Start New vs Buy Existing — Decision Framework
Both routes are viable; the right choice depends on speed, budget, and strategic goals.
| Factor | Start New GmbH | Buy Existing Business | |
|---|---|---|---|
| Time to revenue | 3–12+ months | Immediate (existing customers) | Speed |
| Historical liabilities | None | Asset deal: none; Share deal: all | Risk |
| Brand/reputation | Build from scratch | Existing brand value | Market position |
| Formation cost | €2,000–€3,500 | €5K–€50K+ (legal + due diligence) | Setup cost |
| Customisation | Full control from day one | Inherit existing structure | Flexibility |
| Financing | Equity or startup loan | Vendor finance or bank loan possible | Capital access |
German Business Acquisition Structures
Two transaction structures exist in German M&A, each with different legal and tax consequences:
- Asset deal (Unternehmenskauf in Form eines Asset Deals): purchase specific assets, contracts, IP, and staff — avoids historical liabilities of the company. Preferred by buyers.
- Share deal (Anteilskauf): purchase GmbH/AG shares — acquires the entire entity including all historical liabilities, open tax assessments, and pending disputes. Preferred by sellers (capital gains tax efficiency).
- For GmbH: share transfer requires notarisation under §15 GmbHG. For AG: share transfer via securities/notarised agreement.
In a share deal, any undisclosed tax liabilities from prior years transfer to the buyer with the company. The Finanzamt can assess additional taxes up to 10 years back (§169(2) AO). Representations and warranties in the SPA are critical. We conduct full tax due diligence before any share acquisition.
Due Diligence Workstreams
Four essential due diligence areas for any German acquisition:
- Financial DD: 3–5 years of HGB financial statements, audit reports, management accounts, working capital analysis
- Legal DD: all contracts (customer, supplier, employment), IP ownership, pending litigation, regulatory licences
- Tax DD: all filed and unfiled tax returns, open Betriebsprüfungen (tax audits), transfer pricing documentation, VAT position
- HR/Employment DD: all employment contracts, CBA (Tarifvertrag) obligations, works council (Betriebsrat) agreements, pension obligations
Frequently Asked Questions
Do I need a notary to buy a German GmbH?
Yes — GmbH share transfers (Abtretung von Geschäftsanteilen) must be notarised under §15(3) GmbHG. The share transfer agreement (Abtretungsvertrag) is signed before a German Notar. The updated Gesellschafterliste (shareholder register) must be filed with the Handelsregister within three months. Without notarisation, the transfer is legally void.
How long does a German business acquisition take?
A simple GmbH share deal can close in 4–8 weeks. Complex acquisitions with extensive due diligence take 3–6 months. Timeline: NDA and exclusivity (1 week), due diligence (4–8 weeks), SPA negotiation (2–4 weeks), notary appointment and signing (1–2 weeks), post-closing adjustments (1–3 months). Our team coordinates the entire process.
What is a typical acquisition price for a small German GmbH?
German SME valuations typically use EBIT multiples. Common benchmarks: professional services 4–8× EBIT, manufacturing 5–10× EBIT, SaaS software 10–20× ARR, retail 3–6× EBIT. Asset-heavy businesses (real estate, machinery) may use net asset value as a floor. Micro-businesses (<€500K turnover) are often priced at 1–2× annual turnover.
What German employment law protections apply when buying a business?
When buying assets of a German business with employees, §613a BGB (Betriebsübergang — business transfer) automatically transfers all employment contracts to the buyer with unchanged terms. The buyer inherits all employment rights including seniority, notice periods, and CBA agreements. Employees must be informed and have a 1-month right to object. Works council (Betriebsrat), if present, must be consulted.
Can I finance a German business acquisition with a bank loan?
Yes — German banks (Deutsche Bank, Commerzbank, KfW, Sparkassen) offer Unternehmensfinanzierung for acquisitions. KfW ERP (Unternehmerkredit) provides subsidised loans from €25,000 for business acquisitions. Typical LTV: 50–70% of acquisition price. KfW loans are available to EU and non-EU buyers with German company structures. We introduce clients to acquisition finance specialists.
What is the German Unternehmensnachfolge (business succession) market?
Germany faces a massive Unternehmensnachfolge (business succession) challenge: an estimated 125,000+ German Mittelstand companies need new owners annually as founders retire. Many of these are profitable, established businesses seeking strategic successors rather than financial buyers. The DIHK (German Chamber of Commerce) operates a Unternehmensbörse (business exchange) matching buyers and sellers. Prices for established SMEs are typically 4–7x EBIT with vendor financing options frequently available.
What is a Letter of Intent (LOI) in a German business acquisition?
An LOI (Absichtserklärung) is a non-binding document outlining the key terms of a proposed acquisition: purchase price, payment structure, due diligence period, exclusivity, and major conditions. While not legally binding on price or terms, the LOI creates an implied good-faith obligation to negotiate seriously. In Germany, a binding exclusivity clause within the LOI is legally enforceable. We draft and negotiate LOIs as part of our acquisition support service.
What is the Betriebsübergang (business transfer) under Section 613a BGB?
Section 613a BGB (Bürgerliches Gesetzbuch) mandates that when a business or business unit is sold as a going concern (Betriebsübergang), all employment contracts automatically transfer to the buyer with unchanged terms — the buyer inherits all employee seniority, salaries, and collective agreements. Employees have a 1-month right to object. This applies to asset deals; share deals do not technically trigger Section 613a as the employer entity remains unchanged. The practical impact is identical — all employees stay.
What are the antitrust (Kartellrecht) rules for German business acquisitions?
Acquisitions above certain turnover thresholds require notification to the Bundeskartellamt (Federal Cartel Office). EU-level notification (European Commission): combined worldwide turnover above EUR 5 billion + individual EU turnover above EUR 250 million. German national notification: combined Germany turnover above EUR 500 million (or other thresholds). Small business acquisitions below these thresholds proceed without merger control clearance. The Bundeskartellamt has 1 month for Phase 1 review, 4 months if Phase 2 is opened.
How do I find a German business for sale?
Main channels for finding German businesses for sale: (1) DIHK Unternehmensbörse (nexxt-change.org) — Germany's official SME business exchange, free to search. (2) Business brokers (Unternehmensberater/M&A Berater) who represent sellers. (3) Deutsche Bank, Commerzbank, and Sparkasse M&A teams who have deal flow in their corporate client base. (4) Industry-specific networks and trade associations (Verbände). (5) Direct approaches to family-owned Mittelstand companies in your target sector. We assist clients in sourcing and evaluating German acquisition targets.
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