German Federal Court of Justice strengthens management participations in private equity structures
In its judgment of 10 February 2026, the German Federal Court of Justice (Bundesgerichtshof, “BGH”) confirmed the validity under corporate law of a leaver provision commonly used in private equity structures. The BGH clarified that the compulsory repurchase of a management participation is not equivalent to a squeeze-out under corporate law, but must instead be assessed with the principles governing termination clauses (para. 32). The decisive factor is not an isolated assessment of individual contractual provisions, but rather an “overall assessment of all circumstances of the individual case” (para. 47).
