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

last updated on 22 February 2022 | Reading time: approx. 1 minute

  

What special issues await Japanese companies when they take over or acquire a stake in an owner-managed company in Germany?

Japanese companies planning to acquire a business in Germany must be prepared for the special character­istics of owner-managed companies. “Owner-managed companies” commonly means companies in which mostly two or three owners hold more than 50 per cent of the company shares. Often, these are very large companies with international operations. 

Therefore, when planning to take over an owner-managed company, it is recommended for Japanese companies to obtain detailed information about the respective special structure of the target company and its owners in advance. Depending on how the German target company is organised, the Japanese acquiring company will have to prepare itself for certain special aspects. In Germany it is very much appreciated if a Japanese prospective buyer is well informed about the history of the company and its owners and refers to it during negotiations.
 

What aspects should Japanese companies take into account when negotiating with German medium-sized businesses?

During contract negotiations with German owner-managed companies Japanese companies should be aware of some peculiarities which do not appear on the agenda in business transactions in Japan or are approached differently there. It is true that punctuality is also important in Germany at the start of contract negotiations. But in business life it is not as highly esteemed as in Japan. Here, being punctual means arriving at least 5 to 10 minutes before the meeting starts. In Germany, it may happen that negotiation partners are 5 to 15 minutes late without calling and apologising for this earlier.
 
Likewise, greeting the other party at the beginning of negotiations has not the same meaning as in Japan. In Germany, the negotiation partners introduce themselves to a Japanese prospective buyer with a (more or less) firm and solid handshake; a bow is possible, but rather unusual in Germany. Also handing over business cards is approached differently. In Japan, an offered business card is always accepted with both hands and the Japanese partner's own business card is handed over in the same way. German negotiating partners, however, are used to accept an offered business card with one hand, at the same time offering the Japanese negotiating partner their own business card using the other hand. Also this behaviour should not be viewed as a sign of gross impoliteness.
 
In addition, Japanese negotiation partners should be prepared for situations in which German entrepreneurs may also raise their voices in the course of negotiations. Whilst this is unusual in Japan because there, opinions are very seldom expressed directly and criticism – if at all – is voiced evasively, in Germany, the focus is not constantly on creating a consensual atmosphere.
 
Another possible area of misunderstandings is the use of the words “Yes” and “No” which is different in Japan and Germany. Whilst in Japan, “Yes” is often used to confirm to the other party that one is listening, in Germany negotiation partners assume that “Yes” already means the acceptance of certain facts. Japanese should be aware of this during contract negotiations in Germany and act respectively (with caution).