The German M&A market has seen a very positive start into 2022 with strong/record M&A activity expected both from strategic as well as from private equity investors. The war in Ukraine has now led to new risks for the German economy mainly related to high energy prices and new/additional supply side constraints.
Strategic M&A deals do not seem to be questioned by uncertainties related to the war and inflation fears as do interesting deals led by private equity investors with huge amounts of liquidity. Deals involving assets in/linked to Russia and the Ukraine will be difficult to handle. In general, market participants remain very positive and are reporting strong deal pipelines. Valuations for small and mid-cap companies which had stagnated at a high level in the past months have recently seen a small increase. This is especially the case for small cap transactions in the technology sector.
Besides supply chain disruptions and high energy prices the labour market – with shortages in skilled workforce „supplies“ – remains a limiting factor for growth.
Post by Dr. Sonja Legtmann, EXG CONSULTING