Mergers & Acquisitions in Germany: 360° Legal Advice

International and foreign companies can face challenges regarding M&A negotiations in Germany, particularly in reaching consensus on crucial aspects such as purchase price or contractual terms. Our law firm, Schlun & Elseven Rechtsanwälte, stands ready to provide unwavering support.

Should negotiations reach an impasse, resulting in termination, pursuing damages often becomes a focal point. However, discerning whether the termination constitutes a pre-contractual withdrawal or occurs post-contractual conclusion is paramount. In cases of pre-contractual termination, the assertion of damages claims can pose complexities. While claims may be pursued under Sections 280 (1), 311 (2), 241 (2) BGB (culpa in contrahendo, abbreviated as c.i.c.), establishing a legitimate expectation worthy of protection is essential and contingent upon the specifics of each scenario.

In instances where one party breaches the contract, such as failing to fulfil the agreed purchase price, recourse to compensation from the other party becomes viable. Additionally, withdrawal from the concluded purchase contract between companies is feasible under specific circumstances.

Our team of adept German contract law specialists at Schlun & Elseven Rechtsanwälte will diligently apprise you of your legal options in the aftermath of M&A deal cancellations or negotiation breakdowns. We’re committed to representing your interests with precision and efficacy throughout the implementation of these options.

Meticulous preparation is essential as international and foreign companies face the complexities of M&A transactions in Germany. At Schlun & Elseven Rechtsanwälte, we specialise in providing legal advice tailored to foreign and international companies seeking expertise in the German market.

Companies embarking on M&A transactions have many options to ascertain the legal and financial standing of the target company for a successful transaction. Typically, this involves an exchange of information followed by a thorough due diligence review. This review delves into the financial health, tax implications, and legal risks associated with the target company. Additionally, market positioning and strategic compatibility between the parties are assessed, empowering informed decision-making.

Our legal team, representing the buyer, meticulously examines the target company’s documents, assesses its management structure, and evaluates strategic alignment between the entities. For sellers, due diligence validates the proposed valuation against the actual market worth, gauges the buyer’s credibility, and proactively addresses legal concerns. Schlun & Elseven Rechtsanwälte ensures comprehensive due diligence support, safeguarding trade secrets and mitigating potential liabilities.

Our due diligence services encompass:

• Comprehensive Overview: We conduct a holistic evaluation of the selling company, examining product portfolios, geographical considerations, and internal management structures to identify potential synergies.
• Financial Due Diligence: Our experts analyse past and present financial statements to validate future forecasts, ascertain asset and liability specifics, and prepare buyers for associated costs.
• Legal Due Diligence: We scrutinise contractual agreements, intellectual property assets, and legal disputes, ensuring a thorough understanding of legal risks. Environmental compliance is also assessed.
• Organisational and Labour Law Analysis: We assess company policies, collective agreements, and labour law compliance, anticipating post-transaction restructuring needs.

The scope of due diligence varies based on individual circumstances. Whether you’re a buyer or a seller, having seasoned legal counsel by your side is indispensable for seamless transactions. Contact our M&A practice group at Schlun & Elseven Rechtsanwälte today to confidently leverage our expertise and face M&A transactions in Germany.

In principle, the buyer has two options for acquiring a company in Germany: the asset deal or the share deal. Both options have advantages and disadvantages. However, which option is chosen depends on the circumstances of the transaction in question.

While a share deal can be easier to realise, the asset deal offers the acquirer more control over the acquisition. When choosing the acquisition method, other considerations such as tax aspects, flexibility and the interests of both parties must also be considered.

In a share deal, shares in a company are acquired and transferred. It should be noted that assets and liabilities are assumed with the purchase in this type of acquisition. Essentially, this means that any agreements concluded with third parties, the tax situation and other contracts are taken over in the form in which they exist at the time of the purchase. Specific agreements may contain “Change of Control” clauses, which allow for cancellation after the transfer of ownership.

When purchasing a company in Germany as part of a share deal, it is crucial to proceed carefully during the due diligence phase, particularly concerning tax aspects.

In an asset deal, on the other hand, the buyer acquires individual assets of the company. The assets to be acquired include, for example, land, buildings, plant and machinery. Particular attention must be paid here to the requirement to list all assets in detail in the corresponding purchase agreement (principle of certainty).

Each asset must be precisely identifiable. In the case of intangible assets (trademarks, copyrights, patents), however, this is sometimes difficult unless a valuation is carried out in advance. It is therefore advisable to instruct an experienced German corporate lawyer at this point and to research the values of individual assets in advance.

A meticulously detailed takeover agreement is vital, especially for international and foreign clients facing M&A transactions within Germany. The nuances and prerequisites differ significantly, whether structured as a share deal or an asset deal, necessitating expert legal guidance throughout the drafting and review process.

In an asset deal, adherence to the principle of certainty is imperative. This mandates precise delineation of the assets to be transferred within the purchase agreement or, if necessary, through a separate transfer agreement. Annexing a detailed list of assets to the purchase agreement is highly recommended to ensure clarity and specificity.

Furthermore, it’s essential to recognise that certain documents may require notarisation. For instance, transactions involving the acquisition of shares in a limited liability company or purchasing real estate typically necessitate notarisation. Similarly, if the assets being acquired substantially constitute the entirety of an individual’s or a company’s assets, notarisation may also be mandated.

At Schlun & Elseven Rechtsanwälte, our seasoned legal professionals provide invaluable support in such cases, offering international and foreign clients in Germany a distinct advantage in their M&A endeavours. Please do not hesitate to contact us directly to ensure a seamless and legally sound takeover process tailored to your specific needs.

In M&A transactions in Germany, the employment status of the staff within the selling company remains unchanged. According to § 613a (1) sentence 1 BGB, the transfer of a business does not automatically result in the termination of employment contracts. The transfer itself cannot serve as grounds for dismissal. However, if corporate restructuring is on the agenda, redundancies may be initiated for operational reasons.

It’s crucial to acknowledge that all aspects of German employment and labour law must be carefully addressed, particularly concerning wrongful terminations. Allow our specialised labour law practice group to provide guidance. This ensures that any dismissals are conducted in accordance with legal requirements, offering you peace of mind throughout the process.

Asset or share deals often extend across borders, presenting unique challenges due to differing legal frameworks. Whether you’re an international company seeking to acquire assets or transfer shares within Germany, or conducting transactions with foreign counterparts, legal guidance regarding German law can be indispensable. It’s crucial not to underestimate the cultural and legal disparities inherent in cross-border M&A cases.

At Schlun & Elseven Rechtsanwälte, we specialise in assisting international companies operating in Germany, providing comprehensive support throughout the entire cross-border transaction process. Our experienced legal team ensures that your interests are protected amidst the complexities of international business dealings. Trust us to face the intricacies of cross-border M&A, enabling you to pursue your objectives with confidence in the German market.

The multidisciplinary approach of our law firm enables your company to work in a cost-efficient and time-saving manner. In addition to reviewing existing contracts or contracts yet to be drafted, our lawyers advise on labour law issues and ensure that our corporate clients are fully informed about compliance requirements, developments in whistleblower law and the possibilities of German tax law.

Working with our legal experts ensures that all legal requirements are considered and legal disputes are avoided. We offer you and your company continuous and skilled legal advice.