Headlines in recent months have sounded the alarm: several media outlets have warned of a "fire sale of German industry." But a closer look reveals that some high-profile acquisitions of Germany’s hidden champions by foreign investors are far from cause for concern. In many cases, the buyers are strategic investors with deep knowledge of the local market and a focus on transformation and future-oriented growth.

The “German Mittelstand”: Selective and Strategic Sellers

Many headlines in the business media in recent months have sounded unsettling: “Are we witnessing a sell-off of the German economy?”, “German companies in crisis available at bargain prices!”, “The backbone of German industry is up for sale”, “Americans now targeting our hidden champions”, “Corporate Germany is on sale”.

But is German industry really up for sale? If this were the case, there should be a significant rise in cross-border M&A activity. Yet the Datasite platform shows no such trend. In fact, the majority of deals still take place within Germany, as confirmed in the latest Deal Drivers report.

It would also be surprising if Germany’s family-owned, Mittelstand businesses – often dubbed hidden champions –suddenly began selling en masse to foreign buyers. These business owners tend to be extremely selective about who they sell to, whether it's a stake or the entire company.

They are discerning sellers, often emotionally connected to their businesses, and typically demand high valuations. But price isn’t everything: many owners feel a responsibility to ensure the future success of their companies and often wish to remain involved in management. As such, they frequently seek assurances from buyers – such as commitments to maintain jobs or keep operations local.

To secure deals on such terms, companies must demonstrate strong profitability and a resilient business model that promises future growth. That’s a tall order in today’s volatile global market. Unsurprisingly, many financial investors are currently unwilling to meet the high price expectations of Mittelstand sellers.

Opportunities for Financial Investors

Nonetheless, there are attractive opportunities, particularly for smaller, regionally focused, and specialized private equity firms. These players possess in-depth local expertise, allowing them to assess the true potential of businesses and guide them toward a successful future.

Strategic Investors on the Rise

The landscape looks different for strategic buyers. We are indeed seeing increased interest in German companies from beyond the EU, particularly from the United States. US firms are looking to diversify their international operations to reduce their exposure to geopolitical tensions and trade uncertainty.

A strong match occurs when strategic buyers align with Mittelstand companies seeking partners to help drive investment in future-focused areas such as digital transformation and artificial intelligence. These businesses aren’t looking to cash out—they’re looking to scale up.

Plenty of Opportunity

What we’re seeing, then, is not a wholesale sell-off of German industry. Instead, selective Mittelstand sellers are engaging with strategic and regional investors who recognize long-term potential and conduct thorough due diligence. High-profile transactions like the sales of Schenker, Viessmann, or parts of the Port of Hamburg may create a different public perception, but they don’t tell the whole story.

One more point contradicts the “bargain hunting” narrative: deal timelines are getting longer. M&A transactions are taking more time, with due diligence processes becoming increasingly complex and time-consuming. That’s in part due to rapidly shifting market conditions, geopolitical uncertainty, and a greater emphasis on ESG scrutiny.

The Bottom Line

Despite high-profile sales of household-name German companies, there is no widespread sell-off of German businesses to foreign investors. Rather, the current market environment presents opportunities for strategic and regional investors with deep local knowledge and a long-term perspective.