Insights: Investing in Germany

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Investments in Germany are still extremely popular among foreign investors. But what should be taken into account? This Special Theme issue brings to you articles addressing issues related to investing in Germany and offers answers to basic questions. 
 
Due to its high attractiveness, a wide variety of investors such as corporations or financial investors are in the market for German companies and are looking for suitable takeover targets. Foreign investors planning to take over or invest in a German company should be prepared for a variety of special aspects in advance of the transaction: These include issues such as accounting, the optimal choice of legal form, the employment of foreigners or deciding between a share deal and an asset deal.

 
When carrying out the actual acquisition of a company or shareholding, the measures customary in international practice are taken in Germany: For example, fairness of the purchase price or Financial Due Diligence at family-owned businesses.
 
It should be kept in mind that also the post-acquisition phase is crucial. Foreign investors making their first investment in Germany have an urgent interest in establishing effective management of their new subsidiary or investment.
 
In addition, our Special Theme issue highlights special features in selected countries around the world.

Investieren in Deutschland Strengths of small and medium-sized enterprises in Germany and the consequences for Financial Management

SMEs are the “backbone” of the German economy. Until now, many SMEs have closed their doors to capital market financing or financing from investors. International investments are facing fundamental changes in financing behaviour. More »

Investieren in Deutschland Company acquisition – choice of legal form for German companies

In recent years, foreign direct investment (inbound investment) in Germany has risen sharply. In particular, an increase in investments made by the United States and China has been recorded. Investors focus mainly on medium-sized companies, many of which are world market leaders. More »

Investieren in Deutschland Accounting in medium-sized companies in Germany – special aspects for international investors

Transaction ventures pose many challenges to investors. In the case of medium-sized targets in Germany, one of these challenges include understanding annual financial statements when they are – and most of them are – prepared in accordance with the German Commercial Code (HGB). More »

Investieren in Deutschland M&A: Bidding opens up opportunities for investors and sellers

German companies are sought-after all over the world. The owners can therefore currently achieve high purchase price levels. In the M&A process, bidding has proven to be a good tool to reach the largest possible group of potential buyers. What should investors bear in mind? More »

Investieren in DeutschlandEffective management control by foreign shareholders

Foreign investors have a burning interest in effectively managing their subsidiaries or shareholdings in Germany. Companies operating as limited liability companies (GmbH) offer the best opportunities for controlling management bodies. More »

Investieren in DeutschlandComing to stay: Special aspects of acquisitions by Chinese investors

More and more companies from Asia, mainly China, are flocking to Germany. Earlier, German enterprises feared that if Asian investors acquired German companies they did it only to vacuum off the know-how, close and move production overseas. More »

Investieren in DeutschlandThe diversity of the buyer universe: New and old investors go for the M&A market

Anyone who wants to sell their company has a large number of buyers to pick and choose from. However, this has not only advantages but involves several hurdles, too. How does an entrepreneur find the right partner? More »

Investieren in Deutschland Financial Due Diligence for family-owned businesses: What financial investors look at closely

The segment of small and medium-sized enterprises, most of which are family-owned businesses, increasingly attracts financial investors. For the family-owned businesses that have become the object of sale, the sales process poses new challenges that not only open up opportunities but also entail risks. More »

Investieren in Deutschland Business acquisition: Fairness of the negotiated purchase price

The appropriateness of the purchase or the sales price is one of the key questions in M&As. If it is disputable, a so-called fairness opinion can be obtained for it. It makes it easier to assess whether the responsible management has fulfilled its duties of due care. More »

Investieren in Deutschland Sell Side Due Diligence

In the transaction process, buy side due diligence (Buy Side DD) often costs pre-cious time. In order to optimise the sales process, it is advisable for the seller to commission due diligence (Sell Side DD) of its own company. More »

Investieren in Deutschland Buying a company out of insolvency as an opportunity

As opposed to buying a competitor or a regionally close company, which is often time-consuming and capital-intensive, buying a company out of insolvency can be a quick alternative at the optimum price. The greater interest from European and American investors over the last years confirms the attractiveness of buying German insolvent companies. More »

Investieren in Deutschland Employing foreigners is fraught with pitfalls

Due to the current shortage of skilled workforce in Germany and in the context of internationalisation, it has become common for German companies to employ not only German but also other EU nationals. It is becoming increasingly common for the so-called third-country nationals to be employed in Germany. More »

Investieren in DeutschlandCompany acquisition: the trap of the transfer of the business

Almost always with the acquisition of a company, the purchaser is faced with the question, of whether he wants to take on all of the employees or only a part. The process of designing the take-over of employees is not free from pitfalls in the context of employment law, but it offers the purchaser enormous scope for creativity. More »

Investieren in Deutschland Company acquisition: Share deal versus asset deal

The term “company” is not defined in German law. A company is commonly understood as the totality of assets and rights, tangible and intangible legal interests and goodwill, which serve a specific business purpose. Thus, there are two options to purchase a company: Purchase of the legal entity by buying its shares or purchase of assets owned by the legal entity by buying all or selected assets. More »

Investieren in Deutschland Hot potatoes – Data protection in the context of a company acquisition

Defective data protection procedures undermine corporate values – from tarnishing the company’s own credibility (“data protection is important for us”) through necessary remedial measures to jeopardizing the business model. Acquisitions of such companies require caution – or in other words: How to save millions. More »

Foreign investors interested in German family businesses should be aware of their special features. The legal and tax framework in this country also often raises questions for those who are unfamiliar with it. We asked the international experts at Rödl & Partner what needs to be considered when entering Germany.

last updated on 22.2.2022

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