The new German government has pledged reliability, a pro-business agenda, and massive investments. Promising words – especially for the M&A market. But the key question remains: will action follow rhetoric?

The new government under Chancellor Friedrich Merz is signalling a shift in economic policy: more reliability and a strong commitment to entrepreneurial freedom. Both are central factors in assessing the potential impact of this administration’s agenda on the M&A landscape.

Markus Schiller, Head of DACH & CEE at Datasite, views these signals as broadly positive: "Stable conditions and business-friendly policies foster confidence – and that’s exactly what the M&A market needs," he says. Uncertainty stemming from political back-and-forth and endless policy debates has long held back mergers and acquisitions. If companies regain the ability to plan mid- and long-term, M&A activity will naturally move back into focus.

However, the crucial issue is whether the government can deliver on its promises.

So far, many of the announcements remain at the level of intention. Whether they will be implemented – and how quickly – is an open question. Political consensus alone is not enough. “To drive more M&A activity, we need functioning processes, efficient public authorities, and a realistic timeline for regulatory adjustments,” Schiller emphasizes.

Billions for Infrastructure – But Unclear Execution and Impact

A key element of the new economic agenda is a massive infrastructure investment package. Billions are earmarked for rail, power grids, hydrogen, and digitalization. On paper, this could act as a catalyst for economic activity and new M&A opportunities – particularly in construction, energy, and industry.

But execution is no guarantee. Projects may stumble over sluggish bureaucracy despite available funding. If public funds cannot be deployed swiftly, the intended stimulus could fizzle out. The result: businesses may not see the growth or modernization effects needed to spur M&A activity.

Another concern: the government’s expansive fiscal policy and massive public investments could push inflation expectations higher. In that case, the European Central Bank might be forced to hold off on rate cuts, contrary to current assumptions. This would keep financing costs high – potentially damping M&A activity rather than stimulating it.

Making Germany More Attractive to Investors – But How Fast?

On the international front, the Merz government wants to position Germany as a magnet for foreign capital. Planned measures include capital market reforms, simplified IPO regulations, increased incentives for venture capital, and improved exit conditions for investors.

These initiatives could inject more momentum into the M&A market over the medium term. For example, dual-track processes – preparing for both IPO and company sale in parallel – may become more attractive. This strengthens sellers’ positions by giving them viable alternatives to a traditional trade sale.

Again, directionally promising, but implementation could be slow and complex. Those hoping for a more capital market-friendly Germany will need patience.

Spotting Growth Markets – Seizing Opportunities

If the government manages to implement its plans efficiently and at speed, certain sectors stand to benefit significantly. Datasite identifies the following as likely winners:

• Industrial, Chemicals & Infrastructure: Transformation, decarbonization, and regulatory changes drive restructuring and consolidation.
• Pharma & Biotech: Innovation pressure meets rising regulatory hurdles – M&A becomes a tool for scaling and accessing markets.
• Technology, Media & Telecoms: Especially in cybersecurity, public tenders and government investment programs create fresh M&A potential.
• Defense: Planned defense spending and upgrades to digital capabilities create a unique opportunity in the security and military sectors.
• Retail & Services: Improved capital market conditions could facilitate buy-and-build strategies.

“While there are still many open questions and execution will take time, this period of transition presents real opportunities for strategic buyers,” Schiller concludes.
Markets don’t wait for certainty; they begin shifting the moment expectations change. Those who act early and base their decisions on solid data can gain a strategic edge that’s hard to replicate later. After all, the best deals often don’t happen in times of certainty, but in times of change.

The Bottom Line: New Government, New Momentum – But Execution Remains the Bottleneck

The government is sending pro-business signals: more reliability, better conditions, and high levels of investment. This represents a clear opportunity for the M&A market, if implementation succeeds.

Many initiatives are still vague. But those who move now will find attractive targets with less competition, particularly in dynamic sectors like defense, tech, and industry.

Conclusion: Don’t wait for everything to be finalized. Now is the time for strategic first movers.