Dealmakers eye growth as German M&A market rebounds

Following a period of economic and political uncertainty, a cautious optimism is emerging among German dealmakers. While challenges remain, including negative GDP growth and high energy prices as the country has sought to replace Russian gas supplies, a more stable economic outlook and a clearer political landscape are creating a more favorable environment for M&A activity.

Additionally, the prospects for Germany’s economy appear to be improving over the next 12 months. This positive outlook is contributing to increased optimism among both corporate and private equity dealmakers, suggesting a potential uptick in M&A activity throughout 2025.

These insights have been gathered as part of our 2025 German M&A Outlook Report, developed in association with Mergermarket. The report takes the pulse of 50 corporate and private equity (PE) dealmakers’ headquartered in Germany and shares their sentiment of the market in 2024, while looking ahead to what’s in store for 2025.

Key insights for dealmakers 

• Economic outlook: 58% of respondents are optimistic about German GDP growth over the next 24 months.

• M&A activity: 74% of respondents expect an increase in domestic German deals in 2025, with 28% anticipating a significant uptick.

• Sectoral growth: 68% of respondents expect industrials and chemicals to experience the strongest M&A growth in the next 12 months.

• Deal drivers: Synergies and supply chain optimization are identified as the most significant drivers of M&A activity.

• Financing: 56% of respondents believe that private debt will be the most attractive source of financing in the next 12 months.

• Regulatory scrutiny: Data protection and environmental issues have emerged as the most significant areas of regulatory scrutiny for M&A transactions.

The opportunities for growth

Three main trends are driving this anticipated increase in M&A activity. Firstly, German companies are facing increasing pressure to modernize and enhance their resilience. This includes addressing challenges such as higher energy costs, increased competition from China, and the need to reform supply chains. M&A is increasingly viewed as a critical tool for achieving these objectives. 

By acquiring new technologies, expanding into new markets, and enhancing their competitive advantage through strategic acquisitions, companies can navigate these challenges and strengthen their market positions.

Secondly, geopolitical tensions and rising protectionism are creating a more complex operating environment. These challenges are driving companies to seek synergies, cost savings, and new capabilities through M&A. By combining forces, companies can achieve greater scale, improve efficiency, and enhance their resilience in the face of global uncertainty.

Thirdly, the financing landscape is evolving. Private debt is gaining significant traction in the German market, offering a compelling alternative to traditional bank financing. This trend is further supported by the increasing activity of private equity firms, who are actively seeking to deploy capital and generate returns for their investors. With a significant amount of dry powder available, private equity firms are well-positioned to drive M&A activity in the coming year.

The rise of technology

The rise of virtual data rooms has revolutionized the M&A process, facilitating secure and efficient information sharing between buyers and sellers. Key features such as AI automation, enhanced security, and user-friendly interfaces are driving the adoption of these platforms. 

These technological advancements are streamlining due diligence processes, improving communication, and ultimately accelerating the pace of M&A transactions.

M&Ade for the German M&A market

The 2025 German M&A Outlook Report provides a comprehensive overview of the current state of the German M&A market, highlighting key trends, challenges, and opportunities for dealmakers in 2025. 

By equipping dealmakers with insights into market dynamics, evolving regulatory landscapes, and emerging financing trends, this report aims to empower them to navigate the complexities of the German M&A market and successfully execute their strategic objectives.