2,586 Transactions: How the German M&A Market Held Its Ground in 2025
07.06.2026 – Frankfurt/Main
The German M&A market closed 2025 on a remarkably stable note, despite economic weakness and ongoing geopolitical tensions. A total of 2,586 transactions with German participation were recorded, representing a six percent decline on the previous year while remaining well above the long-term average since 1998. Beneath this stable surface, however, structural shifts have taken place that have lastingly reshaped the profile of the German transaction market.
The Market is Becoming More Domestic
One of the most striking developments of the year is the marked decline in cross-border transactions. Inbound deals, meaning acquisitions of German companies by foreign buyers, fell by nearly 39 percent. Outbound deals, in which German companies acquire targets abroad, declined by 26 percent. Location factors such as high wage and energy costs, a bureaucracy widely perceived as cumbersome, and the weak growth environment have dampened Germany’s attractiveness from an international perspective.
Domestic transactions have established themselves as the stabilising element of the market. With 1,509 deals, their share in 2025 stood at 58 percent of all recorded transactions, an historic high. Mid-market companies are acquiring other mid-market companies, corporates are restructuring their portfolios, and consolidation is increasingly taking place within Germany. For owners considering a sale, this changes the way potential buyers should be approached. A deep understanding of the German Mittelstand and its consolidation dynamics gives clear access to today’s most active buyer groups.
Private Equity Returns to the Market
A second structural shift may prove even more significant in the longer term. Financial investors were involved in 38 percent of all M&A transactions in Germany in 2025, the highest figure since 2022. Looking at foreign investments in German target companies alone, the share of private equity even exceeded 50 percent, according to PwC’s latest analysis of international investor activity in Germany.
This development is supported by falling interest rates, mounting pressure on funds approaching the end of their lifecycle, and a substantial volume of dry powder yet to be deployed. Private equity firms from the United States, the Netherlands, and the United Kingdom were particularly active, followed by growing involvement from France and Sweden. For sellers, the implication is concrete. A structured sale process can address private equity firms as a defined bidder group and harness their valuation discipline productively in negotiations.
Sectoral Differences Shape Market Dynamics
Although the overall picture appears stable at first glance, developments across individual sectors are highly divergent. Aerospace and defence recorded a significant increase on the previous year, driven by Europe’s security policy realignment and the German federal government’s special defence fund. Engineering and construction grew at a double-digit rate, supported by public investment in infrastructure and the energy transition. Automotive, by contrast, saw a substantial decline in deal activity, weighed down by transformation pressure, intensified Asian competition, and uncertainty around potential US tariffs.
The federal government’s 500 billion euro infrastructure fund is expected to provide additional impulses in energy, construction, and utilities once the first funds begin to flow. Owners initiating a sale process in the coming quarters should factor the relevant sector phase explicitly into their strategy. An aerospace supplier will be sold in 2026 under noticeably different market conditions than an automotive supplier.
A Functioning Market with Growing Selectivity
The figure of 2,586 transactions confirms the resilience of the market and signals that the German M&A market remains structurally intact while shifting in character. Competition for attractive targets is taking place increasingly between domestic strategics and internationally active financial investors, and less between classical cross-border strategic acquirers. Valuation multiples are being handled more cautiously, buyers are acting more selectively, and sellers need to prepare more thoroughly than they did three years ago.
For mid-market owners preparing for a business succession or strategic sale, this means one thing above all. Preparation time is lengthening. Those intending to hand over within the next two to four years should begin the structural, financial, and operational preparation now.
About Edelweiss Corporate Finance
Edelweiss Corporate Finance is an M&A advisory firm based in Frankfurt am Main, specialising in advising mid-market companies. Our work centres on business successions, sell-side mandates, and strategic sale processes for family businesses and owner-led mid-market companies. We combine sector-specific depth with a clear understanding of the particularities of the German Mittelstand, accompanying owners from valuation through to the successful handover of their life’s work.
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Are you planning a business succession or strategic sale within the next two to four years? Get in touch for a substantive, confidential conversation without obligation.
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Sources: Mergermarket (proprietary analysis); PwC, “Destination Deutschland 2025: M&A-Aktivitäten ausländischer Investoren in Deutschland”, December 2025.
