The accession of 10 new member states to the European Union (EU) on 1 May, 2004, offered significant business opportunities to investors. German companies are the natural first point of contact for companies from the new member states that are looking to expand their businesses to the West. On the other hand, the accession states attract German companies with lower cost bases and taxes to expand or outsource their production to Eastern Europe. Both ways, companies need significant funding to pursue their business goals.
It is not surprising, therefore, that recent deal publications show an increase in private equity transactions with an East European focus. This comes at a time when German corporate and tax law and German M&A processes are undergoing significant changes and developments, due in part to the continued focus of private equity investors on the German market. The steady rise of transactions over the past 15 years has led to significant amounts of work on the one hand, but have also created a requirement for the establishment of more and more bodies of rules and regulations on the other. This experience can be used where private equity investors acquire companies in countries such as Poland, Hungary, the Czech Republic and the Baltic States. Strategic and financial investors from the new member states must have regard to the German legal framework when expanding their businesses into Germany.
