The Involvement of the Financial Sector in the Restructuring of the Economy

After World War II the German company network was characterised by strong ties between management, capital, and labour and by a low level of M&A activity. M&A activity increased in Germany from the 1990s, mainly as a result of developments associated with German unification, and continued to rise in the 2000s. The increase was a little smaller than in Europe as a whole, and much smaller than in the US or the UK. Although Germany did not adopt an Anglo-US-American type of M&A regime, changes in the strategy of bigger German banks and enterprises encouraged M&A from the early 1990s on. This was supported by the policies of the German government and the European Commission. These developments involved moderate changes rather than a decisive leap towards a liberal market economic model with easy and frequent takeovers. Hostile takeovers have not been very common in Germany and, if they take place, they are generally of a managed type, involving a compromise between all the stakeholders. The German M&A regime can be judged as hybrid, combining elements of a market radical approach with a strong non-market stakeholder orientation. Vodafone’s hostile takeover of Mannesmann in 2000 was a shock for the traditional German corporate governance model and led to a form of consensus that takeovers should be possible, but not in a market radical way.