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Freshfields German M&A report: Fewer deals but greater values – above all towards the US
A survey by global law firm Freshfields has analysed the M&A activity of the 40 DAX and 50 MDAX companies over the past 10 years, this time from 2015 to 2024. The study shows, that Germany’s M&A landscape has seen fewer deals but greater deal values. You can find the link to the full study here.
- M&A activity among the DAX and MDAX companies saw an overall decline in 2024 compared to 2023 in terms of numbers of acquisitions and investments.
- The 40 DAX companies recorded a 14 per cent decline in acquisitions and investments, with deal numbers dropping from 218 in 2023 to 187 in 2024. This decline in deal volumes is in line with the global trend (where deal numbers were down by 13.8 per cent against 2023) and a 12.8 per cent drop in the overall number of deals in Germany.
- The 50 MDAX companies saw a 21 per cent decrease in the same period, down from 68 in 2023 to 54 in 2024.
- In terms of announced transaction values, investments and acquisitions made by MDAX companies dropped by 42 per cent year-on-year, from $5.3bn in 2023 to $3bn in 2024.
- The DAX constituents, however, saw their total value surge by 118 percent year-on-year, up from $18.3bn in 2023 to $39.9bn in 2024. This uptick was mainly driven by a number of deals worth over €1bn and a strong appetite for investments in the US.
“M&A activity continued to be quieter in 2024 compared to some of the boom years in the past decade, and Germany has been no exception,” says Lars Meyer, M&A partner at Freshfields and global Co-Head of Tech, Media & Telecoms at Freshfields. “High interest rates, tighter credit markets and geopolitical volatility definitely had a dampening effect on the risk appetite among both corporate and financial investors. At the same time, gaps in price expectations between buyers and sellers for potential acquisition targets have led shareholders to postpone sale processes until 2025.”
DAX companies invest massively into the US
Between 2015 and 2024, Europe emerged as the top destination for DAX and MDAX investments and acquisitions outside of Germany, with 1,078 transactions (36.6 per cent of all deals). North America followed with 696 deals, narrowly ahead of Germany at 630. Together, these three regions accounted for 81.6 per cent of all deal activity.
However, in terms of announced value, North America led, capturing 48 per cent of the total deal value over the last decade. Looking specifically at deal values in 2024, companies from DAX were the main drivers of a sharp increase in US investment, with their spending rising from $2bn in 2023 to nearly $30bn in 2024. Here, it must be noted that the three top deals count for two-thirds of this. Meanwhile, DAX companies are investing less in Europe outside Germany.
“The numbers mirror the state of pragmatism and trust: Europe dominates in terms of deal count, supported by a more favourable regulatory climate for deals within the European Union,” says Stephan Waldhausen, Partner and Global Co-Head of Industrial group. “However, most of the investment money flows into the US, where especially DAX companies find appropriate targets to transform their business, gain a strong foothold in the US economy and take advantage of lower energy costs. The higher hurdles for foreign investments are worth the effort.”
A higher degree of regulatory complexity continues have made cross-border transactions indeed more challenging, time-consuming and uncertain for certain types of buyers. But they have also prompted companies to bolster domestic and near-shore operations, such as domestic production, to manage exposure to tariffs and volatility and benefit from local incentives in certain sectors. America-first trade policies exemplify this trend and are particularly relevant for German companies given their strong interest in the US market, as shown by our data.
„The global trade landscape and regulatory environments reflect a broader, decade-long dynamic towards protectionism, which is a trend that persisted in 2024. Appropriate regulatory risk management is now integral to successful M&A,” says Wessel Heukamp, Partner and Co-Head of the global M&A practice.
Diversification, not deindustrialisation
Looking ahead, our study suggests that M&A activity among DAX and MDAX companies could rebound in 2025:
- First, borrowing conditions are set to improve in 2025, which could unlock pent-up opportunities for inorganic growth and more ‘mega deals.’
- Second, strategic challenges faced by many German corporates are driving a renewed focus on their core businesses, which we expect will prompt further portfolio realignments through acquisitions and through divestments of non-core business units.
- Third, macro trends such as the advancement of artificial intelligence, the ongoing realignment of global trade relations, and shifting economic policy (particularly in the US) will push corporates to continue to adapt and pivot at their core. The demand and supply of M&A targets is expected to be met by a rebound of exit and buyout activity among private capital investors in 2025.
“We are not seeing deindustrialisation, but rather that the German businesses are focusing and transforming. And this change will remain a major driver for transactions in 2025,” adds Uta Itzen, Partner and Head of Antitrust, Competition and Trade practice in Germany.
