How to Do M&A Deals in Germany

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Us on the go, head to LinkedIn and follow M and A Science. I'm your host and Chief Scientist, Kisam Patel. Joining me today is Frank Tepper Savitsky.

Partner, Corporate M and A Private Equity.

And Venture Capital at Denton's Denton's, a global law firm with over 12,000 practicing attorneys. Their global M and A group has more than 1500 attorneys and covers the full spectrum of M and A transactions. Today we're going to talk about doing deals in Germany.

Hello Guten Tag hello, Guten Tag Herzwerk.

Thank you for hosting. We are here live in Dusseldorf, Germany at Denton's office. What better place to host a conversation about doing M and A in Germany than in Germany? Frank, how are you doing today?

Thanks for having me today and look forward to our discussion. The best is that today is national holiday so we have time to speak. No pressure. Not many clients are knocking on the doors.

This is when I get you to take a break from doing deals to have a little conversation. Frank, can we kick things off a little bit about your background?

As you said, I'm an M and A lawyer doing venture capital and private equity deals. That's nowadays pretty common that lawyers also do both. In the former days it was more separated. At least in Germany when you're doing venture you're not quite into doing also private equity with the bigger deals as an M and A deal structured because financing rounds is more about having a capital increase here in Germany and Then it's a slightly different structure even in the documents. But as it's more tech related and even the M and A deals and private equity investors are looking for tech investments in Germany also. So it's pretty common that both is integrated. And that's how I came to both because I started with venture and then I also have done some tech M and A deals and was a real easy reach out to the other financial sponsors doing the bigger deals actually in private equity.

How many years have you been practicing for?

I'm practicing now for 15 years. Yeah, so around 15 years. All right.

That's a lot of deals, VC and private equities that you've seen.

Difficult to count them because there were times there was like two a month or something because the smaller venture capital deals could be done a bit faster and then you have deals in peril. Actually the bigger M and A deals took longer. So difficult to count them all.

Can we break it down? How is deal making different in Germany?

Private equity is a strong business, was also a strong yield driven business for investors and financial sponsors. But it's not the culture of Germany. The German investors former days were more corporates, maybe more private investors, private high net individuals. It comes more and more. It's also the first difference to the US because US is more private equity dominated. They're. I think that's also the reason why the bigger deals are in the centers actually because there are many investors doing the deals in Germany. It could be elsewhere also in the middle of nowhere I would say because there might be a family owned business which will be devested actually to a financial sponsor. So it's not only doing secondaries here because you have many primaries first here and even smaller businesses. And Germany is smaller. The US of course the deals are a bit smaller because the economy is not such big. Yeah, it's quite interesting. Germany is also in a transformation actually in many branches. Even the renewables are slightly interesting and other branches like the tech industry. Of course there's lots of things going on. Maybe it's first of all a small business venture and then it's grow up and became a tech giant and then take over bigger other clients actually. And then it is more about doing tech deals later on. It's just the big listed company you're doing deals with. So crazy times actually last 10 to 12 years I would say.

So I got a couple themes. One, it sounds like just smaller countries, so smaller deals are happening. But then also private equity maturity is probably at a different stage because when you look At America, very mature thousands and thousands of private equity firms. And then you hear uk a significant number of private equity firms. But it sounds like a lot of private equity as a model is like still emerging in Germany. Does that sound fair?

Yes. There was always also certain private equity investors. But the culture of doing investments actually even for private people and to get access to such privately structured funds. That is a new and come more to a broader mass of people doing their investments. I think there was after the second World War, not that kind of a culture doing investment that way. Because that was not maybe in the US because in the US it was more used to bring your money to big funds. They are doing the investments for you actually and you increase your money for later days actually when you retired. But in Germany this more governmental structured and some less people were interested. But it is changing because of certain venture. It's more a cultural change now going on. And therefore the people are also more often thinking about divesting to private equity. Because they now understand how private equity works. In the past they were more frightened of doing real deals with financial sponsors. Because also the employees and all the others. When you have a family owned business, you're not thinking about only your benefits. You also think about what's about the firm, what's about the employees. Are these employees secured actually under the financial sponsor or not? The private equity firms doing deals in Germany have done a quite good job actually last decade. I would say the people are more open to it even to sell their companies to private equity.

The culture is evolving and changing to be more accepting of private equity products.

The products actually. And also when you have a family owned business, which is not uncommon in Germany, because we have a strong league of family owned businesses, the next generation, they invest in their business are more thinking about also to give this in the hands of private equity funds.

Very interesting. How about structuring deals? Is there a difference in how deals are structured in Germany?

The major difference is that we have codified law. And it's not like common law. You do not have to rule everything in the contract. So the documents are just not so many pages, do not have so many definitions, etc. Because it is more to codified law. You can just make a reference to it or just do name these phrases and this binding. So sometimes if you are not ruling something which is different, which is the opposite of what was ruled, then it is just binding by codified law. And then you do not have to take it into the contract. That makes a big difference because then you have just less pages in the deal documentation for German lawyer at least more easier because they do not have to look in every detail because the details are in the codified lawyer. You probably know, because they are pretty much standard to the deal. But for foreigners maybe it's more complicated because you probably do not know what is codified. So it's more difficult to get transparency to the deal. Actually the documentation for us it's more easy because we are knowing what's standard.

This is interesting. It sounds like it kind of saves some work if it's already standardized in a way, wouldn't it?

Yeah, it is. We have lots of court decisions around these standards. So they are also court decisions, but they are more precise. The language of the codified law it's a bit different because in common law you have more cases about the same situations. And then you have to look for such a case which is similar to this one you are dealing with. For us it's more about getting a sense of this codified law and thinking about is that the right understanding. And once you have matured understanding of codified law, then you have pretty secureness actually how to act with those rulings. This codified law is more effective in a general way. You have a wording and this wording will not change except there is a court decision or there are court decisions of a higher court which goes in the wrong direction to the parliament ideas. And they made the law actually. And sometimes if they're seeing that's the wrong direction, then they change the codified law.

This is actually pretty interesting. Not how we do things in America. Can you give me an example? What areas of a deal would this cover in terms of referencing codify law versus we just negotiate directly.

One of the biggest differences actually is that we also have some other formalities. And these formalities bring you to another deal structure actually, because when you're looking at the term sheet, it's divided into two sections. One is binding, one is not binding. And why is there's a non binding term sheet? For example, before you're doing an investment, you would like to get both parties to agree on the crucial terms in a way, in a wording which is high level, but gives you an idea how the structure of the deal at the end could be. But in this term sheet, for example, you cannot do, we cannot take in or you cannot include language to transfer shares. For example, writing down an obligation that someone has to give you the shares if some requirements are fulfilled. Because if you're doing it that way, then you need an authorization to get a binding. So therefore it's more about having such intention to do so. You have soft writings, actually what you're including in this term sheet. But you have also binding parts for breakup fees, et cetera, et cetera. Because you also would like to get some secureness on the deal. So I think that is first the difference. Because when it starts with a term sheet, there is the difference because you have such formalities to the binding rules. When you talking about for transferring shares, which is the core of each transaction. Actually when you would like to change the ownership, you have to transfer shares. Then you go into the due diligence. It is pretty much the same. I would say maybe here you have to also look into the qualified law in each section because sometimes you have more authorities, having done some decisions, etc. But I'm not a US qualified lawyer, so I'm not in the details when it comes to diligence in the US when we're going down to such details. But I would assume that because of the codified law and the structure and the authorities we have here, that it is more to check what the authorities give you or what instruction, for example, and have you followed it the way you should do so you do not get any liabilities. I'm not sure. In the US it might be a different way because you have also the punished damages and other structures and tools that might avoid that people or the market is doing it wrong. But you maybe do not have so many authorities looking after that. When you have someone who's damaged, then of course you get maybe a high damages, fees to pay and you would never do it again, or your business runs for insolvency. That might be not the same in Germany, because in Germany when you violate any laws, for example, then you have just to bring in the same position. That was never, never the case. It's not about the punished damages as a add on. We do not have this structure. So I think that's also a difference. Having done the due diligence, then you have to do the legal documentation before you do the signing at the notary. And you have to also work with the notary. That way he is satisfied with all documents you have provided to him. And that way that he can say, okay, that is valid when we are doing the deed, because he's the master of the deed, more or less. He also is checking if everything is valid and effective for good practice. In Germany you would really working tightly with a notary at the end at least. But don't forget that he's always neutral. So he's with both parties. He will always take a neutral role in this signing process. And then you have signing and closing. And between those you have the signing in front of the notary. But the closing could be done between the parties with the closing memorandum. Pretty easy. So the crucial part more or less, of course you have closing conditions you have to fulfill and maybe have also closing accounts. Or maybe there's also some major points in the closing. But the things the rulings and the obligation has to be done before signing and documentated in this signed documentation in front of the notary. So notarized documents.

Actually this is interesting.

It's different. What I have seen from US lawyers actually when they doing the closing, then it's more between the lawyers changing the documents and say that is final. And then you have it close. The deal closed actually. And that is not the same here in Germany we have commercial registry which is officially by the local court of each local district where the company has its business address and seat. There are official documents you can download where you can see for example the newest or the recent AOAs. For example, you can download excerpt where you can just see what has done. What changes in the history has done before and what is the current status. And that is helpful. It gives you a lot of information as an investor. And even you can just check it on the homepage.

And this is for like a particular business or just for all business.

All registered Companies in Germany, GmbH, Kokages or for like Inks Acting Sellschaft and so on.

Well, if they had like a company had a previous transaction, I would be able to see all that information.

Or that is only possible if you have a course actually to ask for such documents. They have to be uploaded. But you have other things. Like the company for example has done a merger before. But merger maybe as a restructuring in the firm or spin off or something. Then you can see it there. Or you can see for example the change of managing directors. You can see when it was established. We have lots of information in this register which is really official and gives you trust and what is done in the past. And you can really. It's not the same in the US as I know because there's more with a secretary to structure the documents. And there's no official place where you can download it, seared it. I think it's more transparent in Germany.

It sounds like there's some good pros. Can we go back to the letter of intent? Because I thought it was interesting. It Sounded like a lot of this stuff is already templated in a way you mentioned. It's sort of a blend between non binding and binding. Can you go through that a little bit more? Is it sort of like every agreement's standardized when it comes to letter of intent that there's this non binding component and a binding component?

There are different ways of. Lois, because a term sheet is one thing. How you can structure it for both parties, make an agreement on soft terms and binding terms actually. But you can also have a letter of intent. What was done at the beginning of my career more often than today. Actually, to be honest, that has changed. Actually. What is also good, because when you see the letter of intent, you maybe just have an offer under certain requirements that you would like to take over the shares. But when you have a term machine then it is more about shifting terms in a high level way from the signing process at the beginning to the agreement process. Because first of all you would like to understand are we on the same page? Is it worth to go into the making the efforts actually to go into the due diligence and do the whole process. Also the reason why, especially in venture deals you're doing it that way because you cannot go always for signing when you have so many deals at the desk. You might do or not. And that could be screwed up by so many things because you do not have maybe only one investor, former investor or old investor. You have maybe three or four or five or 10. And then it's more easy if you make an agreement upfront. And even if you are more than one investor, five or 10 or something, then it's more easy than you see how the conditions are for each. That's also good that we have structured it that way. What is funny aspect is that there are many terms in Germany, at least in the venture deals which came from the US deals and they were just localized to German law. But I think even the wording is more or less the same. And as long as it is possible just because they're the same investors, the market has tried to make it more convenient for foreign investors to invest by taking the same wording or trying to do it the same structure. Actually we have slightly difference by law, of course of our codified law. But I think the market has tried to take over as much as possible.

Sounds like there's not a huge difference between how some of these term sheets are put together in the US as opposed to.

I think the most crucial difference in a venture deal is that you're doing the term Sheet with a company in the US and you're doing it more with the investors being invested. You're more negotiating with them also with the company. Of course, they are also on the desk. But at the end you have also to find first term negotiation to the terms also with the old investors. And in the US How I understand it and is just signing MOU or something or a term sheet with the company. And the company runs a financial round. Actually, it's more about communicating both the company.

Right.

And we are also negotiating between the investors.

That's interesting.

And also when it comes to private equity deals, bigger ones, for example, is also like a rollover structure they offer. And then how could that be structured to taking over, for example, 80%. But 20% is with the founders, actually. And stay with the founders, but the founders will roll it over in an spv, for example. And how could that be structured? That is maybe more complicated here than the US Because I do not have the full insight to the US My excuse, but I would say we are also facing lots of tax issues here on the ground. It's a good recommendation to take a experienced tax advisor with you, go through the deal because you have many obstacles here where something goes in the wrong direction. And private equity and venture is always under time pressure. Someone will deploy his money pretty fast. That could be the reason, but could be also the reason that the startup, for example, is running out of money. And then you have to hurry up.

What's the timeline? How long do deals typically take in Germany? Like a private equity deal? M and A.

It depends on the size, actually. And also on the due diligence, of course. But I would say four to six months for a private equity deal. If you are fast, then maybe four months. I would say.

Now is that from initial conversation to close? Or how about like loi to close?

Loi to signing? Actually four months. Three to four months. Yes. Because you have to go through the due diligence. It takes time. And you have to make the first draft, you have to negotiate them. You have to find an appointment as a notary, you have to go to the notary, you have to poas. POAS is also pretty important here because you need to keep the formalities even in the poas. You have to talk to the notary first, how he would like to have it. Because he would also like to have proof of existence and a statement of good standing. This is the right way described that the person underwriting having the power to represent the company. Because when you have foreign direct jurisdictions, you As a notary do not know how it works. So you need writings where another colleague. Also maybe it's the same structure with a notary notarize that poa. And maybe opposite the POA to get knowledge. How could this person represent the company? Actually, because otherwise you do not have a valid legal documentation here. You cannot execute the deed.

Right. So let's role play this a little bit because I want to understand some of the challenges cross border wise. So I'm. I run a tech company based in America and I got a similar business I'm looking to acquire that's based in Germany. You're my legal counsel, you're going to help advise me to do this acquisition. What are my big things right off the bat that I want to start.

Thinking of pretty much at the beginning, I would just say, look, let's get the POS done, actually, for example, if you are not in the US you are in Canada, for example, then it could be weeks. Was a deal. We wait 10 weeks to get the POS. And that way we need it. Because there is not even.

This is the proof of authorization.

Yeah, because you have to notarize it and you do not only have to apostate it, you have to have a legislation which makes it more difficult because you need authority to make a stamp on it. And that takes time that could screw up your timeline, actually. So that is good to think about such things at the beginning. Or you have time to do it before you get to the signing. Because when you are at the signing, you do not would like to wait for weeks to get things done, which you can easily avoid when you have done it at the beginning. As I said, the term sheet structure. When I have a foreign investor, I always give my pretty much standard term sheet to them and say look at the terms getting familiar with it just twice. And if you have question, talk to me. And when it comes to the deal, when we're doing the negotiations, it's less work and much more understanding when they have read it twice, actually. So is also something I tried to do at the very first beginning. Just to get more sense of what could be asked, what is crucial for you and to get more understanding about the deal. Because the term sheet more often are structured like the investment and shareholders agreement. At the end you get an idea how it could be structured in a way. So it's like a high level introduction. I've also published another venture capital association or business angel association. The templates for the venture capital German market. So I just do those which are Pretty much standard and even have some explanation. So you're getting more idea how a German deal runs. For me, it's always good to have someone at client who understands the deal, who can easily accelerate the negotiations if someone understands what's going on. So I do not have to explain it all while negotiating. It's better if you have done it at the beginning. So I'm not sure whether it's the same in the us but when we have this term sheet, there's often an attachment to it which shows the cap table, the capitalization table actually, and shows you how it is pre deal and post deal. And it is also good for me as a lawyer to get through the numbers, because you have to include it in the language and the documents, of course. But this is also about which party do I have to have what kind of influence to the deal.

You'll see that on M and A deals will actually have a table more.

With ventures, because when you're taking over 100%, you see who is the old investor and then you easily say, okay, I take them all. So from the registry you can download the shareholders list and that you can see how the quotas are between the shareholders. That is also interesting one hand, but you do not see the dilution maybe which is with convertible loans etc, etc and other instruments.

But if I'm looking to buy this company in Germany, I can actually look at that registry and see how their shareholder breakdown is.

Yes.

Wow, that's pretty cool. For any private business.

Yes. Depends. If it's KG and others, you can see how the liability apps are there, but you cannot see it all. But for typical GmbH, which is the used form in Germany actually, which is a common form to do private businesses, there you can see it and you can download shareholders list and can see the how the structure structures from the shareholders.

That's pretty powerful.

Yeah. And it's pretty transparent actually to everyone.

So I gotta ask, okay, I'm gonna buy this company in Germany, It's a competitor. Do I have to worry about like a regulatory body like in the US we have ftc, doj. There are certain thresholds where they'll really watch it. But what's that like in Germany? Because if it's buying a direct competitor.

Yeah, absolutely. Under certain thresholds, I always ask my colleagues to get the right numbers actually to the current status. Sometimes they are changing. But if you are crossing certain numbers actually like the size of the business and even it's a direct competitor, you have to look at the market shares, etc. If there is quite a risk that it could be seen from authority or could be denied, then you have to file for release from the competition authority. That is on one hand the thing which is also nowadays really important is the FDI actually foreign direct investments. Because this regulation is changing all the time and even gets tighter and tighter. And I think it's the same in the us It's a worldwide development actually right now. Because I think of the world's situation, of the wars, et cetera, et cetera. But that is something we really have to look at to get the deal really secured. Because otherwise you have the problem that might be screwed up afterwards. Because authority just jump into the deal and say that's not valid, that's for five years or so. So you really have to check do you have to apply for release or not? That's for foreign investors. Sometimes when you invest in certain areas actually which are of higher importance to Germany, for example energy or there are some branches, some thresholds you have to look at. Just have to make these checks up front so you get an idea of the deal structure. Is that something we have to get in release before closing? Because otherwise it might be not even possible to close the deal. Or it is allowed, but it could be screwed up in five years.

Okay, I gotta find a good attorney at Dentons to work with.

Yeah, I think there are many attorneys, not all at Dentons, but I think we do our best to be one of the best practices.

I'm already favored. You gave me time to give me some free advice. The biggest thing I'm really concerned about, Frank, is the HR stuff. Like any kind of people laws. Because if I buy this competitor and say this company has 40 employees, I'm probably going to want to get rid of like maybe 20, 30% of those folks that are redundant roles that we have. I've heard about this stuff. You know, different countries in different parts of Europe have their own laws. What is it like in Germany? Can I just fire everybody or no?

No, not at all. Bigger the companies and the more you have to even take care of such employment structures. And is there a so called Petriebsraat this is established. Is there a body actually which is taking care of the employees? Is there an obligation, for example to have representers for the employees in the board? Actually, because if you're above 500 employees, then you have the obligation to install a board and one third has to be representers for the employees. And then you have to make such major decisions also to be agreed with such representers Actually, I think that is also something you should take care of and which is pretty uncommon in the us we do not know this thing like working at will. What I have said to the board is even higher, like 50% when you're above 2,000 employees. There are other thresholds you also have to look at. So you're pretty much getting a qualified German lawyer doing many deals to get those smaller obstacles which might not be an obstacle, but to get these closed out. Actually you have to check whether there are some or not. Because then has also impact to the deal and deal structure and negotiations. Because you maybe have to inform the employees what's going on. I think that's a difference to the.

Us what are their big risk items. I'm even thinking about the ip. Is there going to be challenges just having ownership of the ip?

I think data protection is a big thing in the eu. In Germany or in the eu you have to follow these principles and you might have to make a deeper deep dive in tech companies when it comes to when you have customers you are dealing with who are private persons. So. And to have also data protection to the employees. And you have to really make your due diligence really into the detail here because otherwise you're facing pretty high penalties.

There's a lot of nuanced things which goes to the point of having good attorneys that know all this stuff.

Yeah.

Not to like sell you put a big plug. But like logically if you try to take shortcuts here, you're probably going to get beat up pretty hard for it.

This is of course the thing I think that's on one hand important, but on the other hand it is also when you have done it once, you maybe get used to it because it's pretty much the same. It is based on codified laws. Many of such regulations are effective for many branches. So it's a matter of getting experience when you have done three to five deals and you know how it works. I think what's also different is that a German lawyer would like to have someone at the clients from the client who is really into the details. Nitty gritty. And I can speak about such deals. Really someone who is dedicated to the deal. I think it's not so that German lawyers doing it such convenient for the client like the US lawyers do. US lawyers are more convenient more they make us more service oriented. I would say we are more to the point, pretty direct.

Let's check this out. I wanted to talk about the culture. I think this is the fun part. Let's put all the cards on the table. There's folks that love doing business with the Germans and there's folks that the Germans drive them crazy. It's fun. I gotta be mindful. I'm gonna meet our customers here in Stuttgart after this stop here in Dusseldorf. In the beginning, I remember, man, I was like, Germans are tough. Like they really get to every detail and everything's very like process driven. But then what I learned is you learn how to do business with Germans, you can do business with anybody. Like they can really teach you a lot of things. And I love having them as customers because I don't need to build a roadmap for our software. They give you all the feedback you need to create your roadmap. How do you define the culture of doing M and A with Germans?

It's funny that you are saying this in this way. I think it depends who the merkins are. There are other SEM who are just saying, I would like to get things done pretty fast and do it now and do it easy. Yes, that is always a challenge for us. We have so much regulations, we have so much details to deal with. We have formalities. For example, for restructuring I'm working for at the moment, there was just a branch to be registered. And in Germany we say this branch has to be established and then you can register it. I think it doesn't make sense for the US people because it took me a long time actually to explain and I understand where they are coming from, but they are saying, why can you not establish a branch? I say, look, it has to be established in a commercial way and then we register it. But it's always difficult because we can register it and then it is established. No, you have to establish it and then we can register it doesn't make sense at all because for them it's more about making the foundation upfront and the establishment upfront. And then you can run it from a logic perspective is clear. But in Germany for branches the other way around, it has to be established and then you have just make the formal register. That is just one detail which makes sometimes from a cultural perspective difficult. But that is also something I really like to because it gives me an impression how it is in the US And I like to work with foreign countries actually because otherwise it would be just boring everyone. I work with Mexico or other jurisdictions, it's just interesting how they see on the same things. Completely different, different way to look at it.

Okay, so this process is a big piece. It's obviously it's There.

And sometimes you forget because I'm into the details. I'm doing this like for 15 years day by day. Sometimes for me it's a hard thing. How does a US guy look at it and what is he missing in my explanations? Because I say it's a logic. This is just normal thing I'm doing all day. But I have to get the feeling what he would like me to explain him, that he got more grip on deal.

What about in the boardroom in terms of like the culture nuances you mentioned, Germans tend to be pretty direct. Yeah. Like how direct? Because I feel like Americans are pretty direct.

The start always with how are you? And stuff like that in Germany.

Small talk. Yeah.

Yeah. As a German, you get educated to ask this question and to make the small talk up front to get a good entry into the discussions. But when you're talking to German clients, then this is more getting to the details directly. We are just talking about what's going on, what is the question.

So none of the it's a nice day we're having today.

Yeah. Sometimes it's more at the end when you're closing your discussion, then you say, yeah, what's going on? Is everything all right at home? And stuff like that. But I think when you have to get things done, you're more just direct and try to solve such things and then so you don't.

So like I feel like in America it's like you pretty much time about five minutes for small talk.

Here you don't.

You just cut that right out and it's just straight into.

Yeah, I think that's mostly the case. Yes.

I like this though. I could do away with the small talk. You end up rushing at the end of the call because you just. Why do we waste time with the small talk?

Yes. But between a client and the attorney is always a relationship which is based on trust. And you have to get familiar with the other party, how he thinks, how is he feeling. And I'm always really looking for a colleague of mine, how he just let or he lead clients through the deal because that is really convenient to a client as of service. And I think sometimes we are missing. That could be more convenient. Could be. I'm trying my very best to copy it in a way. So I say okay. I do it slightly the same way. It's not so easy because when you're on a rush, then you're just acting like casual behavior. But I'm always impressed. And even for German clients, when they getting advised by a US qualified attorney that they're really happy because there's someone taking care and just doing the thing. I think sometimes even the Germany are not in favor of this direct advice.

Interesting.

Yeah, we can learn from each other. I think, I think it's on both ends.

Maybe there's a little blend you can.

I think the best way is in between.

I know when we first talked I brought up Portia. That's my. My favorite car in the world. And I drive like a 17 year old 911.

Oh, great car.

Oh my God. You appreciate German engineering. I don't have anyone. I got like a. Like I said, 17 years old, but just every little detail. And that's why I was so excited about this conversation. I'm like, is M and A engineered? And I think to a degree the codified law that we talk to. In some ways it's engineered, but doesn't sound like it's always for the greater good. Sounds like in some ways could be a little over engineered maybe.

But in certain cases, maybe not. Other cases it is over engineered. So it also depends on the deal size. If you just have a smaller investment, get things done, then it's for sure over engineered because there's so many pages, so many advice. You have higher transaction cost where you really say why do we make it so complicated to get first businesses run actually to give them some money just to act in Germany just do the same structure like you're investing in a major business. It's even difficult for such startups to even pay our fees. And that's understood, that's for sure. Because they also need a qualified lawyer. And that is even of interest to the other old investors because they should definitely do good contracts to get sanity on the documentation actually. Otherwise you may be missing certain rulings and have later on other problems actually. But make it so complicated. I don't think that's always necessary. But it depends on the deal and the size on the branch. And if you're investing in a regulatory business like energy or fintechs or in finance market, then it's even more complicated and sometimes really funny for what you have to file for and how long it takes. That's also in other jurisdictions. I think there's kind of a protection for each country to save the core businesses which are important.

There's some pros, but I think you got a good example of small deal could be over engineered case. Frank, I know we're getting close on time here. I gotta ask though, what's the craziest thing you've seen In M and A.

The funny thing is that every deal goes in the other direction, actually. Sometimes it's really smooth, but sometimes not. And sometimes it's just a small thing. I remember one case which was really crazy because there was a really good negotiated liability clause. All parties were involved. This was really crucial as it was to the burden to my client actually. So it was really tough, but it was one of the key requirements getting the investment. So to really bring skin in the game actually for my client. And then all was done. The signing run well. So everything was done. It was quite okay. And then we received the notary deed, which is actually the executed version of the documents. And we look into the documents just as we always just make a sanity check if everything is included. And actually they missed that clause. So the notary has just missed that clause. And that was of the benefit to our client. And we felt to have a challenge here.

Looks like a liability clause.

Yeah, that was really liability clause that everything he owns could be included in his liability when it comes to breach of a guarantee, etc. Really tough because in Germany, normally you have that structure that the GmbH is a protection to your private owner money. But in this clause were really tough and really one of the heaviest clauses I've ever seen. But they just missed it. And we thought, okay, should we now go to our client? We have of course directly informed our client, but should we go to the notary and say, you missed something? But that was to the burden of our client and we were just waiting. But on the other side, it was just obviously missed. It was something which should be included. So we were really one day negotiating in the team how to handle this. And then the other party, other attorney in the meantime has also checked the documents and mentioned it. And that was good for us because we had to mention it. We definitely would have done it in this case. It was just helpful that the other party has done it. We just said, okay, that was obviously wrong, so it has to be corrected. And then the notary has corrected and everything was okay. But first of all was really shocking.

Double, triple. I would have kept my lips sealed, but I guess it worked out at the end.

Yeah, at the end was good. As we are also being part of the legal market and the legal system in Germany, we as an attorney are obliged also to correct things which are obviously wrong. So that's also duty to us. So we had to correct it. But on the other side, it was good that we were not the person to mention it.

That's awesome.

Was quite helpful.

Frank. This has been a great conversation. I appreciate taking the time helping me learn a lot more how deals get done in Germany.

It was my pleasure, Alex. It was nice talking to you.

Those of you still listening, thank you for sticking through.

Love to hear feedback.

Till next time. Here's to the deal.

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