Analysis: Czech, Polish firms snap up German Mittelstand bargains

Grupa Recykl SA

17/10/2025 07:00

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      CEE firms keen to build German contacts 
    

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      Succession issues also open up targets in Germany
    

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      German businesses navigating a tough economy
    

  
    By Michael Kahn and Anna Koper
       PRAGUE/WARSAW, Oct 17 (Reuters) - A growing wave of
bankruptcies in Germany's stuttering economy is spurring Czech
and Polish businesses to snap up struggling companies across the
border to fuel expansion into Europe's largest market and
beyond.
    The trend underlines how, three decades after the fall of
the Berlin Wall, the companies of ex-communist central Europe
are often leaner and more agile than German "Mittelstand" peers
whose baby-boomer owners are now hitting retirement age.
Czech producer of fruit brandies R. Jelinek earlier this year
bought Berlin's largest artisan distiller BLN to strengthen its
position in the German market and gain access to big grocery
chains like REWE and Edeka.
    "Our main driver was to enter the key market through the
acquisition of a local brand and personnel with German market
expertise," R. Jelinek Vice Chairman Zdenek Chromy told Reuters.
"The economic cycle has naturally created a need for
consolidation which has opened up opportunities," he said of a
German economy suffering its longest downturn since World War
Two and with bankruptcies up over 9% in early 2025.
     These small and medium-sized businesses, thousands of which
are planning to shut down by the end of the year, are part of
the 99% of German firms known as the Mittelstand. Often
family-run, many are hitting a demographic wall as the children
of their ageing owners have no interest in taking over.
    "In a period of economic weakness and in light of many
unresolved company successions, there are entry opportunities
into the German market," Marc Tenbieg, president of the
Mittelstand association, told Reuters. 
     Reuters spoke to more than a dozen economists, analysts and
companies to shed light on how Czech and Polish businesses are
using their financial strength to plant a foothold in Germany,
especially in manufacturing, logistics and export-driven
sectors. 
    Not only are German corporate valuations being weakened by
the stagnating growth rates of the wider economy, Czech and
Polish firms are also benefiting from ample liquidity and a
period of relatively low borrowing costs.
    "Germany is relatively 'cheaper' today ... which increases
the attractiveness of assets to foreign buyers, including those
from Poland," Lukasz Chrabanski, head of the Polish Investment
and Trade Agency foreign office in Frankfurt told Reuters.
     While precise data highlighting the trend are scarce, the
latest figures from Germany's Bundesbank show Czech investments
in Germany soared nearly 30% to almost 5 billion euros in 2023.
Six takeovers of German entities by Polish companies have been
notified since the start of this year, up from two deals in the
whole of 2024, the data by Navigator Capital showed.
  
     
    CZECHS, POLES READY FOR EXPANSION
    Petr Kozel, the owner of Czech cargo company VCHD, told
Reuters the time was ripe for his business to expand operations
in Germany, where it sees few new local players entering the
market while existing ones struggle with succession problems. 
    "Medium-sized companies with lean structures and direct
owners who can make quick and long-term decisions are now at an
advantage," he said.
    Many of the Czech and Polish businesses scouting for
opportunities in Germany set up shop in the early 1990s
following the fall of communism and have now matured to the
point where they need to look beyond their borders. 
They can also source services back home where labour costs are
often lower while injecting more nimble management structures
into family-owned businesses, the companies and economists say. 
    "Germany has always been a big brother for us with German
companies mainly only coming to Czechia," Adam Jares, director
of Germany for the Czech government's CzechTrade office, told
Reuters.
    "Nowadays Czech companies are at the point where they have
had 25-30 years to build the business and are now ready for
further growth."
For Czech and Polish companies looking to take a bite out of
Europe's largest market, the small and medium-sized enterprises
just across the border make sense, given they account for half
of Germany's economic output and nearly 60% of jobs. 
Szymon Bartkowiak, the chief executive of Polish firm TT PSC,
said its 2025 deal for German information technology provider
x-Info Wieland Sacher had already yielded a flurry of new
contracts.
The purchase announced this year by Polish waste management
company Grupa Recykl of Germany's HRV is also a win-win, the CEO
of the Polish company said: Grupa Recykl will gain better access
to a market nearly three times bigger than its home market while
it will give HRV access to a financially-strong international
partner.
A survey by German state-run development bank KfW showed around
231,000 SME owners plan to close their doors by the end of this
year - 67,500 more than a year ago -- providing plenty of
choices for cash-rich Czech and Polish companies.
    "In my view, for the Czech firms, there’s a three or
five-year window of opportunity to acquire stakes in German
companies,” ING Chief Economist David Havrlant told Reuters.

(Additional reporting by Gergely Szakacs in Budapest and Maria
Martinez in Berlin, Editing by Mark John and Toby Chopra)
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