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German M&A falters over macro concerns

Economic and political turmoil in Europe and beyond weighed heavily on German dealmaking last year, and concerns over how this may seep into 2019 are being felt throughout the M&A community. So, as dealmakers cautiously enter the new year, Mergermarket’s Emma-Victoria Farr and Johannes Koch walk us through the talking key points regarding German M&A.

Mounting uncertainty surrounding the future make-up of the European Union, minus the UK, alongside a demand for higher multiples provided the setting for an 11% dip in German M&A as was generated across 1,106 deals. This compares with a respective EUR 160.8bn and 1,272 a year earlier.

China cuts

China was notably absent from the year’s dealmaking activities. China’s subdued spending coincides with Germany becoming increasingly critical and wary of intellectual property wandering into Asian hands and subsequently, parliament blocked the sale of Leifeld Metal Spinning to a Chinese buyer in July.

Further emphasising the point, inbound M&A generated EUR 72.8m last year, down 44% on 2017. Volumes slowed in tandem to 474 deals from 559 conducted year-on-year.

Peak pressure

Valuations have reached an all-time high and there is a sense that economically, Europe may have peaked in what has been almost a decade of rising profits and record deal numbers. The sustainability of this growth may be tested this year if the macro environment adds downward pressure.

While some investment avenues dried up, others remained bullishly buoyant. German private equity buyout activity hit a five-year high and generated EUR 13.9bn over 149 deals, yet exits slumped 65% to EUR 7.7bn with 25 fewer deals.

Emma-Victoria Farr Financial Journalist Mergermarket

Emma-Victoria reports on M&A activity in the DACH region for Mergermarket. Previously she has worked for Bloomberg in Frankfurt, The Daily Telegraph in London, Deutsche Presse Agentur (dpa) in Berlin, and Falter Verlag in Vienna. She has a Masters in German Literature from Oxford University.

Emma-Victoria Farr Financial Journalist Mergermarket

Emma-Victoria reports on M&A activity in the DACH region for Mergermarket. Previously she has worked for Bloomberg in Frankfurt, The Daily Telegraph in London, Deutsche Presse Agentur (dpa) in Berlin, and Falter Verlag in Vienna. She has a Masters in German Literature from Oxford University.

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