Germany: M&A/Private Equity

Private equity sponsors acquiring EU investment firms through third-country holding structures face complex regulatory architecture decisions under the Investment Firms Regulation and Directive. While there is no automatic EU intermediate holding company requirement, national competent authorities possess discretionary powers to mandate one where effective group-level supervision is absent, creating potential 'regulatory architecture debt' that accumulates with each successive acquisition.

Germany is set to raise merger control thresholds and introduce a new "phase 0" filing process for transactions caught by the transaction value test. The proposed 12th amendment to the German Competition Act also includes subtle but significant changes that could enable the Federal Cartel Office to more easily scrutinize AI partnerships and other non-traditional deals.

The German Federal Court of Justice has issued a landmark ruling on management equity incentive programs, addressing the validity of call options and expulsion clauses when managers depart from private equity-backed companies.