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Purchasing a Company in Germany

Establishing a company or a subsidiary in Germany for the lucrative German market can prove very beneficial. Germany is a country open to investment from non-German business people and does not discriminate against foreign purchasers. Forming a company from scratch is an attractive but time-consuming option, however, purchasing a shelf company in Germany is another option available. Purchasing a shelf company allows your company to benefit from possessing an already-established company and ensures that purchasers from abroad can quickly establish a presence in Germany.

At Schlun & Elseven Rechtsanwälte, our corporate lawyers will oversee the purchase of the shelf company and will ensure that all legal requirements are fulfilled. If you would like to contact our lawyers directly, we can be reached by phone at +49 221 93295960, by email at info@se-legal.de or by the contact form below the article.

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Our company lawyers advise on all issues when purchasing a company in Germany.

As a full-service law firm, Schlun & Elseven will oversee all the legal requirements

Our Services when Purchasing a Company in Germany

At Schlun & Elseven Rechtsanwälte, we provide an extensive range of corporate law services when purchasing a company in Germany. As a full-service legal firm, we advise our clients on the broad spectrum of German legal issues and provide continuing support following them entering the German market. Here are some of the services we offer when it comes to the purchase of a company:

  • Legal and tax due diligence: We ensure that your purchase is safely carried out and that the company purchased is a secure investment.
  • Drafting of documents and opening contact point: We will contact the intended company on your behalf and draft the legal documents required for the takeover / M&A procedure.
  • Oversee the company’s purchase: Our lawyers will ensure that the purchase of the German company is as smooth as possible.
  • Corporate restructuring post-purchase: We can provide the assistance required by the board for the company should they require it.
  • Tax assistance: Our legal professionals will provide clear advice and recommendations regarding the German tax system.
  • Further legal counsel: Following the company’s purchase, our legal team will provide further assistance through legal representation in and out-of-court, advice on issues such as German employment law, and updates on future legal developments in Germany.

These services are just some of those which we offer to our corporate clients. When purchasing a company in Germany, we will be there throughout the purchasing process and afterwards.


How to Purchase a Company in Germany

Purchasing a company in Germany is process that requires the transfer of shares from that company to the purchaser. However, this transfer needs to take place before a public notary in Germany. The notary will also verify and authenticate the necessary documents. Furthermore, purchasers need to provide the appropriate identification documents.

However, although this may appear to be a straightforward process, it is important to consult with experts in advance to perform the necessary due diligence to ensure that the company is as it appears. Performing due diligence in advance can prevent costly legal disputes developing in the future. For example, a company may present itself as a shelf company but may have previously been involved with business transactions. Such a scenario could potentially lead to purchasing a company with hidden debts. Working with corporate lawyers who are experienced in such transactions will prevent this from arising.

If the transfer of shares has taken place in the correct manner, the buyer can focus their attention on important steps such as:

  • altering the name of the company,
  • ensuring the German company’s aims align with the broader company’s,
  • provide an address for the company,
  • put a new board of directors or management in place for the company.
  • contacting the German Trade Register.

Depending on the company purchased, it is possible that the cost of purchasing the company will cost more than starting a company from scratch. Altering the purchased company alongside the notary fees, the costs of making changes to the company and the purchase price involved will likely see additional costs. However, for companies looking to establish themselves quickly in Germany, purchasing a company – whether a shelf company or otherwise – will ensure that they have a market presence in Germany from an early stage. In turn, this will increase the likelihood of achieving their business goals.


Purchasing a Company from Outside of Germany

German law does not recognise a difference when it comes to non-Germans buying a company in Germany. There are also no restrictions when it comes to the repatriation of profits. Germany is a very pro-business country in which the entrepreneurial spirit is encouraged. With its large market and strategic location at the heart of Europe, its membership of the European Union and Schengen Area and its educated workforce, Germany is the ideal location to purchase a company.

German companies are broadly divided into two forms of companies: limited liability and unlimited liability companies. This article will refer to GmbHs primarily, which are equivalent to Ltd. companies; however, we also advise on other forms of company structures in Germany.


Advantages to Purchasing a Shelf Company in Germany

There are many reasons why purchasing a shelf company in Germany may be more beneficial than starting a new company in the German market. Here are some reasons to consider purchasing a ready-made shelf company in Germany over starting a new company from scratch.

  1. Credibility: purchasing a shelf company that suits your company goals and ambitions is a smart means of gaining credibility from banks and investors.
  2. Quickens the process: purchasing a shelf company in Germany generally requires less paperwork and less time-consuming bureaucracy than starting a company from scratch. This allows your company to engage in economic activity faster than as a brand new company.
  3. Flexibility: shelf companies can be easily adjusted to suit the goals and characteristics of your business ambitions. Working alongside experienced advisors in German corporate law ensures that any required adjustments are carried out correctly.
  4. Credibility with banks and investors: purchasing a company in Germany can provide greater credibility to the company than it would gain as a new company. This will, of course, be based on the company purchased and how the transactions were carried out.

However, it must be noted for all these advantages that they come with the caveat that the company purchased must have a solid economic background before purchase. At Schlun & Elseven Rechtsanwälte, our corporate law team, will work with you to perform the required due diligence when purchasing a company. Purchasing a company without a solid reputation, with limited assets compared to extensive liabilities and with the wrong legal status for your plans may derail the project before it gets off the ground. Having a reliable corporate legal team in Germany dedicated to your requirements will ensure that this does not happen.


Characteristics of a Shelf Company in Germany

A shelf company is a company that has been registered in Germany but has not conducted economic activity. The purchase of shelf companies allows the investor to focus their attention on the economic activity of the newly purchased company as opposed to the bureaucratic requirements involved in starting a company in Germany. From the start, the company exists, and it can be easily manoeuvred into the requirements sought after by the new owner. Purchasing a shelf company provides the benefits of starting a company from the beginnings while eliminating many of the paperwork requirements involved in setting up a company.

Once a shelf company has been purchased, changes can be made by the purchaser. The official nature of the business can be changed to suit the investor, the location of its headquarters and many other aspects. Our corporate legal team will manage the requirements when making such changes as preferred by our clients. We will provide you with the information you need regarding making the changes and then carrying them out on your behalf.


Purchasing an Established Company in Germany: Specific Industries

Although it can be an expensive proposition, purchasing an established company in Germany can provide extensive benefits. As well as quicker entry into the market, an established company has the benefit that it already has a market share and customers within the German market and will have a positive outlook by banks and investors. Such a solid foundation is a huge bonus when looking to continued growth for the company. Due diligence is vital in such acquisitions.

At Schlun & Elseven Rechtsanwälte, our team can provide you with industry specific insights in fields such as the German retail market, the insurance industry, the entertainment, gaming and eSports industries among others. We provide clear insight into industry-norms in Germany and we will be your partner on-the-ground to advise you as to how a certain company fits with your goals, characteristics and current structures. Contact us today by phone at +49 221 93295960, by email at info@se-legal.de or by the contact form below to benefit from these insights.


Mergers & Acquisitions Lawyers in Germany

At Schlun & Elseven Rechtsanwälte, our corporate lawyers provide full-service support to our corporate clients in Mergers & Acquisitions. From the necessary due diligence to the structuring of the asset or share deal, our legal advisors will advise you throughout the entire process. Our lawyers draft and review the letter of intent, employ our extensive negotiation skills throughout the M&A process, thoroughly examine the terms & conditions within contracts, advise on aspects concerning German and European competition law, oversee gaining the required licenses and permits and draft the acquisition agreement. Assistance from expert German corporate lawyers provides the best opportunity for a smooth process.

Once the M&A has taken place you can still benefit from our full-service approach. With certified specialists in employment law, a dedicated team for corporate restructuring and assistance available across the legal spectrum, Schlun & Elseven Rechtsanwälte is your comprehensive partner for all matters concerning mergers & acquisitions in Germany.