Managing a successful sale in Germany

Article Abstract:

Financial investors are very interested in participating in Germany's Mittelstand companies, and are able to do so through more than 80 venture capital funds. The German Venture Capital Association had capitalization of more than DM9.2 billion by the end of 1996, with DM1.4 billion of this having been invested in 1996. Most venture capital firms focus on growth or expansion finance, but a significant proportion of the investment also goes to management buyouts and management buyins. With many management buyouts, the consultant plays a vital role as an independent and objective adviser.

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Patience pays off

Article Abstract:

There can be many challenges associated with purchasing a family-owned German company. Financial information is not publicly available in Germany, and it is therefore very hard to identify potential targets. Owners will generally only be prepared to give financial details if they are keen to sell, and even then it is important to be aware that profit and loss accounts are structured extremely conservatively in order to avoid high tax. It is vital to be both persistent and cautious if a successful purchase of a family-owned German company is to be made.

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Making the marriage work in Germany

Article Abstract:

The German market for mergers and acquisitions differs from that of the UK in that fewer companies are listed on the stock exchange and public bids are not common. Family-owned companies are more common in Germany and they may not be listed on the stock market, so it may be more difficult to obtain finanical information. Acquirors need to understand the German tax and legal system and the strength of ties that owners of family businesses may have. Foreign buyers should develop a relationship of trust with the owner.

Economic aspects, Small business

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