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How to handle the target's employment contracts in an M&A transaction
City-Yuwa Partners
  • Japan
  • 27 January 2021

When conducting M&A transactions in Japan, one of the most important considerations is how to handle the target's employment relationships. In Japan, it is generally difficult for an employer to dismiss employees or change their employment conditions to ones which are disadvantageous without obtaining the employees' consent. Therefore, buyers must carefully examine a target's existing employment contracts and the effects of the M&A transaction on its employment relationships.

Reducing share capital: current law and expected changes
Meyerlustenberger Lachenal
  • Switzerland
  • 20 January 2021

In June 2020 the legislature passed draft modifications of Swiss corporate law, which would amend, among other things, substantial parts of the Code of Obligations. This marked the end of what is generally known as the 'large corporate law reform' which officially started in 2007. As part of these 'final' modifications, the provisions concerning the reduction of the share capital of Swiss corporations will be amended.

Snapshot: private fund registration – what have we learnt?
Ogier
  • Cayman Islands
  • 13 January 2021

For the best part of 20 years, private equity sponsors and their global advisers have been attracted by the Cayman Islands' neutrality, efficiency, quality and flexibility – but also by its predictability. So, when the Cayman Islands announced in early 2020 that all Cayman-domiciled closed-ended funds (including private equity and real estate funds) would be required to register with the Cayman Islands Monetary Authority by August 2020, this seemed like a shake-up.

Jersey – a home for private equity fund managers
Ogier
  • Jersey
  • 06 January 2021

Jersey is witnessing a spike in the inflow of private equity fund managers establishing a physical presence on the island. A number of household name fund managers across all asset classes now call Jersey home, with others in advanced stages of planning to follow them into Jersey. What are the principal drivers of this trend?

Financing M&A deals
Kayum & Demir
  • International
  • 23 December 2020

At its core, financing constitutes using a fund which incurs the lowest cost for the borrower and provides the highest rate of return for the financier. Each party has their own considerations in an M&A deal which are reflected in the financing of the deal as much as in the deal itself. This article sets out the most common ways of financing an M&A transaction.

SEBI tightens grip on M&A by listed companies
Lakshmikumaran & Sridharan
  • India
  • 23 December 2020

Owing to market dynamics and in an attempt to clear certain regulatory cobwebs, the Securities and Exchange Board of India recently issued a circular which applies to all mergers, demergers, amalgamations and arrangements filed with a stock exchange after 17 November 2020. While the circular will undoubtedly ensure higher levels of transparency and disclosure with respect to proposed schemes, it has introduced additional responsibilities for listed companies' audit and independent directors' committees.

Global Britain? Rules, Britannia: Britannia screens the investment waves
Gowling WLG
  • United Kingdom
  • 02 December 2020

The government recently published the National Security & Investment Bill. In a marked contrast to its 'Global Britain' aspirations in a post-Brexit world, the bill will create a mandatory screening regime for investment in certain core areas of the UK economy in which national security risks are considered more likely to arise. This article considers the key implications of the proposed new regime for investment in the United Kingdom.

Private M&A deals: Paris Court of Appeal manual for overriding termination clauses
AyacheSalama
  • France
  • 02 December 2020

In acquisitions of group companies, the agreements entered into by the parties are often subject to termination clauses. If the conditions of a termination clause are met, the beneficiary of such clause can choose between terminating the agreement and waiving its termination right in order to obtain the contract's performance. A recent case before the Paris Court of Appeal provides an example of the issues that may arise when a termination clause is insufficiently accurate.

Scheduling M&A transactions: practical considerations regarding FDI
City-Yuwa Partners
  • Japan
  • 02 December 2020

When a non-Japanese company or investor proceeds with an M&A transaction in Japan, one of the key regulations to observe is the Foreign Exchange and Foreign Trade Act (FEFTA), which regulates foreign direct investment (FDI). However, regulation under the FEFTA can delay the M&A transaction schedule. Therefore, this article sets out practical considerations relating to Japan's FDI regulations which non-Japanese companies and investors should bear in mind when scheduling an M&A transaction.

Hostile dispute between Stone and TOTVS over merger with Linx
Freitas Ferraz Advogados
  • Brazil
  • 25 November 2020

The recent dispute between StoneCo Ltd and TOTVS SA over the acquisition of Linx SA has brought to light many important matters, especially directors' responsibility for damages caused to a company or its shareholders. TOTVS presented a hostile takeover offer, something which the Brazilian market is not used to since most companies have a controller group which owns 50% or more of the voting shares.

Private equity – acquisition structures
Ogier
  • Jersey
  • 11 November 2020

Complex tax, accounting and employment matters are among those which drive the choice of acquisition structure for private equity-funded transactions. Two common types of private equity acquisition transaction are the leveraged buy-out (LBO) and the management buy-out (MBO). Where an LBO or MBO transaction involves a domestic or international business with a UK-domiciled management team, Jersey acquisition structures have gained traction with UK private equity advisers for numerous reasons.

Guernsey ticks right boxes to attract increasing private equity investment from United States
Ogier
  • Guernsey
  • 04 November 2020

Guernsey ticks all the right boxes when it comes to private equity – both private and listed. Importantly, Guernsey's private equity regime is simple and established, with sensible proportionate regulation which recognises the sophistication of managers and their investors. Guernsey is the ideal gateway to the United Kingdom and the European Union for US managers who continue to make use of private placement regimes in all of the key markets.

Thinking outside the (locked) box: post-closing adjustment mechanisms
Lakshmikumaran & Sridharan
  • India
  • 04 November 2020

In the realm of M&A and private equity (PE), pricing a deal is not an exact science. Despite in-depth financial, business and legal due diligence, the buyer can never be certain that they are not overvaluing or undervaluing the target. Add a pandemic to the mix, and this uncertainty as to valuations is further magnified. This article takes a closer look at various post-closing adjustment mechanisms used in PE and M&A deals involving Indian private companies.

Has Croatia implemented FDI screening mechanism?
Schoenherr
  • Croatia
  • 04 November 2020

The Regulation on the Implementation of the EU Foreign Direct Investment (FDI) Screening Regulation (the Implementing Regulation) recently entered into force. The foreign investment clearance concept has not been regulated under Croatian law before and, even with the Implementation Regulation's entry into force, little has changed. This article examines FDI in Croatia.

Pricing mechanisms in M&A deals
Kayum & Demir
  • International
  • 14 October 2020

The complexity and multitude of factors and external requisites which are not under the control of either party in an M&A transaction mean that significant time can pass between the company's valuation and the deal's completion. How the target operates during this time will affect its value. However, several adjustment and pricing mechanisms are available to amend this situation.

M&A in 2020: adjusting to COVID-19 shockwaves
Lakshmikumaran & Sridharan
  • International
  • 07 October 2020

The year 2020 has had an adverse effect on economies worldwide. Companies face varied and unique challenges and the actions undertaken to combat these will determine the continued viability of their business. In the coming months, various M&A practices are expected to emerge based on market demand and the extent of the pandemic's impact on each sector and jurisdiction. As there is no rule book for avoiding distressed deals, parties must be creative and flexible.

Equity swaps and takeover bids: intentions matter
AyacheSalama
  • France
  • 30 September 2020

In April 2020 the Financial Markets Regulator (AMF) heavily penalised a hedge fund for omitting to disclose its objectives regarding a takeover bid after it had purchased large amounts of equity swaps in shares of the company subject to the takeover. This decision confirms that the mere fact that equity swaps can give the equity swap holder access to shares of a company that is the subject of a takeover bid is enough for them to fall within the scope of the takeover bid legislation.

New FDI screening act
Schoenherr
  • Austria
  • 30 September 2020

In July 2020 a new foreign direct investment (FDI) screening act, the Investment Control Act (ICA), entered into force. The ICA, which largely transposes the requirements of the EU Foreign Investment Screening Regula­tion, is in line with the general EU trend of tightening or enacting FDI screening instruments, which has been fuelled by concerns of buy-outs of critical European infrastructure by foreign investors due to the COVID-19 pandemic.

Restrictions on FDI from bordering countries
Lakshmikumaran & Sridharan
  • India
  • 09 September 2020

In light of the disruption caused by the COVID-19 pandemic, India has adopted a similar approach to the United States and Europe and restricted foreign direct investment from certain jurisdictions. By way of a notification issued by the Department of Economic Affairs, the government has introduced measures to curb opportunistic takeovers (direct or indirect) of Indian companies by persons or entities of any country which shares a land border with India.

Resilience and sustainability in a changed environment
Ogier
  • Guernsey
  • 09 September 2020

As the world emerges from the COVID-19 pandemic, every industry must take stock and evaluate the changes that are here to stay and the adaptations required to suit the new environment. This article examines the developments in and resilience of Guernsey's funds industry. Notably, it is clear that the government continues to support the funds industry and recognises the importance that private equity and sustainable finance play in the longevity of Guernsey as a financial centre.

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