038;p=138606"},"modified":"2026-04-08T11:29:06","modified_gmt":"2026-04-08T11:29:06","slug":"germany-mergers-acquisitions","status":"publish","type":"comparative_guide","link":"https:\/\/my.legal500.com\/guides\/chapter\/germany-mergers-acquisitions\/","title":{"rendered":"Germany: Mergers &amp; Acquisitions"},"content":{"rendered":"","protected":false},"template":"","class_list":["post-138606","comparative_guide","type-comparative_guide","status-publish","hentry","guides-mergers-acquisitions","jurisdictions-germany"],"acf":[],"appp":{"post_list":{"below_title":"<div class=\"guide-author-details\"><span class=\"guide-author\">FPS Rechtsanwaltsgesellschaft mbH &amp; Co. KG<\/span><span class=\"guide-author-logo\"><img src=\"https:\/\/my.legal500.com\/guides\/wp-content\/uploads\/sites\/1\/2025\/04\/FPS_Logo_RGB_color_pos-1.jpg\"\/><\/span><\/div>"},"post_detail":{"above_title":"<div class=\"guide-author-details\"><span class=\"guide-author\">FPS Rechtsanwaltsgesellschaft mbH &amp; Co. KG<\/span><span class=\"guide-author-logo\"><img src=\"https:\/\/my.legal500.com\/guides\/wp-content\/uploads\/sites\/1\/2025\/04\/FPS_Logo_RGB_color_pos-1.jpg\"\/><\/span><\/div>","below_title":"<span class=\"guide-intro\">This country specific Q&amp;A provides an overview of Mergers &amp; Acquisitions laws and regulations applicable in Germany<\/span><div class=\"guide-content\"><div class=\"filter\">\r\n\r\n\t\t\t\t<input type=\"text\" placeholder=\"Search questions and answers...\" class=\"filter-container__search-field\">\r\n\t\t\t<\/div>\r\n\r\n\t\t\t\r\n\r\n\r\n\t\t\t<ol class=\"custom-counter\">\r\n\r\n\t\t\t\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">What are the key rules\/laws relevant to M&A and who are the key regulatory authorities?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>The key rules applicable to M&amp;A depend on the differences between public and private M&amp;A transactions. While a public M&amp;A process is highly regulated due to mandatory rules and required approvals by regulatory authorities, private M&amp;A mostly lies in the negotiations between the parties. M&amp;A transactions under the participation of German companies always request awareness for European Law besides and in addition to national laws.<\/p>\n<p>Besides German Stock Corporation Act (<em>AktG<\/em>), laws related to the capital market, such as German Securities Acquisition and Takeover Act (<em>Wp\u00dcG<\/em>) and German Securities Trading Act (<em>WpHG<\/em>) are relevant to public M&amp;A deals. Those national rules exist alongside and are applied in addition to the generally binding European regulations, i.e. the Market Abuse Regulation (<em>MAR<\/em>).<\/p>\n<p>The private M&amp;A-process, on the contrary, is mostly up to parties\u2019 autonomy. Only in case the parties do not agree upon a specific regulation within the contract, laws do apply, in particular, the German Civil Code (BGB), the German Limited Liability Company Act (<em>GmbHG<\/em>) and the German Commercial Code (<em>HGB<\/em>). Since a significant amount of German medium-sized companies are organized in the form of a Limited Partnership with a limited liability company as general partner (<em>GmbH &amp; Co. KG<\/em>) adaptations within the laws applying to partnerships at the beginning of 2024 by the Act to modernize the Laws of Partnerships (<em>MoPeG<\/em>) must be considered. However, supervision by regulatory authorities plays a subsidiary role in the M&amp;A process except for merger control and foreign direct investment approval on national and EU level which have an increasing relevance to private M&amp;A deals. Especially, midcap and large cap transactions (in particular in highly sensitive sectors or in transactions parties from third countries are involved) require the approval of the European Commission, the German Federal Cartel Office and\/or the Federal Ministry for Economic Affairs and Energy (<em>BMWE<\/em>).<\/p>\n<p>Besides the main regulatory framework, both public and private M&amp;A transactions face a number of specific rules. While many rules differ from sectors, the German legal system consists of an increasing number of corporate sustainability obligations. Such obligations have a significant scope of application which makes them relevant to large cap as well as to small cap transactions. The Corporate Sustainability Reporting Directive (<em>CSRD<\/em>) and the Whistleblower Protection Act (<em>Hinweisgeberschutzgesetz<\/em>) constitute examples of new corporate governance legislation. Besides general legislation numerous industry sectors are affected by the German Supply Chain Due Diligence Act (<em>Lieferkettensorgfaltspflichtengesetz<\/em>). In 2024, the European legislators have adopted and enhanced supply chain duties through the European Corporate Sustainability Due Diligence Directive (<em>CSDDD<\/em>).<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">What is the current state of the market?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>The development of the German M&amp;A market proved to be robust, even though the economic and geopolitical circumstances might have expected a different picture, and the current situation is challenging to M&amp;A activities. In total, the M&amp;A activities declined by 6.0% (2,586) in 2025 or 166 transactions less compared with the M&amp;A year 2024. According to the historical average since 1998, the recorded transactions exceeded the average by +45.3%. Consequently, the market volume was significantly above the historical average. The decline of transaction activity is attributable to the sharp drop from inbound and outbound transactions. Compared to the previous year, inbound transactions fell by -38.8% and outbound transactions by -26.4%. However, the increase in domestic transactions by +32.8% is a positive development. These developments are attributable to geopolitical uncertainties and fluctuating US tariffs, but also to Germany&#8217;s increasing unattractiveness as a business location due to rising personnel and energy costs, bureaucracy, and weak economic growth. The uncertain situation created transaction activity against a backdrop of financial performance motives and a focus on revenue, profit growth and portfolio structure. The course of 2025 was marked by transactions carried out by private equity investors, which accounted for 51.8% of the total. For the first time, these exceeded the transactions carried out by strategic investors.<\/p>\n<p>Across all sectors, the M&amp;A activity declined except for the sector Business Support Services. The TMT sector continues to be the M&amp;A sector with the most transactions although the amount of deals decreased slightly by -1.5%. However, the Business Support Services sector showed a significant increase of transactions in the amount of 29.0%. The increase was mainly caused by continued interest in asset-light business models by investors. This was reflected in the fact that financial investors were involved in 46.0% of transactions in this sector. In general, 2025 saw a significant increase in transactions with financial investors of +36.0% or 258 transactions compared to the previous year, resulting in a total of 975 transactions with financial investors in 2025. The reason for this development is the declining interest rate environment since 2024. The number of transactions in the Industrial Machinery &amp; Components sector and in the Consumer &amp; Retail sector declined by -8.7% and -16.4%, respectively. The healthcare sector also recorded a decline of -10.6%. This is due to the fact that five of the top 30 deals in the large-cap segment are attributable to the healthcare segment.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">What do you believe will be the three most significant factors influencing M&A activity over the next 2 years?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>a) Artificial Intelligence and ESG issues<\/p>\n<p>The influence of Artificial Intelligence (AI) continues to be significant and is a driver as well as a subject of M&amp;A. In addition to the use of transactions for the acquisition of AI and digital capabilities, it offers potential for achieving particular efficiency in the M&amp;A process. At the same time, the global capex supercycle for AI infrastructure is forcing companies to reprioritize investments in technology alongside M&amp;A and other projects as part of their capital allocation. In addition to the challenge of keeping up with the competition, there are also implementation risks associated with integrating AI into business and operating models. However, European legislation \u2013 in contrast to other jurisdictions \u2013 has chosen a regulatory path for AI which might impact the development and use of AI in Germany. The impact of the European AI Act on the development and use of AI in Germany is hardly predictable. Nevertheless, AI remains an area for technological and economic development for the upcoming years.<\/p>\n<p>ESG issues will also continue to gain importance for companies, private equity firms and financial institutions in the coming years. Regulatory activities in the EU and in Germany lead to an increase in sustainability regulation. A wide range of German companies is obliged to invest more focus on its sustainability actions. However, ESG is not only noteworthy from its regulatory component. Sustainability will constantly grow in relevance as driver or barrier to M&amp;A transactions. Recent transactions show specific focus on ESG risks through the due diligence process. Sustainable industry establishes itself as independent industry sector besides the AI-sector and gets attention from investors.<\/p>\n<p>These developments primarily promote innovation-driven sectors such as technology, digital infrastructure, healthcare, defence and renewable energies.<\/p>\n<p>b) Government investments and Private Equity<\/p>\n<p>A slight economic upturn is expected in 2026 due to government investment, which could reach the real economy in the targeted sectors of defense, technology, and infrastructure. Although no significant and noticeable impact on M&amp;A activity is to be expected, positive impetus from the federal government and planned investments can at least be anticipated.<\/p>\n<p>The significant increase in private equity supported transactions also offers scope and potential for the future. The considerable pressure on many private equity firms to generate cash flow returns is growing, which in turn is stimulating the potential monetization of long-held private equity investments. In addition to the use of continuation funds, less restrictive debt capital markets also have a supportive effect here. Although the German debt market showed greater receptiveness to M&amp;A transactions in 2025, interest rates remain high and banks tend to take a conservative stance. As a result, transaction participants are increasingly turning to alternative lenders in order to gain flexibility and speed.<\/p>\n<p>c) Succession wave and rising corporate insolvencies<\/p>\n<p>Due to demographic factors, Germany is facing a massive exit wave, which is leading to an oversupply of sales and a stable buyer&#8217;s market. As numerous entrepreneurs are reaching retirement age, around 190,000 business successions are expected over the next two years. Due to the continuing weak market dynamics, corporate insolvencies are rising in parallel, reaching their highest level since 2014 with an increase of 8.3% compared to last year. The Transport &amp; Storage, Hospitality and Construction sectors were particularly affected. The consequence of this is reflected in the increasing relevance of distressed M&amp;A transactions. These developments point to a continuation of pandemic-related effects and increasing visibility of rising personnel and energy costs as well as declines in exports and consumption.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">What are the key means of effecting the acquisition of a publicly traded company?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>The required means to acquire a publicly traded company depend on the stake that shall be acquired. German law distinguishes different kinds of offer that are set out in the German Securities Acquisition and Takeover Act. Conclusively, there are the ordinary acquisition offer, takeover offers and mandatory offers.<\/p>\n<p>The ordinary acquisition offer concerns the acquisition of shares without obtaining control over the target company or in case the acquiror still obtains the control. The ordinary acquisition offer is characterized by the lack of an obligation to pay an appropriate consideration.<\/p>\n<p>In contrast, a takeover offer requires to offer an appropriate consideration for acquiring the shares of a minority shareholder. The takeover offer relates to the case the acquiror obtains the control through the acquisition. A shareholder has the control over a Stock Corporation if it holds at least 30 % of the shares in the company. However, the German Securities Acquisition and Takeover Act contains exceptions for a takeover offer which require an approval by regulatory authorities.<\/p>\n<p>The mandatory offer concerns the constellation that a shareholder obtains the control over a company other than by a takeover offer. The cases for mandatory offers are narrowed through exceptions stipulated by German Securities Acquisition and Takeover Act. If a mandatory offer is required, obligations to pay an appropriate consideration will apply as well.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">What information relating to a target company is publicly available and to what extent is a target company obliged to disclose diligence related information to a potential acquirer?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>The amount of information about a target company that is publicly available depends on its legal form. Generally, almost every company is obliged to be registered with the German Commercial Register and thereby must publish certain information. The German Commercial Register is accessible via a website and a query is free of charge. The commercial register provides general information about a company such as the legal form or its representatives. Further, the articles of association, a list of shareholders, and shareholder resolutions \u2013 depending on the legal form of a company \u2013 are accessible via the Commercial Register. The list of shareholders in particular is not freely available for stock corporations. In addition, the annual financial statements of companies can be found in the German Federal Gazette (Bundesanzeiger) if the company is required to publish them.<\/p>\n<p>In a due diligence process the target company is obliged to disclose further information. There is no general approach to which extent a company must disclose internal information. The disclosed information must be in sufficient detail to enable an experienced purchaser with the relevant expertise to make a reasonably informed assessment of the target company. This principle has been confirmed by the German Federal Court of Justice (BGH).<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">To what level of detail is due diligence customarily undertaken?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>The level of detail for due diligence is regularly up to the agreed scope. No specific law considering the level of details exists. Thus a low level of detail is usually covered by guarantees and indemnities within the contract. However, it is common that a legal due diligence covers the areas of corporate matters, finance, employment, relevant contracts, real estate, IT\/IP, environmental and litigation\/arbitration\/regulatory.<\/p>\n<p>Nevertheless, the required level of detail in due diligence is influenced by the obligations for directors of a company. Before acquiring the shares of a company the director must secure that the acquisition is based on adequate information. Additionally, a judgement of the German Federal Court of Justice on the Due Diligence process is noteworthy: Vendors are pre-contractually obliged to fairly disclose information about the target company in the (virtual) data room. The disclosure of information under false description may cause liability of the vendor. According to this judgement, transactions under participation of German companies require an accurate preparation of the due diligence process.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">What are the key decision-making bodies within a target company and what approval rights do shareholders have?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>The key decision-making bodies depend on the type of company and the provisions in the Articles of Association (AoA) or alternatively the Shareholder Agreement (SHA). It is common, especially in the AoA or SHA of a German Limited Liability Company (GmbH), to agree upon specific approval rights for shareholders even though the mandatory law does not require such. Thus the necessary approvals vary between the companies. Since a GmbH requires the consent of the shareholders to acquire or sell shares, a shareholders resolution is commonly made within the M&amp;A process. Although a GmbH mandatorily only consists of a management board and the general meeting of the shareholders, a supervisory board can be installed which may have the right to approve a transaction.<\/p>\n<p>The key bodies of a German Stock Corporation (AG) are the management board, the supervisory board and the general meeting of the shareholders. The approval rights and the control over the company is split between the supervisory board and the shareholders. However, only the supervisory board can directly impact the management board. The supervisory board appoints, removes and supervises the board members. The shareholders have only indirect influence on the operating business through their right to appoint the members of the supervisory board or the right to discharge the management board and supervisory board.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">What are the duties of the directors and controlling shareholders of a target company?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>Pursuant to the act on German stock corporation and German limited liability company board members or directors have to comply with a catalogue of duties. Primarily, the directors must exercise the diligence of a prudent and conscientious manager. The director fulfills this duty when he\/she acts in the best interest of the company. German courts have derived many specific obligations from the general duty for directors. Those duties apply to the M&amp;A process as well, e.g. the duty to disclose relevant documents in the VDR, the duty to conceal specific business details, the duty to negotiate in the best interest of the target company, which may include the duty to negotiate with different investors etc. On the other side, shareholders must act in the best interest of the target company as well whereby the catalogue of duties differs from director\u2019s duties since shareholders are not obliged to conduct the operative business. In M&amp;A transactions with middle-sized companies, it should be considered that shareholder and director are often the same person.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">Do employees\/other stakeholders have any specific approval, consultation or other rights?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>Generally, respecting stakeholder rights in M&amp;A transactions is common since especially employees have a considerable legal position in German companies. This makes it necessary to examine whether the target company is bound by collective agreements and\/or operating agreements. Such agreements may require consultation of employees (e.g. worker council) before a transaction can be performed. By law the German Civil Code stipulates the right of objection against the transfer of operations (<em>Betriebs\u00fcbergang<\/em>) for employees. If a company employs more than 500 employees, it is obliged to save a third of the seats of the supervisory board for employees. In case the target company is a Limited Liability Company, the company is in such scenario obliged to establish a supervisory board.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">To what degree is conditionality an accepted market feature on acquisitions?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>Conditionality is a usual and accepted market feature in accordance with German law and in certain scenarios even required. A variety of conditions is negotiated throughout an acquisition process, especially regulatory consent requirements, such as merger clearance conditions or reorganization conditions. Additionally, the payment of the purchase price is a common condition to the transaction. Thus, conditionality is an instrument to conclude transaction agreements and simultaneously securing factual or legal interests of the parties to be fulfilled before the transaction can be performed. The fulfillment of the conditions agreed in a share and\/or asset agreement characterizes the closing process after the signing. The right of set-off and right of retention, however, is usually excluded by the parties.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">What steps can an acquirer of a target company take to secure deal exclusivity?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>As publicly traded target companies are characterized by its openness to varying investors, granting deal exclusivity seems unusual. Additionally, since directors must act in the best interest of a company and therefore must negotiate with different investors, granting deal exclusivity might contradict the duties of a director. It should be noted that directors may be held liable in case the exclusive deal is not in the best interest of the target company. However, as long as management duties and mandatory legal provisions are respected a publicly traded company can also grant deal exclusivity.<\/p>\n<p>In contrast, private companies may grant deal exclusivity even though directors duties must be taken into account. The option of exclusivity can usually be derived from the Letter of Intent or the Term Sheet. Thus, if the M&amp;A process is not planned as bidding process, deal exclusivity is most commonly possible. Generally, deal exclusivity in M&amp;A transactions under the participation of German companies is not uncommon and depends on the commercial parameters of the transaction and the time line. We observe that especially in bidding processes exclusivity (informally) granted to bidders for a short period of time within the transaction process is becoming increasingly attractive.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">What other deal protection and costs coverage mechanisms are most frequently used by acquirers?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>Typically discussed deal protection mechanisms include termination or break-up fees that are paid to the seller in case the deal is not completed. Those protection mechanisms are agreed upon in an early stage of a M&amp;A process, i.e. the term sheet or LoI. Break-up fees are not unusual in German M&amp;A market and an acknowledged mechanism for deal protection. A comparable deal protection mechanism concerns cost coverage clauses. Other mechanisms such as non-solicitation provisions or exclusivity agreements are acknowledged as well. Thus, the decision about the use of such mechanisms depends on the intentions of the parties involved in the M&amp;A process.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">Which forms of consideration are most commonly used?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>In German M&amp;A market cash offers remain the most common consideration. The offer of shares instead of cash is also acknowledged in the market. Therefore, it is part of practice to offer the seller to reinvest in the company of the acquirer by taking a minority stake. We observe that such reinvestments by sellers in private equity transactions are becoming increasingly common in order to maximize the exit process and to keep the know-how in the target company. This mechanism is frequently used when the seller receives a call option for the sold shares in order to give the option continuing to participate in the operations of the target company. Since private equity involvement continuously increases, such forms of considerations seem to grow.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">At what ownership levels by an acquirer is public disclosure required (whether acquiring a target company as a whole or a minority stake)?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>The acquirer of a company that is publicly traded must inform the company and the German Federal Financial Supervisory Authority (BaFin) about its number of shares in the company under German Securities Trading Act when specific thresholds are met. The lowest threshold is up to 3 %. Further thresholds are set at 5 %, 10 %, 15 %, 20 %, 25 %, 30 %, 50 % or 75 %. Ownership includes direct and indirect participation in the company. It is noteworthy that the obligation to inform the regulatory authorities and the target company about the level of ownership also arises if the shareholding in the company falls under a threshold. Private M&amp;A transactions, on the contrary, usually do not require notifications to financial supervisory authorities.<\/p>\n<p>Besides notifications under German Securities Trading Act a public offer to acquire the shares in the company must be published if the acquirer intends to control the company after the acquisition. Under German Securities Acquisition and Takeover Act a public offer is required if the acquirer will own more than 30% of the company after the acquisition. In specific cases the German Federal Financial Supervisory Authority (<strong>BaFin<\/strong>) can grant an exception from the mandatory public offer under the Regulation of Offers to the German Securities Acquisition and Takeover Act.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">At what stage of negotiation is public disclosure required or customary?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>The necessity to publicly disclose the negotiations within a M&amp;A process only applies to listed companies when the negotiations are considered as inside information as defined within the Market Abuse Regulation and the German Securities Trading Act. The obligation to disclose information about the negotiations applies simultaneously to vendor, acquirer and the target company if they are listed companies. Without details such inside information are basically all information that may possibly impact the stock exchange price of the shares of the respective target companies. The precise stage at which a disclosure is mandatory must be determined under the specifically underlying circumstances. Generally, the further the transaction has progressed, the more likely it is that the transaction will be performed and the more likely it is that the transaction impacts the stock exchange price. Even the conclusion of the due diligence can require a public disclosure of the information. At least, the time one party offers a bid constitutes an information that is subject to public disclosure. Further, in case information about the deal have been leaked the parties to the transaction process must disclose information about the transaction. However, the parties involved should examine whether they can exempt themselves from public disclosure requirements. An exemption is possible if a delay in disclosure is relevant to the interest of the company and does not constitute a mislead of the public.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">Is there any maximum time period for negotiations or due diligence?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>German law does not require to hold a maximum time period for a M&amp;A process. According to rather vague legal principles, parties in the process of concluding a contract shall be able to make their decisions without being pressured by time tables. In accordance with this legal principle, a party that slows down the M&amp;A process cannot be held liable. Only in rare exceptional cases when a party has a significant interest to conclude the share purchase agreement in time and the other party is aware of that interest the expiration of time might lead to liability. Apart from legal principles, however, parties may agree upon a certain time table. The decision about the conclusion of the share purchase agreement must then be made within the agreed time frame. Further, a factual maximum time period can be set by non-disclosure agreements or non-solicitation-agreements that are limited in time. Not only for this reason but also in the natural interest of parties, negotiations within a short period of time are common in order to use a momentum. Also in bidding processes we observe rather ambitious time lines in order to maintain a competitive process which is understandable given the resources that a M&amp;A process ties up.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">Is there any maximum time period between announcement of a transaction and completion of a transaction?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>The time between announcement of a transaction and its completion is not regulated under German law. However, a short time period usually is in the interest of the parties and mainly depends on the fulfillment of closing conditions and closing actions. The complexity of a transaction, thereby, determines the time period until completion. Parties may also agree upon long stop dates for their transaction. Thus, a party reserves the right to withdraw from the contract if an agreed time period has expired.<\/p>\n<p>In public M&amp;A deals, however, the time between announcement of the offer to acquire the shares and the completion of the transaction is regulated. The required time for acceptance of the offer must not be less than four and no longer than ten weeks.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">Are there any circumstances where a minimum price may be set for the shares in a target company?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>Private M&amp;A transactions do not require to set a minimum price for the shares in a target company. The relevant price for the shares is usually determined by the equity value of the target company. In public M&amp;A transactions the required minimum price for the shares in the target company depends on whether the purchaser intends to obtain the control over the target company, i.e. holding at least 30\u00a0% of the shares. In a takeover offer or a mandatory offer the purchaser is obliged to pay an appropriate consideration. The definition of an appropriate consideration can be derived from the average stock market price of the shares of the target company within the last three months prior to the offer and from the price the purchaser or its affiliates paid for shares in the target company within six months prior to the offer.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">Is it possible for target companies to provide financial assistance?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>The options for target companies in this regard are restricted since German Law intends to protect creditors. Therefore, German Limited Liability Companies and German Stock Corporations must be distinguished. Limited Liability Companies must not put their assets at risk. A violation of this duty may lead to liability issues for the management. However, in practice it is rare that a Limited Liability Company puts its assets at risk through a M&amp;A process. Thus, in case a Limited Liability Company is the target financial assistance can be provided. In contrast, Stock Corporations are strictly obliged to restrict from financial contributions except dividends. Providing financial assistance directly through the target company is in context of Stock Corporations under considerable risk.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">Which governing law is customarily used on acquisitions?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>Share Purchase Agreements on the acquisition of a German target company usually decide on German law as the governing law to the contract. Further, such transactions generally choose the jurisdiction of German courts or arbitral tribunals. If the parties agree upon arbitral tribunals instead of ordinary courts, transactions involving German targets will usually decide on German Rules of Arbitration set by the German institute for arbitration (DIS).<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">What public-facing documentation must a buyer produce in connection with the acquisition of a listed company?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>The acquisition of a listed company requires public-facing documentation with regard to the offer documents since the offer is addressed to all shareholders of the company. This only relates to offers that must be published. Generally, the necessary information to be published shall be sufficient for other shareholders to make an informed decision about the acceptance of the offer. This vague approach is fulfilled by default through information about the purchaser and description about the intent of the offer. Typically, the purchaser provides information about the reason for the transaction, its intentions on future development of the target company, its own financial situation and the current state of the target company.<\/p>\n<p>&nbsp;<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">What formalities are required in order to document a transfer of shares, including any local transfer taxes or duties?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>German law stipulates mandatory documentation for the transfer of shares that differ from the legal form of the company. Respecting such documentation requirements is usually relevant to hold a transaction valid. In private M&amp;A transactions on the acquisition of a German limited liability company notarization of the share purchase agreement is required. Additionally, during or after the closing period of the transaction a new list of shareholders must be submitted to the Commercial Register. Acquisitions of the assets of a company instead of its shares \u2013 usually seen as asset deals \u2013 often require notarization as well since such transactions include properties that encompass the entire assets of the vendor. Thus, transactions under German law require awareness of the purchaser on the notarization prerequisite. This requirement grows in relevance if the transfer of shares crosses borders and another than German jurisdiction is involved. Further, transactions of companies held by natural persons often require the spouse consent. Additional and specific requirements relate to transactions of intellectual property rights which includes mandatory registration requirements.<\/p>\n<p>Transactions including listed companies require different formalities to be respected. Such formalities concern ad-hoc publicity or registration and notification in the company\u2019s share register. The exercise of specific rights that are related to the shares depends on the registration in the company\u2019s share register.<\/p>\n<p>Transfer taxes and duties vary by the type of company as well. However, capital gains taxation must always be taken into account. Thus, taxes in particular have a great impact on the structure and completion of the transaction which should be considered even in an early stage of the M&amp;A process.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">Are hostile acquisitions a common feature?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>Hostile acquisitions or hostile takeovers are known but rather uncommon. Typically, the acquiror sets a public offer and contacts at least the management board of the target company before entering into the acquisition process. Restrictions through German Securities Acquisition and Takeover Act lead to an obligation to publish an offer at a threshold of 30% of the shares in the target company. This additionally makes a hostile acquisition unusual. Besides legal aspects, M&amp;A processes often take place in solid cooperation between the parties involved. This common understanding makes hostile acquisitions \u2013 especially in the last years \u2013 rare. However, all of the aforementioned shall not hide the fact that hostile approaches are known to the market.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">What protections do directors of a target company have against a hostile approach?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>Instruments against a hostile approach are rather on a factual than on a legal basis. Board members can encourage other investors to purchase shares. Even the willingness of another investor may positively impact the stock market price and, thus, lower the interest for a hostile takeover (\u201cwhite knight\u201d). Further, other shareholders may purchase additional shares. If members of the board do not find other investors or shareholders to acquire shares, they might attempt to lower the interest for a hostile takeover by making the target company unattractive. Any measure against a hostile acquisition, however, must be in accordance with the general obligation of the management to restrict from actions that put the company and its interests at risk. Thus, any protection against a hostile approach is a balancing act to the members of the board. To avoid any allegation of impeding the success of the company, actions of the management board should be confirmed by the supervisory board.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">Are there circumstances where a buyer may have to make a mandatory or compulsory offer for a target company?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>Mandatory offers are not part of private M&amp;A transactions. The involvement of a target company with publicly traded shares, however, imposes additional requirements. An obligation to set a public offer appears in transactions in which the purchaser intends to acquire more than 30\u00a0% of the shares in the target company in order to obtain the control. Such transactions may have a great impact on the stock market price of a company. Thus, other shareholders shall be protected. A public offer to acquire all other shares in the company is intended to ensure this protection. The German Securities Acquisition and Takeover Act, however, stipulates a few exceptions from the obligation of a public offer.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">If an acquirer does not obtain full control of a target company, what rights do minority shareholders enjoy?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>The process of obtaining full control over a target company usually contains the strategy to acquire 95\u00a0% of the shares in a first step. This enables the majority shareholder to \u201csqueeze out\u201d the remaining minority shareholders. Besides this strategy applying to Stock Corporations, minority shareholders are usually under pressure if the majority shareholder holds more than 75 % of the shares in the company. Such a constellation typically allows the majority shareholder to dominate the company. Minority shareholders are limited to their rights to speak and propose motions at the annual general meeting. Deviating rights for minority shareholders can be stated in the articles of association.<\/p>\n<p>The protection of minority shareholders in a Limited Liability Company is no more extensive. In case the purchaser acquires at least 75% of the shares in the target company and the articles of association do not stipulate otherwise a minority shareholder has little to no significant impact on the decisions of the company. Thus, the protection of minority shareholders is less a question by law than by parties agreements.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\t\t\t\t\t<li class=\"question-block filter-container__element\">\r\n\t\t\t\t\t\t<h3 class=\"filter-container__match-html\">Is a mechanism available to compulsorily acquire minority stakes?<\/h3>\r\n\t\t\t\t\t\t<button id=\"show-me\">+<\/button>\r\n\t\t\t\t\t\t<div class=\"question_answer filter-container__match-html\" style=\"display:none;\"><p>The option to acquire the shares of minority shareholders is acknowledged under the term \u201cSqueeze-Out\u201d. Precisely, a Squeeze-Out is only an instrument in transactions with a Stock Corporation involved. Thus, in case of Limited Liability Companies a mechanism to acquire minority stakes does not exist. A Squeeze-Out under the German Stock Corporation Act requires that the acquiror holds at least 95 % of the shares in the Stock Corporation. Based on this condition the majority shareholder has the right to acquire the remaining shares by paying an appropriate compensation. The compensation must be paid in cash. In order to guarantee a fair Squeeze-Out German Stock Corporation Act sets out strict requirements to the process.<\/p>\n<\/div>\r\n\r\n\r\n\t\t\t\t\t<\/li>\r\n\r\n\t\t\t\t\r\n<div class=\"word-count-hidden\" style=\"display:none;\">Estimated word count: <span class=\"word-count\">5758<\/span><\/div>\r\n\r\n\t\t\t<\/ol>\r\n\r\n<script type=\"text\/javascript\" src=\"\/wp-content\/themes\/twentyseventeen\/src\/jquery\/components\/filter-guides.js\" async><\/script><\/div>"}},"_links":{"self":[{"href":"https:\/\/my.legal500.com\/guides\/wp-json\/wp\/v2\/comparative_guide\/138606","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/my.legal500.com\/guides\/wp-json\/wp\/v2\/comparative_guide"}],"about":[{"href":"https:\/\/my.legal500.com\/guides\/wp-json\/wp\/v2\/types\/comparative_guide"}],"wp:attachment":[{"href":"https:\/\/my.legal500.com\/guides\/wp-json\/wp\/v2\/media?parent=138606"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}