Recent research indicates that leading German executives are increasingly viewing M&A as a tool for strategy, not just an option. 58 % of German CEOs responded in the KPMG CEO Outlook 2025 that significant takeovers are probable — a leap up from only 40 % last year.

Meanwhile, industry-specific studies like the Ansarada/Mergermarket “2025 Germany M&A Outlook” reported that 74 % of German deal-makers anticipate greater domestic deals in 2025 compared to 2024 — and 28 % foresee a “significant pick-up”.

These numbers indicate a change of heart: confronted with declining organic growth, rising costs, regulatory complexity and digital disruption, German companies are increasingly resorting to inorganic growth through M&A as a way to grow faster, gain capability, or consolidate in fragmented segments.

Why the change? Drivers of the deal appetite

There are quite a few interlocking drivers for this growing M&A sentiment in Germany:

Stagnant growth horizon. The KPMG survey indicates just 72 % of German CEOs anticipate that their businesses will expand in the next three years — down from 80 % in 2023.

With reduced growth, businesses are under pressure to identify levers other than organic growth.

Need for strategic change. German businesses are under immediate stress on digitalisation, the take-up of AI, re-shaping of supply chains and raised competition. In such a context, transactions provide an avenue for acquiring new abilities, technology, access to markets or cost savings faster.

The Ansarada poll, for example, discovers that 68 % of interviewees anticipate industrials and chemicals to experience robust deal growth, and a number mention supply-chain optimisation as a significant driver.
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Market fragmentation / Mittelstand consolidation. Germany’s economy is dominated by a multitude of medium-sized companies (the “Mittelstand”). Quite a few of these companies are ready for consolidation as buyers or sellers, as they desire size, or wish to retire. In the Ansarada survey, 56 % saw rising M&A in the Mittelstand positively.

Cost, regulatory and competitive pressure. In the face of global competition, growing cost pressures and regulatory load, companies view M&A as a strategic option to create resilience, reduce risk and reposition themselves for shifting markets instead of incremental expansion.

Is there more consolidation to come in German industry? Yes — but with qualifications.

With the above, one can anticipate an increase in consolidation in German industry — although the pace, volume and sectors will be relevant.

Sector set to lead: Heavier-industrial industries like chemicals, manufacturing, supply-chain pieces and industrials are likely to have more consolidation, per the data. Ansarada/Mergermarket research highlights industrials & chemicals as a leading space for deal growth.

Moreover, transactions focused on developing digital capability or to counter service-model transformations (e.g., software, data, digital services) might catch up.

Consolidation first at home: The belief that 74 % of respondents expect more domestic deals in 2025 indicates that consolidation would first be inward into Germany — amongst local players or medium-sized companies — as opposed to huge international inbound deals.

Mittelstand transactions: Since numerous German medium-sized businesses can be aging, searching for succession options, or in need of scale, a tide of acquisition in this space appears possible. The merger of Mittelstand companies could result in smaller but more substantial domestic champions.

But several caveats moderate the outlook:

Valuations, financing and regulatory challenges. Even if sentiment is robust, true deal completion relies on valuations being acceptable, financing being accessible (particularly if interest rates remain high), and regulatory/government scrutiny (especially in Germany/EU) not overwhelming. For instance, Bundesverband Mergers & Acquisitions (BM&A) Climate Monitor reported that sentiment in the large-cap segment was “subdued” in early 2025.

Integration and implementation risks. Consolidation is only effective if post-merger integration is achieved. German companies need to handle cultural fit, systems, regulatory adherence, and talent retention—particularly pertinent as digital/transformation transactions tend to rely on human/tech capabilities.

Macro/market risk. German growth opportunities are weak and external forces (geopolitics, supply chain disruptions, energy prices) remain in place, so companies can still remain cautious about making big commitments until the outlook settles down. The KPMG survey indicates management confidence is declining.

What this means for stakeholders

For target firms (particularly mid-sized businesses): It is time to review strategic exit opportunities, or alliances with bigger buyers. With more buyer demand, valuations can be advantageous.

For acquirers: Practioners may have to act fast to close deals but need to maintain a due diligence robustness, particularly for digital/technology acquisitions where integration risk is elevated.

For employees / workforce: Consolidation tends to mean change. Target firm employees could encounter restructuring but consolidation can also lead to scale, investment and future growth opportunities.

For the wider German economy: If stronger, more internationally competitive German companies are propelled through consolidation, the economy can gain from greater productivity, increased innovation and internationalization. But if the trend is sluggish, disjointed or badly integrated, gains are likely to be uneven.

Conclusion

Increased M&A enthusiasm by German CEOs is a pragmatic reaction to limited organic growth and structural transformation. The evidence points towards a plausible direction for increased consolidation in the German industry — particularly in domestic markets, the Mittelstand sector and among industrials/digitally-anchored companies.

The actual question now becomes less about whether transactions will occur and more about how effectively they will be undertaken, how integration is handled and whether consolidation provides the desired competitive advantages. If German industry seizes this chance wisely, we could very well be experiencing a period of reindustrialization — and one with positive potential for companies, workers and the overall economy.