American investors are increasingly acquiring European companies, prompting calls for new ownership models to protect economic sovereignty.
Donald Trump’s presidency began with a focus on trade protectionism and geopolitical expansionism. But sovereign states appear not to be the only “commodities” the United States is targeting. The “financial class”, as recently noted by The Economist, “have escaped the anti-globalist revolt” associated with Mr Trump’s “Make America Great Again” movement. The US, it seems, is now pursuing European capital.
Indeed, as recently reported by the Financial Times, the value of US-based private equity buyouts in Europe has increased at twice the rate of the rest of the world. The total value of US-held European business assets has surged from $1.05 trillion in 2011 to $3.79 trillion in 2024, with nearly 32 percent of European assets currently held by American investors.
As one analyst at Morgan Stanley explained, US investors are exploiting a financial arbitrage, “buying into Europe and being tactical about what capabilities they want to acquire”. European companies are seen as structurally undervalued. This is partly attributed to a weak euro. Another contributing factor is underdeveloped capital markets, or rather, an increasing supply of business ownership opportunities with insufficient demand to consolidate the market.
Transfers in business ownership are accelerating across Europe. There appears to be a generational shift occurring among the owners of European companies, and the continent seems ill-prepared for it. The European Commission warns that every year, 600,000 businesses are changing ownership, with a third threatened by a lack of succession options, leaving billions of euros worth of European capital vulnerable to takeover by global financial “predators”. This is corroborated by recent figures from other European countries. In Germany, 626,000 businesses are planning a business transfer in the next two years – a substantial 16 percent of all small and medium-sized enterprises (SMEs).
In Slovenia, the University of Ljubljana conducted a survey among business owners in 2024 to study this trend. Based on recent developments, the results may not be surprising, but they are certainly a cause for concern. Thirty-four percent of all closely held enterprises are expected to change hands in the next 10 years, with 75 percent of owners unaware of who will be taking over the business.
The question of who will acquire European companies and how is fundamental to the stability of national and local economies, and ultimately, it concerns Europe’s economic and political sovereignty. SMEs are a crucial job engine, responsible for 71 percent of employment growth in the non-financial economy. Local companies are sources of innovation and competitiveness, and “represent the lifeblood of local economies and communities”.
In the case of financial takeovers, the consequences for economic and political stability can be dire. Many commentators have discussed the effects of the private equity industry not only on the sustainability of the businesses themselves but also on employees, local communities, and other stakeholders in the value chain. While the European Commission emphasises “strategic autonomy” as one of its top industrial policy priorities, it remains unclear what concrete and systemic measures it is proposing to prevent this “shopping spree” of European businesses.
“Ownership protectionism” – localising business ownership – presents a path with significant potential. Around the world, various ownership structures exist, including steward ownership and employee ownership, where control and financial interest are anchored, over the long term, in the hands of local communities, employees, and other close stakeholders.
For some, it may be surprising that localisation comes at no cost to efficiency and business growth. Instead, such businesses tend to outperform conventional competitors and demonstrate improved crisis resilience.
There is no need to “reinvent the wheel”. In the US and the UK, ownership of more than 10,000 businesses has been “taken out” of the market and anchored in local communities. Employee buyouts are facilitated through perpetual trusts, prioritising long-term value creation over short-term financial extraction.
The so-called ESOP model is a type of leveraged buyout where the main idea is that workers do not have to invest their own savings. Instead, the future profits of the business are used to pay off the debt incurred for buying out the business. In this way, the models allow employees from all ranks, not only management, to participate in ownership. And it is less risky than some might expect. Research shows that default rates on ESOP loans have been well below comparable private equity deals.
One way, therefore, to counter trade protectionism and financial expansionism is through business ownership protectionism. While further research is needed to develop evidence-based policy, much is already known from international experience. It is well understood that special legislation must be enacted to provide regulatory certainty for sellers and sustainable models that anchor ownership securely. Fiscal incentives that favour employee buyouts over financial buyouts are also known to play a crucial role in facilitating these transitions. Furthermore, it is essential to develop a robust financial infrastructure with a range of financing instruments that can support leveraged buyouts and decrease risk for private lenders.
In addition to strong support for the ESOP model in the US, the UK, and recently, Canada, examples of supportive measures include “coopératives d’actionnaires salariés” in Quebec, the cooperatives supported by the Marcora law in Italy, “sociedades laborales” in Spain, and the “Fonds commun de placement d’entreprise” (FCPE) de reprise and “les société coopérative” (SCOP) in France.
The need for such policies is even more pressing given the lessons learned from past trade conflicts. Canada’s experience with US tariffs under the Trump administration serves as a cautionary tale. Writing in the Toronto Star, Jim Stanford discussed the severe economic impacts of protectionist measures but pointed out that real resilience was found not in top-down policy shifts but in community-rooted ownership models that insulated businesses from external shocks. When businesses are controlled locally, they are less vulnerable to geopolitical “whims”, ensuring continuity and stability even in turbulent times. In achieving this, Canada will surely benefit from recent ESOP legislation, which mimics the US and UK models. US senators just introduced the American Ownership and Resilience Act to prevent foreign takeovers and closures of U.S. businesses.
Europe should take note. The defence against financial expansionism is not merely in regulatory countermeasures but in the proactive establishment of ownership structures that embed businesses within their communities. Just as cooperative and employee-owned firms are helping Canada and the UK resist “predatory” takeovers by emphasising local stakeholder interests, the EU should step up in creating measures to secure long-term control in the hands of those who contribute to their success.
The window of opportunity for effective defence may be narrowing. A decisive industrial policy that puts a figurative “not for sale” sign in front of Europe’s businesses could help protect European economic autonomy from the “whims” of global capital.
Dr Timothée Duverger is head of the TerrESS Chair at Sciences Po Bordeaux and a researcher at the Centre Émile Durkheim. He is also co-director of the Observatory of Local Experimentation and Innovation at the Fondation Jean-Jaurès. His books include The social and solidarity economy (La découverte, 2023).