Member Article

German gold for M&A efforts

Johannes Koch, Germany Bureau chief at mergermarket, explains why Germany is achieving in the international M&A tables.

The twists and turns in German M&A are similar to the women’s vault at the Olympics where Germany eventually enjoyed an important fourth place position. The German in the woman’s vault must have been extremely frustrated jumping to perfection only to come fourth. The Russian was denied a silver medal to take bronze and the German may have slipped in to bronze position had it not been for the American, who got a silver medal despite a catastrophic fall in her second-to-last jump. The American got enough points overall with the higher level of difficulty of her jumps and risked more earlier on to come in second.

Arguably, Germany needs to risk more within Europe if it wants to stay ahead of the US not only in the vault but also in M&A. In chasing medals there are many parallels to draw on but lets look at Germany’s performance in an M&A league – a league driven by economic want over necessity. Germany’s performance for the first six months of this year was stable and it closed deals worth EUR 24bn compared to EUR 28bn of deals in the same period last year, or only 40 deals less, according to mergermarket. M&A in the Germanic region, which would include Switzerland and Austria, was up 29.6% to EUR 76.2bn and accounted for nearly a quarter of all European deals by value and was the busiest first half of a year for the region since 2008. Including Germany’s cousins and Glencore’s acquisition of Xstrata, already brightens the picture.

But this is nothing compared to the US, probably still the world’s largest single economy and with a higher debt profile than EU, which closed deals worth USD 258.7bn (EUR 210bn) in the first half of this year - outpacing Germany by a multiple of eight. Only Europe, considered as a unit despite the wobbly components of its union and all its sovereign debt woes, would come out above the US having closed deals valued at USD 356bn (EUR 290bn) so far this year, generating almost EUR 100bn more in value than the US in this league.

Seeing Germany as part of Europe allows it to easily outpace the US in this case but when it comes to Olympic medals or the real economy, we are still far from seeing the world outside our tried and tested national prisms. There is still great unease about taking this type of risk in the European project but should Germany ever see itself as part of Europe first, it may never have to worry about its ranking in a fictitious global M&A league or in the woman’s vault where a Rumanian, or European for that matter, eventually snatched gold.

This was posted in Bdaily's Members' News section by mergermarket .