An equity solution can also be the prelude to a full acquisition. This is possible because agreements have been made with the investor at the moment of the investment to carry out a full acquisition or based on joint agreement on an exit, often with the intention to sell the company either in full to a third party or to carry out an IPO.
A full acquisition can also be a relevant solution without a preceding equity participation. Especially in sectors were Technology has a major inspect, you can see companies innovate, change, grow or collaborate by acquiring or disposing of companies or specific assets. Especially in these situations, that are often transformative for a company and its stakeholders, it is important that you have a legal business partner who can reduce the risks of this process in an efficient and pragmatic manner. A partner who can function as an extension of your own organisation.
As with the equity solution, we offer a complete range of legal M&A advisory services for full acquisitions, taking into account the major differences concerning the integration of the two companies after completion of the transaction (see below). Click here for an overview of the work that can be expected from us as legal advisers if you consider selling your (portfolio) holding.
Highlights:
Post-merger integration
Contracting
Good cooperation goes hand in hand with agreements laid down in clear contracts with applicable provisions. Operating as a Tech company in a regulated market is an added dimension. There is a (strong) supervising framework that may impose conditions on a cooperation such as maintaining and/or acquiring permits and/or disclosing information to supervisors.
Regulatory Advice
Regulatory means the regulation of companies and activities. These regulations may concern market access, requirements for the company and its products and/or services, and cooperation with other parties. Examples are mandatory disclosure of information to the competent supervisory authority such as DNB, the AFM, the ACM, the AP or the NZa, or review of the cooperation based on competition legislation. Regulatory also concerns privacy laws and regulations, which are relevant for a company processing personal data. The expectation is that (future) investments in companies that are essential to the Dutch economy will be subjected to a formal investment check.
Employment benefits
Staff and employment conditions are an important issue during mergers or acquisitions. In case of a company transfer, involved employees will also be transferred to the partner while retaining their employment conditions by operation of law. There are also significant exceptions to this rule that require the employment conditions to be identified in advance. The rights of the works council or lighter forms of employee participation are also important. The works council will usually have advisory powers in case of a proposed decision on a merger, split or cooperation. Certain employees may be granted special rights such as options or incentive plans in case of partnerships. Various rules apply in this regard. You will need to study whether such rights are considered income by the Tax Authorities. Companies in the financial sector must also determine whether the incentive is possible within the applicable remuneration rules. All kinds of arrangements will need to be established, for example, a whistle-blower scheme with corresponding advisory powers by the works council. The team is in the possession of this expertise and experience.
Intellectual Property (IP)
If tech, innovation, content creation or distribution are part of your core business, the importance of timely your protecting intellectual properties cannot be emphasised enough. Examples are ensuring the correct IP registration, setting up a fitting organisational structure, and making sound (contractual) agreements. The latter applies, particularly, to joint ventures. Tech companies absolutely need these agreements if they freely want to exploit their products and services in the field of tech, innovations or content. When concluding a partnership, we can study in advance, based on a due diligence, whether the right licenses and present and how trademarks, copyrights and IP rights are protected.
Privacy & Compliance
An area of concern is compliance with privacy legislation. What personal data are processed by whom and why? What does this mean to the cooperation? What (security) measures are necessary? Privacy compliance is a critical theme as the General Data Protection Decree comes into force on 25 May 2018 and the penalties are increasingly higher.
Cyber attacks are becoming more effective and take place at a greater scale. They are a serious threat to companies. The contract will need to describe who is liable for the prevention of incidents and when these actually take place.
Finance Docs
- Legal Opinions
- Loan documentation
Security Docs
Sell side vendor/buyer Due Diligence
The books have to be audited in the context of a transaction. If the sale of a company is organised based on the principle of a controlled action, we can draw up a legal vendor due diligence report. We thoroughly review all legal documentation from the perspective of a buyer. This enables any issues to be addressed at an early stage to avoid any disruptions to the process. This means that the seller is properly prepared for the negotiation process. It also enables a seller to request a brief and focused due diligence process from candidate buyer to achieve a faster exit. We also carry out a due diligence when we act on behalf of a buyer to identify any legal risks associated with the company to be acquired. In both cases, clients can rely on the expertise of a multidisciplinary, integrated team where the day-to-day operational experience of lawyers in the privacy, IP, IT, regulatory and employment domains are linked to transaction strength.
Transaction documents
The commercial agreements and risk spread between the parties must ultimately be captured in clear and understandable transaction documentation. A thorough due diligence investigation is of considerable interest because these results are ultimately an important part of the 'risk appetite’ of the parties. Clients benefit from the availability of a team of legal advisers that understand the risks and can help make commercial choices and translate these choices into clear agreements.
Transaction structuring
Mergers and acquisitions are complex processes with a particular dynamic of an often a cross-border nature. Because of this, it is important to think about the best possible transaction structure at an early stage. This particularly applies to technology-driven transactions because of the importance of data, intellectual property, IT infrastructure, taxation, laws and regulations and employees. Our multidisciplinary team of lawyers, civil law notaries and tax consultants can help you make the right choices to set up the best possible transaction structure.
Employee consultation requirements
Transactions of a certain size will usually involve a (central) works council and possibly even trade unions. Our team has extensive expertise in managing these stakeholders and supervising these consultancy processes for transactions.
Antitrust
Certain transactions must be reported to the Dutch Consumer & Market Authority or the European Commission. Our firm has a team of competition law attorneys who are able to advise clients on notification processes to the aforementioned authorities. Filings in multiple jurisdictions may be required and our team often plays a central role in coordinating these filings to make sure the procedures take place efficiently.
Acquisition finance
Information about the other involved party is often required for transactions. However, the exchange of information may lead to a limitation to the competitiveness, especially if it concerns the exchange of commercially sensitive information between (potential) competitors. Our competition is specialised in assisting parties in this respect to avoid competitive risks. We give advice on what information can be shared, to whom, and under what circumstances.
Post-merger integration
A special aspect of a full acquisition is that after completion of the transaction two companies will need to be converted into a single company (as with a merger) or that a newly purchased company will need to be integrated into the new parent company. That means that for the sale of a (portfolio) company, an analysis will need to be made of the buyer landscape and that an analysis of the integration risks needs to take place to ensure that these risks can be addressed in the transaction timetable and documentation at an early stage. These risks are all the more relevant for Technology-driven risks due to the important role of IP, IT, Privacy and Employees in combination with the influence of sector laws and regulations.
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