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Spain is a developed European country, which, despite the leaps and a series of crises, has always been distinguished by high investment attractiveness.

2020 has changed a lot for the worse for most countries in the world. The negative impact on the Spanish economy due to the coronavirus outbreak is very serious, although there is still a lot of uncertainty. Now the Spanish economy is falling to 12%. However, under various scenarios predicted by the Bank of Spain, economic recovery will begin in 2021, with projected growth between 5.5% and 8.5%. Along with positive growth expectations and profitability of Spanish companies, a positive outlook in the Spanish M&A market is anticipated. Moreover, the country has an advantageous position as a result of having first-class companies at more affordable purchase prices than in other EU member-states. There are many transactions in booming sectors such as technology and media.

If you are planning to start an M&A deal in Spain, you may find this blog post helpful.

Public information

If you are planning to register a Spanish SA or SL, it is important to know that such companies must submit an extensive package of documents that become publicly available online in the Commercial Register, including:

  • company charter;
  • audited financial statements;
  • composition of the board of directors;
  • shareholders decisions related to the company's charter, or any amendments to such matters;
  • details of changes in the company’s authorized capital;
  • annual reporting.

Detailed information on registered IP in Spain can be obtained from the Spanish IP Department.

Due diligence

Due diligence of private M&A deals in Spain allows potential buyers to assess the company from different angles. Before signing an agreement on the merger of companies in Spain, a comprehensive analysis is carried out. A detailed study of the company's dossier, where events are investigated in chronological order, including financial statements and other internal documents. Experts, by analyzing the current position of the company, determine its adequate value. Therefore, in order to make decisions regarding companies mergers and acquisitions in Spain and in other jurisdictions, it is strongly recommended that a preliminary thorough analysis by lawyers, financiers, accountants and other specialists is made in accordance with the company’s area of activity. In any case, one should remember that in this competitive environment, timing is more critical than ever.

The main goal of due diligence is preventive protection and minimization of existing risks. Within its framework, the following vulnerabilities can be found and analyzed:

  • Legal, administrative and tax risks with accountability;
  • Risks associated with labor law;
  • Recognition of the transaction as invalid;
  • Overestimation of the book value of tangible assets;
  • Loss of intangible assets: loss of reputation, intellectual property, etc.;
  • Corporate structure risks;
  • Cases of unfair competition, etc.

Employment matters

When companies merge to conduct common activities with the distribution of profits among themselves, this can not be perceived as a reorganization and such associations do not affect labor relations – in this case, employees remain working at their workplaces and under the same conditions. The acquisition of shares in a Spanish company does not change the employer's responsibility, and only changes his property, but not his position. Therefore, pensions and other benefits will be automatically transferred to the target company's employees following the M&A transaction.

When one or more legal entities cease their activities for the sake of creating a new legal entity, then the legal successor, or one of the legal entities joins the legal successor, the solution of issues of labor relations with employees of the reorganized enterprises is a priority.

Correct registration and compliance with the mandatory procedure for the release and recruitment of such workers will allow employers to avoid labor disputes.

The IQ Decision UK team is ready to provide the necessary information and assistance in M&A transactions in Spain. Reach out to us at the contacts listed on the site.