VentureCapital Magazin | Courageous Decisions Needed: Commentary on the 2024 German M&A Market

Jan 2024

Originally posted by VentureCapital Magazin on January 5, 2024.

Rising interest rates, increased energy costs, geopolitical conflicts and poor economic forecasts led to a slower German mergers and acquisitions (M&A) market last year.

While challenging conditions are likely to continue, several factors suggest that M&A will be a priority for German companies this year.

“Increasing globalization and the growing importance of digital business models are forcing many medium-sized companies to adopt bold acquisition strategies or to sell to a larger or financially strong partner,” Dr. Michael Drill, Managing Director and Head of Lincoln Germany, commented. “Shorter product and company cycles, challenges in the core business and occasionally previous major acquisitions require large German corporations to constantly review their corporate portfolio.”

Increasing pressures from shareholders, an effort to improve environmental, social and governance (ESG) ratings through M&A and aging private equity portfolios are also driving market activity.

M&A this year is expected to be a buyer’s market alongside longer processes, an uptick in cross-border transactions as well as a large proportion of deals in the mid-cap segment.

“Almost all industries will be affected by mergers and acquisitions, with the share of non-cyclical industries continuing to increase at the expense of cyclical industrial sectors,” Michael said. “We see above-average M&A activity in the areas of technology, business services and healthcare, while there is a special boom for M&A in infrastructure investments.”

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