Trends at the M&A market
Despite the uncertainty regarding the Brexit negotiations and the discussions surrounding the presidential elections in the USA, the M&A market in Germany remained at a consistently high level in 2016. The deal volume increased from USD116.156 million in 2015 to USD199.982 Million in 2016, and the number of M&A deals increased by 5.9%.
The low interest rate policy as well as the high cash Holdings of German corporations were the key drivers for M&A transactions in 2016.
China’s investment activities increased in particular, from a transaction volume of under USD1 billion in 2015 to over USD10 billion in the first half of 2016 alone, which is more than all previous years combined. This made Germany the number-one country for Chinese investments in Europe.
While Chinese investors have previously focused on German technology companies (and still do), the area of investment has widened to include everything from pharma and biotech companies to clinics and care homes. However, Chinese investments declined to a certain degree in the fourth quarter of 2016, which may partially be explained by a change of the political climate for such investments.
In particular, there has been an increased level in the frequency of the review of such transactions under German foreign investment regulations, which were tightened in July 2017.
Transactions with Private Equity Involvement
2016 was the best year for transactions with private equity involvement in Germany since the pre-crisis year 2007, with a total purchase value of USD20.8 billion and a total sales value of USD19.7 billion. For the first time since 2012, the investment sum was higher than the revenues generated by the sale of interests. The mid-market became a very important field for private equity investors.
Industrials & Chemicals is still the most active sector in Germany, with 32% of the M&A transaction volume, followed by the Business Services and Consumer sectors, with 12% each.
Read this article in full
This article was first published in: Chambers Global Practice Guides, Corporate/M&A 2018 (last updated October 10, 2018)