Dealmakers in both countries are actively seeking investment opportunities in each other’s markets, with 2025 shaping up to be the strongest year in recent memory
Certain M&A markets have a habit of defying expectations. In a year where equity volatility and tariffs have dominated headlines, US and German dealmakers are undeterred, pursuing assets in each other’s respective markets with great determination. Deal value has soared this year, with US buyers acquiring US$5.2 billion in strategic assets in Europe’s largest economy and their German counterparts investing nearly three times as much, with US$14.3 billion in deals that target scale and innovation across the US.
It is a resurgence that belies macro headwinds. In Germany, growth is currently tepid. The Bundesbank downgraded its GDP forecast for 2025 to 0 percent in April, abandoning an earlier forecast of 0.3 percent, citing trade tensions—especially related to US tariffs—and weak export demand as primary headwinds. Growth is expected to pick up in the next two years, though, with projections of 0.7 percent and 1.2 percent slated for 2026 and 2027.
The newly installed coalition government, which came into power following February’s snap federal election, is still finding its footing, and business sentiment is subdued amid widespread industrial malaise. The country’s storied “Mittelstand”—the small and medium-sized businesses forming the foundation of the German economy—is under pressure, with traditional manufacturing sectors caught between structural reform needs and a sluggish domestic economy. A recent EU-US trade deal, meant to stabilize relations, has instead drawn backlash in Berlin, with politicians criticizing the European Commission for perceived concessions to Washington on tariffs.
Across the Atlantic, the US economy surpassed expectations in H1, though cracks are beginning to emerge. The first quarter posted a modest annualized contraction of 0.5 percent, according to the Bureau of Economic Analysis, though this was not strictly a marker of economic weakness, but rather a consequence of how GDP is calculated: US businesses anticipating new trade measures stockpiled imports in early 2025, resulting in a decline in net exports and therefore a technical drag on Q1 growth. As inventory investment stabilized, the second quarter saw a significant rebound to 3 percent growth. Inflation also held relatively steady.
The most recent jobs report shows a continued softening of the labor market, though, and investors remain wary of the administration’s approach to trade and foreign policy. Despite this uncertainty—which many dealmakers are learning to treat as the “new normal”—cross-border M&A between the US and Germany is buoyant.
US appetite
In H1, US acquirers were responsible for US$5.2 billion of inbound deal value into Germany, across 52 transactions, already surpassing the total for 2024, when 123 deals tallied just over US$2 billion. Although H1 volume declined marginally, the value rebound signals a return of conviction.
Headline deals from H1 indicate this shift. In May, cybersecurity company Proofpoint announced a US$1 billion acquisition of Hornetsecurity, a German cloud security provider whose threat intelligence tools complement the buyer’s global portfolio.
In the healthcare space, Teleflex struck a US$794 million deal for Biotronik’s vascular business, while Lantheus moved to acquire Life Molecular Imaging, a molecular diagnostics specialist, for US$780 million.
However, these deals were surpassed in mid-July, when a consortium including US-based alternative asset manager TPG acquired Techem, a digital service provider for the real estate market, for US$7.8 billion.
At the time of writing (September 22), a further 24 deals had been announced, pushing the annual total to 76, with year-to-date value rising to US$7.1 billion, continuing the upward trend of H1.
Deutschland deal drivers
Germany’s strength in high-value sectors such as engineering and industrial automation continues to appeal to US strategic acquirers. Defense and digital infrastructure assets are also drawing increased deal interest, as EU states ramp up security spending and the bloc renews its focus on strategic autonomy.
Valuations remain highly attractive, despite the US dollar losing around 11 percent of its value against the euro since the beginning of the year. The average price-to-earnings ratio of German public equities is 18.5, versus 26.6 in the US, according to World PE Ratio. Some of this is due to the heavy industrial bias in Germany, compared with the tech-heavy nature of Stateside stock markets.
Private equity firms, flush with dry powder, are also actively on the hunt for mid-market opportunities, including discounted distressed assets with turnaround potential. That pool of opportunities is expanding. Corporate insolvencies in Germany climbed to a ten-year high in H1, according to Creditreform, as companies grapple with soft demand in the face of manufacturing competition from China, elevated input costs and persistent macroeconomic uncertainty. A total of 11,900 businesses filed for insolvency during the period, up 9.4 percent year on year, underscoring the mounting pressure on companies across the industrial and services economy.
However, challenges remain. The new EU-US trade accord has introduced as much uncertainty as clarity. While intended to calm markets, the agreement has raised fears that the US may impose new tariffs if it judges the EU to be gaining a competitive edge, potentially prompting retaliatory measures from Brussels. These concerns are particularly acute in the automotive and industrial sectors, which are deeply integrated across transatlantic supply chains.
Regulatory scrutiny remains a factor, too, with Germany tightening its foreign direct investment regime in recent years to expand review powers over acquisitions in sensitive sectors such as defense, tech and critical infrastructure, particularly when non-EU buyers are involved. Nonetheless, the investment case remains compelling. The overall number of US-Germany deals may be lower than in peak years, but the average ticket size is rising.
Germany doubles down
While US investors are pursuing opportunities in Germany, the flow of capital in H1 was overwhelmingly stronger in the opposite direction, with German bidders identifying the US as a key destination for dealmaking, despite political turbulence. In some respects, this imbalance is unsurprising, given the size of the US market and its strengths in key sectors, including tech and industrials. The US is also home to deep pools of capital, making it a desirable destination for German companies looking to diversify their market exposure.
German buyers have stepped up their investments in the US, with H1 deal value hitting US$14.3 billion across 29 transactions—more than five times the value recorded in all of 2023 and 147 percent above H1 2024’s total of US$5.8 billion. By September 22, those figures had risen to US$14.8 billion, from a total of 44 deals. The value figure is already above the overall total for the first three quarters of 2024.
The biggest transaction this year has come from Siemens, which agreed in April to acquire US cloud-based research platform Dotmatics for US$5.1 billion. The deal strengthens Siemens' digital lab footprint and reinforces Germany’s broader shift toward digital transformation across life sciences and industrial sectors.
Also in April, pharma major Merck inked a US$3.9 billion deal for SpringWorks Therapeutics, a biotech player focused on precision oncology. Munich Re added to this transatlantic trend with its US$2.6 billion acquisition of Next Insurance, expanding its presence in the fast-growing insurtech space.
Infineon Technologies continued the ongoing semiconductor shopping spree by acquiring Marvell’s automotive ethernet business for US$2.5 billion, signaling continued confidence in US-based R&D assets. These large, innovation-led transactions highlight the strategic logic behind Germany’s outbound M&A: access to technology, market depth, and scale.
Several tailwinds support this. A weaker US dollar since the beginning of the year has made US acquisitions more cost-effective for euro-denominated buyers, while inflation and interest rate pressures in the US appear to be peaking. German companies are also pursuing supply chain resilience by acquiring production capabilities closer to key end markets. For industrial giants, the US offers energy security, lower long-term production costs and the most liquid capital markets in the world.
That is not to say risks are being ignored. The current administration’s policy is an ongoing source of apprehension, particularly as it relates to future trade rules and regulatory thresholds. But sentiment on the ground remains bullish, with the US being the largest target market for German acquirers by both volume and value.
Cutting through the noise
For all the volatility in geopolitics and policy, the logic behind transatlantic dealmaking remains intact: Germany offers US buyers high-quality assets at a discount, while the US gives German acquirers access to growth, innovation and scale.
If anything, recent macro turbulence has widened the gap between headline risk and underlying opportunity. In Germany, weak demand, rising costs and heavy pressure on industrials have created a more accessible entry point for well-capitalized acquirers.
Regulatory hurdles, tariff skirmishes and valuation mismatches remain part of the equation, but they are no longer a deterrent. Dealmakers have learned to move through uncertainty, not around it. With momentum building on both sides of the Atlantic, and a number of marquee transactions made in first eight months of 2025, the US-Germany corridor is on track for its strongest year since 2021. This cross-border pairing is proving once again that M&A can flourish, even in turbulent times.
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