Five years back, less than 5% of all deals with foreign investors in Germany were subject to foreign investment control by the Federal Ministry of Economics and Energy. This number has grown year on year since and peaked in 2020 with c. 180 foreign investment control proceedings relative to c. 850 deals with foreign investors:

Source: PWC, BT-Drs. 19/23507 and own information.

Still, these numbers are a rather conservative picture since roughly 50% of deals involved foreign investors from within the EU for which German foreign investment control is not always relevant and since the UK, despite having left the EU, benefitted from "EU-equivalence treatment" until the end of 2020.

For 2021, a further increase in number of foreign investment proceedings is expected, driven by

1. more M&A activity as the pandemic hopefully eases (but also as the number of transactions involving distressed businesses may grow),
2. UK investments coming into scope (considering that the UK ranked 2nd by number of deals in 2020 despite Brexit-uncertainty),
3. the expected widening of the sectors which trigger mandatory foreign investment review in the coming months, affecting sectors such as tech, which are particularly attractive to foreign investors (number of foreign investments in German targets active in the tech sector increased in 2020 by 27% relative to 2019 and should increase further driven by the pandemic-induced boost to digitization).

While the Federal Ministry of Economics and Energy has increased its resources for review proceedings to some extent, companies engaged in M&A should consider foreign investment control at a very early stage of the deal process since foreign investment proceedings may be subject to rather long timelines. Such timelines might well be affected by the sharply increased number of filings. However, with early preparation, such timelines can be managed.