M&A Market Report Germany
FIRST HALF YEAR 2020
Transactions with German counterparts
DR. FLORIAN VON ALTENMember of Executive Board
T: +49 40 349 14 -168M: +49 152 091 929 49E: [email protected]
DR. BASTIAN BREITMAYERAssociate
T: +49 40 349 14 -246M: +49 152 091 929 73E: [email protected]
OAKLINS – M&A Market Report Germany – First half year 2020
The first half of 2020 was largely determined by the COVID-19 pandemic which had a massive impact on public life and economic activities worldwide. Prevention measures against the spread of the virus varied across countries with different consequences for local economies and M&A activities. How large was the impact of the crisis on the M&A activity in Germany – a country that was able to manage the virus outbreak relatively well?
M&A ACTIVITY AND REPORTED COVID-19 CASES IN GERMANY
At the beginning, the M&A year 2020 made quite a promising start with the number of reported deals being
on previous year level during the first four weeks. After the first reported COVID-19 patient on the 27th of
January and a rising number of reported cases in the following weeks, however, uncertainty about a potential
shutdown was increasing and COVID-19 became the most important determinant of M&A market activity. As
shown in figure 1 on the following page, the number of reported M&A deals continuously decreased after 10th of
February. Particularly during the time of the most rigorous public life restrictions between 25th of March and the
announced lifting on 5th of May, the number of reported deals decreased by -54% compared to previous year’s
period. Overall, for the first half of 2020 we observe a decrease of -27.6% announced M&A deals compared to
H1 2019 – mainly driven by the large decline (-41%) in the second quarter. With declining COVID-19 cases and
lifted restrictions, however, we observe a slight recovery of market activity with 247 reported deals between 5th
of May and the end of June 2020.
As one of the global leading mid-market M&A advisory firms, we would like to provide in-depth insights into the M&A activity in Germany during the first six months of 2020
To get a better understanding of the impact of the spreading virus and economic shutdown measures, we collected
the number of announced and completed M&A deals with at least one German counterpart, i.e. target, buyer or
seller, as well as the reported COVID-19 cases in Germany on a weekly basis. The results of our time series analysis
indicate a strong relation between the reported COVID-19 cases, public life restrictions, and M&A market activity.
Especially transactions among strategic parties have been concerned.
OAKLINS – M&A Market Report Germany – First half year 2020
M&A transactions 2019
M&A transactions 2020
New COVID-19 cases in Germany
30-Dec-19 24 20 006-Jan-20 76 66 013-Jan-20 45 58 020-Jan-20 61 66 027-Jan-20 69 40 503-Feb-20 54 61 710-Feb-20 33 37 317-Feb-20 51 39 024-Feb-20 52 25 3202-Mar-20 46 48 35309-Mar-20 39 29 196916-Mar-20 39 32 1176923-Mar-20 65 22 2815030-Mar-20 58 30 3740806-Apr-20 45 28 3382913-Apr-20 31 13 2030520-Apr-20 36 20 1655327-Apr-20 58 22 873604-May-20 48 51 818111-May-20 41 34 585218-May-20 40 22 406025-May-20 53 39 324601-Jun-20 60 28 281308-Jun-20 35 18 240315-Jun-20 29 31 286022-Jun-20 59 24 4022
0
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M&A transactions 2019
Num
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M&A transactions 2020
Num
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9 c
ases
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New COVID-19 cases in Germany
First COVID-19 case in Germany
Public life restrictions
Government financial aid
Lifting of restrictions
Number of M&A transactions and reported COVID-19 cases – figure 1
Source: Oaklins, Majunke, Mergermarket, Zephyr, European Union
German investors are cautious about foreign acquisitions
While the number of domestic deals went down by -24% compared to H1 2019, our results show an even larger
drop of -38% for acquisitions of foreign targets by German investors. German investors were increasingly risk
averse and cautious about the virus outbreak prevention measures in other countries. A more detailed look at the
numbers reveals that particularly acquisitions of US targets have declined by -69% to just 18 transactions within the
first half of 2020. Unsurprisingly, 14 of these acquisitions were reported until the 6th of March, before the US was hit
by a major outbreak of the virus. Interestingly, with a drop of only -18% and 28 announced transactions, the United
Kingdom is the most popular country for acquisitions of foreign targets by German investors. Like investments into
US targets, more than 70% (20) of transactions were announced or completed by the end of March.
OAKLINS – M&A Market Report Germany – First half year 2020
Acquistions of foreign targets
Domestic deals Acqusitions made by foreign buyers
New COVID-19 cases in Germany
30-Dec-19 4 13 3 006-Jan-20 16 30 20 013-Jan-20 21 23 14 020-Jan-20 18 29 19 027-Jan-20 12 22 6 503-Feb-20 16 27 18 710-Feb-20 3 20 14 317-Feb-20 8 21 10 024-Feb-20 10 12 3 3202-Mar-20 4 26 18 35309-Mar-20 2 14 13 196916-Mar-20 9 8 15 1176923-Mar-20 4 9 9 2815030-Mar-20 5 18 7 3740806-Apr-20 3 17 8 3382913-Apr-20 1 4 8 2030520-Apr-20 8 7 5 1655327-Apr-20 4 14 4 873604-May-20 11 22 18 818111-May-20 6 18 10 585218-May-20 4 10 8 406025-May-20 10 17 12 324601-Jun-20 6 16 6 281308-Jun-20 1 8 9 240315-Jun-20 6 18 7 286022-Jun-20 3 13 8 4022
0
5
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15
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35
30-D
ec-1
9
06
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13-J
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03-
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Acquistions of foreign targets
Num
ber
of tr
ansa
ctio
ns
Domestic deals
Num
ber
of C
OV
ID-1
9 c
ases
in th
ousa
nds
New COVID-19 cases in Germany
Acqusitions made by foreign buyers
Comparing domestic and cross-border transactions – figure 2
Buyer country ranking (excl. German buyers) – figure 3
Source: Oaklins, Majunke, Mergermarket, Zephyr, European Union
Looking at acquisitions of German targets by foreign investors reveals 55 announced deals (only a 5% drop) by
US investors, showing acquisitions on a stable level and leaving the US on rank 1st of the most active foreign investor
countries in Germany. In contrast, we record a significant activity decrease of European investors. Acquisitions of
investors from France, the United Kingdom, Switzerland, the Netherlands, and Austria have all declined by at least
-30% and up to -59% compared to the previous year. With nine announced transactions, only Belgian investors
have increased their activity on the German market.
Surprisingly, Japan claims the 5th position in the ranking of most active buyer countries with 14 reported deals and
has overtaken China in the first half of 2020. We have reported similar results for the first half of 2019, however,
in the whole year table of 2019, China ranked before Japan again. In the first half of 2020, Chinese investors have
announced 13 takeovers of German targets and thereby reached previous year’s level.
Rank Buyer Country H1 2020 H1 2019 Difference to H1 2019 Change in % Share of total
1 United States 55 58 -3 -5% 6%
2 France 26 37 -11 -30% 3%
3 United Kingdom 20 32 -12 -38% 2%
4 Switzerland 19 28 -9 -32% 2%
5 Japan 14 19 -5 -26% 2%
6 China 13 13 0 0% 1%
7 Netherlands 11 27 -16 -59% 1%
8 Austria 11 19 -8 -42% 1%
9 Sweden 11 18 -7 -39% 1%
10 Belgium 9 5 4 80% 1%
Source: Oaklins, Majunke, Mergermarket, Zephyr
OAKLINS – M&A Market Report Germany – First half year 2020
FOCUS ON THE TMT AND BUSINESS SERVICES SECTOR – LARGE DECLINE IN RETAIL AND AUTOMOTIVE
We observe large differences in the sector ranking. With public life restrictions, closed retailers, and increasing
working from home agreements, sectors such as TMT and Business Services were the winners of the Corona crisis.
In line with the stock exchange developments, our results show a +15% and +3% increase in M&A deal activity for
the TMT and Business Services sectors compared to H1 2019, respectively. Ranking as the 3rd most active sector,
M&A activity in the Healthcare industry remains overall on a stable level. On the other hand, industries that were
largely negatively affected by the public life restrictions also record significantly less M&A deals. Especially the
number of Retail and Automotive deals declined by -60%. The results of our sector analysis clearly show how the
Corona crisis has affected the economic activity, uncertainty, and associated M&A activity across different sectors.
H1 2020 H1 2019
TMT 259 225Business Services 178 173
Healthcare 99 104Industrials 72 84
Retail 55 137
0
50
100
150
200
250
300
TMT Business Services Healthcare Industrials Retail
5572
99
178
259
137
84104
173
225
H1 2019 H1 2020
Top 5 most active sectors – figure 4
+15% -60%Reported deals in TMT Reported deals in Retail and Automotive
Source: Oaklins, Majunke, Mergermarket, Zephyr
OAKLINS – M&A Market Report Germany – First half year 2020
SHARE OF DEALS WITH PRIVATE EQUITY REACHES A RECORD HIGH OF 33%
Comparing the behaviour of different investors reveals large differences. Strategic investors became increasingly
reluctant to execute or announce takeovers. Particularly during the time of comprehensive travel restrictions within
Germany, the activity of acquisitions made by strategic investors reached a minimum. The board members of most
companies were preoccupied with managing the crisis and maintaining daily operation rather than focusing on
expansion plans. On the other hand, after financial investors had successfully secured the liquidity of their portfolio
companies, they were able to regain their acquisition appetite. Triton, DBAG, and Waterland rank among the most
active financial investors in Germany. Large amounts of dry powder enable financial investors to execute transactions
without major funding of commercial banks and to stay active in the market.
Strategic investors Financial investors New COVID-19 cases in Germany
30-Dec-19 10 9 006-Jan-20 51 13 013-Jan-20 38 19 020-Jan-20 43 22 027-Jan-20 23 16 503-Feb-20 41 18 710-Feb-20 25 11 317-Feb-20 25 13 024-Feb-20 16 9 3202-Mar-20 33 13 35309-Mar-20 18 10 196916-Mar-20 21 11 1176923-Mar-20 13 8 2815030-Mar-20 15 15 3740806-Apr-20 18 10 3382913-Apr-20 7 6 2030520-Apr-20 11 9 1655327-Apr-20 17 5 873604-May-20 37 14 818111-May-20 22 12 585218-May-20 17 5 406025-May-20 27 11 324601-Jun-20 16 12 281308-Jun-20 12 6 240315-Jun-20 21 10 286022-Jun-20 17 7 4022
0
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ec-1
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Strategic investors
Num
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of tr
ansa
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Financial investors
Num
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OV
ID-1
9 c
ases
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ousa
nds
New COVID-19 cases in Germany
Activity of Financial and Strategic Investors over time – figure 5
Source: Oaklins, Majunke, Mergermarket, Zephyr, European Union
In total, financial investors were involved in 33% of
all deals reported in the first half of 2020 which is
a large increase compared to 23% private equity
involvement in the first half of 2019. Our survey
results show that private equity investors are
willing and able to invest into healthy business
models. 84% of participants reported that they
can close transactions without any third-party
financing. Furthermore, most investors will not
claim price discounts for short-term liquidity
issues of solid business models.
OAKLINS – M&A Market Report Germany – First half year 2020
22 TMT
Of the top 30 deals were reported before 31st of March
Is the dominant sector for the top 30 deals
TOP DEALS WERE MOSTLY REPORTED IN Q1
By far the most important transaction and only mega deal with a German counterpart was the sale of the highly
profitable elevator business by Thyssenkrupp to Advert International, Cinven, and RAG Stiftung for about
EUR 17.2 bn. The carve out is part of the strategic restructuring process of the German blue-chip company and
was announced on 28th of February 2020. Likewise, 22 of the top 30 deals were announced in the first quarter
2020 which accounts for 89% of the deal volume of the top 30. While the sale of Thyssenkrupp Elevator AG was
the only transaction with a volume above EUR 10 bn, we count two further deals, i.e. the acquisition of Bombardier
Transportation GmbH by the French competitor Alstom (EUR 7.6 bn) and the purchase of Deutsche Glasfaser Holding
GmbH by EQT and OMERS Infrastructure Management (EUR 2.8 bn) above the two billion Euro mark. We count
13 deals with a volume of at least EUR 1 bn.
About half of the top 30 transactions were reported with German buyers, while US and French investors rank second
and third. Despite the large machinery deals, TMT remains the most prominent sector among the top 30 deals.
Month Number of Transactions
Volume in EURm
January 3 2516Feburary 14 29176March 5 10897April 1 1200May 4 1452June 3 2291
0
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4
6
8
10
12
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16
January Feburary March April May June
35.000
30.000
25.000
20.000
15.000
10.000
5.000
0
Number of transactions
Num
ber
of tr
ansa
ctio
ns
Volume in EURm
Vol
ume
in E
UR
m
Top 30 deals with at least one German counterpart – figure 6
Source: Oaklins, Majunke, Mergermarket, Zephyr, European Union
OAKLINS – M&A Market Report Germany – First half year 2020
IN A NUTSHELL
The worldwide spread of the Corona virus was the main blockage of M&A activity in the first half of 2020.
Transactions that seemed to progress well were put on hold or cancelled and new acquisition plans postponed.
During the time of the most rigorous public life restrictions, M&A activity dropped to a minimum. With the step-
by-step lifting of restrictions, we also observe a slight recovery of the M&A market. Particularly sectors that have
benefitted from the crisis record increasing numbers of deals within a short period of time. Overall, prices have
declined across all sectors by a minimum of 1-1.5x EBITDA compared to 2019.
For the second half of 2020 we expect further recovery of M&A activity and reported deals if we don’t experience a
second major outbreak of COVID-19. Besides more frequently reported restructuring cases we expect an increasing
M&A activity of companies that have weathered the storm much better than others. At the same time, the bargain
hunters under the strategic and financial investors are expected to exploit high levels of liquidity and low interest
rates far into the future. In addition, financial investors worldwide possess large amounts of free funds and face
increasing investment pressure due to limited fund maturities. Sectors that were negatively affected by the crisis
will have to accept high price discounts. For companies and sectors that were able to benefit from the political
measures we expect prices on nearly pre-crisis levels.
Most importantly, the M&A activity will depend on the fact whether Germany will face a second outbreak of COVID-19 which would likely bring back uncertainty and hesitation of investors. In this regard, we expect an increasing share of transactions with variable pricing structures, e.g. earn-outs, in order to account for the risk of a second outbreak.
Overall, we expect that the M&A activity on the German market with respect to numbers of transactions and volume will be able to recover and to reach the levels of 2019 and 2018 by the end of 2022.
OAKLINS – M&A Market Report Germany – First half year 2020
OAKLINS INTERNATIONAL
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industry teams in over 45 countries and 70 offices worldwide. We have closed over 1,500 transactions in the past
five years.
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OAKLINS – M&A Market Report Germany – First half year 2020
OAKLINS GERMANY
Our company
Oaklins Germany (formerly Angermann M&A International AG) is the German team of Oaklins International Inc. and
the oldest M&A advisory firm in Germany. As part of the Angermann Group (with over 200 employees) Oaklins
Germany is specialised in advisory for M&A buy- and sell-side projects, succession plans, carve-outs, as well as the
execution of strategic growth plans. Oaklins Germany has over 20 advisors in three offices.
Our expertise
Since 1953, Oaklins Germany has successfully advised clients in more than 1,000 national and cross-boarder
transactions covering various industries. Over 50% of all transactions were cross-boarder.
What we do
M&A SELL-SIDE
Closing a chapter
ͽ Succession plans
ͽ Carve-outs
ͽ Sale of investment companies
ͽ Share deals
DEBT ADVISORY
Increasing leverage
ͽ Balance sheet structuring / restructuring
ͽ Verification of business plans
ͽ Company valuation
ͽ Expert opinions
M&A BUY-SIDE
Finding a perfect fit
ͽ Strategic expansion plans
ͽ Diversification
ͽ Joint Venture
GROWTH EQUITY & ECM
Getting the right support
ͽ Mediation of equity capital
ͽ Mediation of mezzanine captial
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Oaklins Germany serves clients from offices in Hamburg, Frankfurt and Berlin.
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