Churchill was quite aware of the danger from invasion but, as he told Lord Beaverbrook in June 1940, he doubted whether the Germans could mount it successfully - "I think they might recoil eastwards" he said. In the event Churchill was right.
Although the Germans had used paratroopers to some effect in the Netherlands, as Crete was to show they would not necessarily have been effective in a larger operation. I'm sure they would have been used, but the Germans would have learned their lesson a little earlier.
As far as the German Kriegsmarine is concerned they simply were not up to the job they would have been set. All the RN had to do was destroy a goodly proportion of the German landing craft. Many of the troops that Hitler could send would have simply ended up at the bottom of the Channel. With the Russians breathing down his neck this was simply not an option for Hitler. His forces lacked an overall strategic dimension (as the failure to cross 20 miles of open water graphically demonstrated)and were designed for ground operations in mainland Europe. It is interesting that, while announcing to the worlds press that they were producing larger numbers of aircraft for attacking England, Hitler had secretly ordered a vast expansion of his tank forces for continental use.
Hitler is said to have told Keitel "I have no intention of taking such a risk", while preparations for Barborossa were ordered to be disguised as moves against Britain. As A.J.P.Taylor said "As an operation of war Sealion did not exist" and, as the German High Command joked at the time "Sealion was contemplated but never planned".

Chris Ray.