Special aspects of negotiating with German medium-sized businesses for Polish investors

Takeovers of German companies by Polish investors are no longer rare, although the number of transactions is smaller compared to the still flourishing investments of German entrepreneurs in Poland. The number of Polish entrepreneurs expanding into the German market is steadily increasing. This is not surprising, given the steadily growing and close economic cooperation between the two European neighbours. Apart from the obvious advantages that the German market offers to foreign investors, such as high legal certainty and good payment practices of German business partners, it is access to Germany's large sales market that is particularly attractive to Polish investors. Investors who decide to invest beyond Poland's western border often already have a well-established economic position in Poland and quite frequently also company locations and shareholdings that can demonstrate financial success in many other countries outside Poland. In recent years, it has been increasingly observed that Polish capital has been used to help German family businesses that are in a difficult situation for various reasons (e.g. due to the lack of succession). It is much easier to invest in an established German company and take over its stable market position, brand, sales markets and business partners than to build one from scratch. Finally, the geographical proximity and strong similarity of the Polish and German legal systems encourage cross-border M&A transactions, which follow a very similar process in each of the two countries. Nevertheless, there is a difference in corporate culture and – which should not be underestimated – mentality. 

Polish companies that decide to expand into Germany are often experienced investors who are supported by Polish legal advisors specialising in international M&A business, have a very good knowledge of German and know the specific legal conditions in both countries. What often surprises Polish investors is the German system of employee co-determination (which does not exist in Poland) and the fact that safeguarding the interests of different groups of stakeholders in companies, including employees, by the company owner is a very essential element in negotiations. Polish investors are usually positively surprised by the very good preparation of German business owners for the transaction, knowledge of relevant facts and figures, the open and fair conduct of negotiations, the rational and quick making of business decisions, and by the fact that what is said at the negotiating table can actually be trusted to be delivered.