A distinctive feature of the Netherlands has always been a comfortable business environment, openness to innovation, and a favorable investment climate. Another compelling advantage is the ease of entry into the EU market, which is why businessmen are often interested in the regulation of mergers and acquisitions in the Netherlands.
This blog post describes the key features of entering into M&A transactions in this jurisdiction.
Types of mergers in the Netherlands
The most typical structure for buying a private company in the Netherlands is the purchase of its shares or assets. In this case, the seller and the buyer enter into a sales contract.
Private M&A can be done through a two-way process or auction to sell the company in the Netherlands. There are significant differences between these two processes.
The two-way process includes the following stages as standard:
- signing of NDA and protocol of intent;
- due diligence of a Dutch company;
- discussion of points of the sales contract and its signing;
- closing the deal.
The auction process includes additional legal steps:
- preparation for the auction phase;
- signing the NDA;
- issuance of a technology letter to bidders;
- due diligence of the company and submission of mandatory and optional bids by bidders;
- negotiations with selected bidders and due diligence of the transaction in the Netherlands;
- entering into an exclusive agreement with the preferred bidder;
- signing the sales contract;
- break between signing and closing the deal;
- closing the M&A deal in Holland.
Please note that despite the additional steps, the auction process often takes less time than the two-way process.
Legal aspects of mergers in the Netherlands
If you seek opportunities in the Netherlands, you should be aware of the fact that here, private purchases and sales are not governed by a single code or law. Under Dutch law, the deal participants have the freedom to agree on the terms of purchase. The parties are free to choose the law in relation to the purchase of shares, business, or assets. There is only one exception when they cannot choose when it comes to the transfer of registered shares and property, which is only regulated by Dutch law.
Businessmen planning to conduct an M&A deal in the Netherlands should be aware that local regulating bodies strictly monitor transactions that could lead to competition problems. If the transaction qualifies as a concentration and the total turnover exceeds certain thresholds, then the measures provided for by the Competition Law can be taken.
It is also important for entrepreneurs who are preparing for an M&A deal in the Netherlands to take into account that coronavirus pandemic and subsequent national and international containment measures have impacted the Netherlands' economy greatly. Today, a 15% decline in economic activity is observed with forecasts for moderate recovery by the end of this year. Nevertheless, even in an economic downturn, there is funding available for an appropriate acquisition.
If you have any questions about this topic, please reach out to us to schedule a consultation on Dutch M&A regulation in relation to private transactions.