• M&A: Increase in company takeovers and mergers
  • August 13, 2015 | Author: Michael Rainer
  • Law Firm: GRP Rainer LLP - Stuttgart Office
  • Wirtschaftswoche reported on its website that Germany is the country with the largest number of company takeovers and mergers in Europe, with the trend continuing to rise across Europe.

    GRP Rainer Lawyers and Tax Advisors in Cologne, Berlin, Bonn, Düsseldorf, Frankfurt, Hamburg, Munich, Stuttgart and London - www.grprainer.com/en conclude: Takeovers, mergers and other transactions are in vogue. Experts are expecting a further increase in the third quarter of 2015 in the number of these transactions, which can be consolidated under the term “mergers and acquisitions” (M&A). Wirtschaftswoche reports that M&A transactions are continuing to go up not only in Germany but also across Europe, the Middle East and Africa.

    Growth is vital for many businesses in order to continue to be able to remain in the market or assert their position. There are, however, usually limits to internal growth, meaning that growth is also achieved through corporate acquisitions, company mergers, takeovers and even cooperation. The result is an increasing number of M&A transactions.

    With these kinds of transactions, a whole series of statutory regulations and rules have to be observed. These also include potential infringements of antitrust law. A contract for the purchase of a commercial entity forms the basis of M&A transactions. This needs to be notarised.

    A corporate acquisition generally cannot be compared with purchasing a car or property, as a company is not normally purchased as a single entity but instead split up into various parts, such as the plot of land, the building, machines as well as receivables. Generally speaking, it is the buyer who bears the risk. It must examine whether the object of purchase is free from defects. To this end, it is advisable to conduct a so-called due diligence review, in the course of which all of the target company’s strengths and weaknesses are subject to in-depth scrutiny and based on whose data the risk associated with the transaction is ascertained. The purchase price is determined by the ascertained risk. The scope of a due diligence review can be set by the parties in advance.

    Many aspects have to be considered before a transaction is concluded in the corporate sector, from the structure of agreements to possible infringements of antitrust law. Lawyers who are experienced in the field of company law can provide the contractual parties with support.