116		4  Corporate Acquisitions in Germany
4.5.2	Requirements for the Bidding Process				125
4.5.3	Evaluation of the Bid by the Target Company				127
4.5.4	Consideration: Cash Offers and Exchange Offers (Share for Share)				128
4.5.5	Duty of Neutrality and Defence Measures				128
4.5.6	Role of BaFin . . .	. . . . . . . . . . . . . . . . . . .	. . . . . .	. . . . . . . .	129
4.6  Squeeze-out of Minority Stockholders					130
4.6.1	Overview . . . . . . . . . . . . . . . . . . . . .	. . . . . . . . . . . . . . . . . . .	. . . . . .	. . . . . . . .	130
4.6.2	Steps of the Squeeze-out Procedure	. . . . .	. . . . . .	. . . . . . . .	131
4.6.3	The Takeover-Related Squeeze-out Procedure as anAlternative				132

4.1  Introduction

Compared to Anglo-Saxon countries, relatively few German companies are listed on a stock exchange. Many companies, notably the famous Mittelstand entities, are owned by families, foundations, other groups of individuals, financial investors or other companies. Most of these companies are in the legal form of a limited liability company (GmbH), which—unlike a stock corporation (AG)—cannot be listed on a stock exchange. Due to this structure, most corporate acquisitions in Germany choose the form of private M&Arather than public M&A.

The term ‘mergers and acquisitions’(M&A) is a general term used for all different types of corporate acquisitions, including management buy-outs, joint ventures etc. M&A can be divided into two main categories: private M&A, where the buyer negotiates with the seller (or several known sellers) the acquisition of a business. In contrast, a public M&A transaction refers to the acquisition of a stock-exchange listed company.

There are no specific statutes governing private M&A. The general legal framework for the acquisition of goods regulated in the German Civil Code (Bürgerliches Gesetzbuch, BGB) will apply. In addition, as far as possible, the parties to an M&A transaction will try to develop their own set of rules within the framework of the sale and transfer agreement.

4.1.1  Case Study

Case Study

Following extensive market research, B has discovered that M-GmbH, a German limited liability company, registered and domiciled in Munich, is producing car components (mainly for the German car industry) which appear to be quite similar to those manufactured byA. B therefore thinks that M-GmbH would complementA’s business portfolio perfectly and that a takeover of M-GmbH would be a significant way of getting a foot in the German market.