GREECE Law and Practice Contributed by: Stefanos Charaktiniotis, Danai Falconaki, Stathis Orfanoudakis and Nadia Axioti, Zepos & Yannopoulos
any way, directly or indirectly, as a result of its own acquisition or the acquisition by persons acting on its behalf or in concert with it, securities in the company under acquisition which exceed 3% of the total voting rights in that company. 6.3 Consideration • Private M&A transactions: Cash is more commonly used than shares as consideration, while share-to- share exchange schemes have become more and more attractive to investors due to introduced tax incentives. • Public M&A transactions: Both cash and shares may be used as consideration. Specifically in a tender offer, the consideration may consist of cash or securities (whether listed or not on a stock exchange market) or a combination of both. In the case of a mandatory tender offer, the offerees must be provided with the option to receive only cash as consideration in exchange for their holdings. Bridging Valuation Gaps Different valuation models and methods in a busi - ness combination in conjunction with regulatory, legal, political or financial factors often lead to valuation gaps which may cause frustration and uncertainty for both parties. In response to such discrepancies, the legal market has introduced mechanisms to bridge parties’ different approaches with variations on a case-by-case basis: • Earn-outs: Earn-out structures may be negoti - ated when the parties do not seem to agree on the valuation of the business and thus the proposed purchase price. Earn-outs also play a key role as an additional incentive offered to the sellers to aim for higher business performance within a speci - fied timeline. Often based on a pre-agreed busi - ness plan, such mechanism may provide comfort against a valuation gap but should be carefully formulated in terms of the method of calculation and the exact earn-out period. • Escrow agreements: In cases where potential risks have been identified during the due diligence pro - cess, the parties may agree on a specific amount of the purchase price to be retained by the buyer and put in escrow until the risk has materialised or been resolved, at which point the amount may be
released to the relevant party. Such arrangements are governed by escrow agreements negotiated between the parties in the context of the transac - tion, while key considerations may relate to the length of the escrow period, the release notices, etc. • Hold-back mechanism: Alternatively to an escrow mechanism, the parties may agree a hold-back arrangement which involves the buyer retaining a specified portion of the purchase price following completion, rather than remitting the full considera - tion to the seller. Unlike escrow arrangements, the hold-back amount remains under the buyer’s direct control until such time as the conditions for release are satisfied. This mechanism serves as security for the seller’s post-completion obligations, includ - ing indemnification claims arising from breaches of warranties, representations or covenants, as well as any price adjustment disputes. Hold-backs may also be deployed where the parties have identified specific contingent liabilities during due diligence but have been unable to agree on a definitive valuation adjustment at the time of signing. Key negotiating points typically include the quantum of the hold-back (often expressed as a percentage of the total consideration), the duration of the reten - tion period, the circumstances triggering release or set-off, and any interest accruing on the retained funds. Whilst hold-backs offer administrative sim - plicity compared to escrow arrangements, sellers are quite mindful of the credit risk associated with the buyer holding the funds directly, particularly in circumstances where the buyer’s financial position may deteriorate post-completion. 6.4 Common Conditions for a Takeover Offer Pursuant to the provisions of Law 3461/2006, a takeo - ver offer may not be subject to any conditions prec - edent, except for conditions that have been included in the tender offer prospectus and solely relate to the receipt of regulatory approvals and/or the issuance of securities which are offered as consideration under the said tender offer. 6.5 Minimum Acceptance Conditions There are no minimum acceptance conditions in terms of control thresholds for tender offers under the appli - cable provisions in Greece. An offeror may proceed
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