1. Overview
In this article, we provide an overview of the German mergers and acquisitions (M&A) market in 2021, using transaction volumes and the largest deals to highlight the pertinent practical legal developments. We also offer an outlook for the rest of 2022.
2. Transaction volume and value
According to PwC, there were 1,206 announced deals by foreign investors involving German targets from January to mid-November 2021. By contrast, 2020 saw a total of 940. PwC said that it expected a total number of 1,380 deals for the full year 2021. The total deal volume steadily declined since a peak in 2017 (EUR 103.9 billion), amounting to a total deal volume of EUR 64.7 billion in 2019. However, since 2020, there has been an increase in deal volume. In 2021, deal volume has increased significantly. The total deal volume was expected to reach EUR 123 billion by the end of 2021, which would represent an increase of 62% compared to the year before. The average deal value in the period from January to mid-November was EUR 302 million, already exceeding the total average deal value in 2020 of EUR 265 million.
Most foreign strategic investors in German companies came from the United States, according to PwC. By mid-November 2021, US buyers totalled 265 deals and a total deal value of EUR 27.8 billion. US buyers account for 22.0% of the total amount of deals and a share of 25.9% of the total deal value. The United Kingdom came second, with 132 deals and a total deal value of EUR 3.3 billion. Next was France with 120 transactions, followed by Switzerland with 88 transactions. The number of deals in France increased by 25% from 96 deals in 2020. Switzerland is followed by the Netherlands with 87 transactions, Sweden with 69 and China/Hong Kong with 35.
With regard to private equity deals (meaning involvement of private equity investors either on the buy or sell side), German targets attracted the most interest from US private equity investors. According to PwC, 155 transactions were completed with US private equity investors between January and mid-November 2021 (representing 29.6% of total transactions with private equity investors). The United Kingdom came second with 84 deals (representing 16.1% of total transactions with private equity investors), followed by France with 69 deals announced and Sweden with 37 deals. By comparison, in 2020, there were only 17 deals relating to Sweden, which represents an increase of 117.6%. Sweden is followed by the Netherlands with 33 deals, Switzerland with 25 deals and China/Hong Kong with 10 deals. A total of 523 deals were announced with private equity participation from January to mid-November 2021,representing a huge increase over the total of 392 transactions announced in 2020.
