Buying a German business is easier than one may think

Germany has the biggest economy in Europe, and one of the strongest. Mid-sized firms, often family owned, are the backbone of Germany’s economy, and many are open to expansion through investment. So, what are the crucial points when thinking of investment in German companies?

In general, foreign investors who intend to buy a German company face no limitations and there is no requirement for any public authority to approve a transaction. The typical acquisition routine involves due diligence followed by a letter of intent and detailed deal negotiations. The results are laid down in a term sheet, which lawyers later put into the legal documentation. With respect to purchase price the discounted cash-flow approach is fairly standard.

Finding a suitable target may be a challenge but specialist consultants are available and chambers of commerce and banks are often helpful contacts.

Gautam Khurana is the managing partner at India Law Offices in New Delhi. Walter Schmidt is CEO of ETL International AG, Berlin. The firms collaborate for entry to Germany and tax, audit and legal assistance for Indian companies.