Selling a Business in Frankfurt

German corporate law requires that any transfer of GmbH shares — by far the most common corporate structure for mid-market businesses — be notarised by a German Notar. This is not optional or a formality: the notarisation requirement is a fundamental feature of German M&A law under the GmbHG (GmbH-Gesetz). In practice, this means both buyer and seller must coordinate with a Notar for the signing of the share purchase agreement, which adds a procedural step not present in most other jurisdictions. International buyers unfamiliar with this requirement occasionally underestimate the scheduling lead time. We coordinate this process as part of every transaction.

The vast majority of mid-market German businesses are structured as GmbH (Gesellschaft mit beschränkter Haftung). AG (Aktiengesellschaft) structures are less common but do appear in larger businesses or those that have raised institutional capital. GmbH share transfers require notarisation (see above) and, depending on the shareholder agreement, may involve pre-emption rights, consent requirements, or drag-along provisions that need to be worked through before a transaction can proceed. Buyers — particularly those from common law jurisdictions — will often want German legal counsel to advise on the specific shareholder agreement and articles before committing.

German employment law gives employees significant rights in M&A transactions. If the target company has a Betriebsrat (works council), it must be informed and consulted prior to a business transfer or significant restructuring. This is not a veto right — the works council cannot block a transaction — but the consultation requirement adds time and needs to be planned for. Buyers should also be aware of the information rights available to works councils under the BetrVG, which affects what information about the transaction must be disclosed and when.

German mid-market businesses typically prepare accounts under HGB (Handelsgesetzbuch — German GAAP) rather than IFRS. HGB accounting differs from IFRS in several important ways: provisions are generally more conservative, revenue recognition may differ, and the treatment of certain assets and liabilities will not match IFRS equivalents. International buyers or those preparing post-close group accounts under IFRS will typically require an HGB-to-IFRS conversion as part of their financial due diligence. German tax law (Steuerrecht) is closely tied to HGB accounting, which also affects the normalised EBITDA calculation and add-back analysis.