M&A Deals in Spain

How do privately-held companies, businesses & assets get bought & sold?

The most common way of buying or selling privately-held companies, businesses or assets in Spain involves directly purchasing or selling stakes of companies owning a target business. Directly selling a business is a rare practice & is mostly resorted to when only a part of a target business needs to be sold.

What Do Typical M&A Deals in Spain involve?

Purchasing businesses, companies or assets in Spain depends on many factors, such as:

• how many parties are involved; 
• whether a deal includes two-party negotiations; 
• whether there’ll be an auction involving more than two potential purchasers. 

A deal involving two parties normally includes signing these documents:

• NDA;
• MOU;
• SPA, TSA & SLA; 
• a deed transferring ownership rights in Spain to the purchaser.

An auction comprises several stages, such as:

• compiling a teaser;
• preparing for DD & compiling an SPA;
• potential purchasers’ expressing interest & conducting DD in Spain;
• conducting DD & making an offer; 
• conducting talks on finalizing a deal.

Duration

Depending on the scope of a deal, it may take up to 4 months to complete an M&A transaction in Spain. Because there’s hardly any competition during the process, two-party deals may require more than four months to finalize. 

Legal Framework

Basically, M&A deals in Spain are governed by contractual terms. Though there’s some provisions regarding selling & purchasing products, stakes & services in Spain, they may be get replaced with parties’ contractual obligations in an SPA. 

Despite the fact that the majority of M&A transactions in Spain are governed by Spanish legislation, foreign laws can still be applicable. However, for that to happen, Spanish M&A regulations must be complied with. 

Spain: Foreign Investments

Pursuant to Spanish legislation, all overseas investments in Spanish corporate entities must be reported to the country’s financial regulators within 30 days of such an investment.

For investments exceeding fifty per cent of a target company’s capital an early notice is required.

Is Consent of 3rd Parties a Must?

Getting a 3rd party’s consent depends on a specific law regulating the transferring of liabilities & assets in Spain. When it comes to acquiring a company or business in Spain, the Spanish law requires sellers to transfer their obligations to buyers.

Documents

The usual set of documents required to proceed with an M&A transaction in Spain includes:

• SPA
• confidentiality agreement;
• a letter of disclosure;
• SLA/TSA; 
• documents confirming registering or transfering a title in Spain.

Also, purchasers may need to forward several letters to sellers expressing their willingness to go ahead with a deal & conditions on which they’re ready to close an M&A deal in Spain.

Spain: DD

Allowing purchasers to assess a target company’s financial & legal status, DD is normally undertaken to verify:

• company’s ownership;
• company’s legal status;
• company’s assets & liabilities;
• intellectual and real property;
• company’s compliance with M&A legislation in Spain

Taxation

Transferring stakes, businesses & assets in Spain usually entails no taxation. However, there’s certain exceptions to this rule:

• if a company’s assets include Spanish real estate;
• if a deal isn’t subject to VAT.

Conclusion