Definitive global law guides offering comparative analysis from top-ranked lawyers
CHAMBERS GLOBAL PRACTICE GUIDES
Private Equity 2025 Definitive global law guides offering comparative analysis from top-ranked lawyers
Contributing Editor Markus Paul Freshfields
Global Practice Guides
Private Equity Contributing Editor Markus Paul Freshfields PartG mbB
2025
Chambers Global Practice Guides For more than 20 years, Chambers Global Guides have ranked lawyers and law firms across the world. Chambers now offer clients a new series of Global Practice Guides, which contain practical guidance on doing legal business in key jurisdictions. We use our knowledge of the world’s best lawyers to select leading law firms in each jurisdiction to write the ‘Law & Practice’ sections. In addition, the ‘Trends & Developments’ sections analyse trends and developments in local legal markets. Disclaimer: The information in this guide is provided for general reference only, not as specific legal advice. Views expressed by the authors are not necessarily the views of the law firms in which they practise. For specific legal advice, a lawyer should be consulted. Content Management Director Claire Oxborrow Content Manager Jonathan Mendelowitz Senior Content Reviewers Sally McGonigal, Ethne Withers, Deborah Sinclair and Stephen Dinkeldein Content Reviewers Vivienne Button, Lawrence Garrett, Sean Marshall, Marianne Page, Heather Palomino and Adrian Ciechacki Content Coordination Manager Nancy Laidler Senior Content Coordinators Carla Cagnina and Delicia Tasinda Content Coordinator Hannah Leinmüller Head of Production Jasper John Production Coordinator Genevieve Sibayan
Published by Chambers and Partners 165 Fleet Street London EC4A 2AE Tel +44 20 7606 8844 Fax +44 20 7831 5662 Web www.chambers.com
Copyright © 2025 Chambers and Partners
Contents
INTRODUCTION Contributed by Markus Paul, Freshfields p.6
FINLAND Law and Practice p.165 Contributed by Waselius FRANCE Law and Practice p.181
AUSTRIA Law and Practice p.11 Contributed by Kinstellar Trends and Developments p.26 Contributed by Kinstellar
Contributed by C-Level Partners Trends and Developments p.196 Contributed by Sullivan & Cromwell LLP GERMANY Law and Practice p.201 Contributed by Willkie Farr & Gallagher LLP Trends and Developments p.218 Contributed by Willkie Farr & Gallagher LLP GREECE Law and Practice p.224 Contributed by Kyriakides Georgopoulos Law Firm Trends and Developments p.242 Contributed by Kyriakides Georgopoulos Law Firm
BRAZIL Law and Practice p.32 Contributed by Lacerda Diniz Advogados Trends and Developments p.49 Contributed by Lacerda Diniz Advogados
BRITISH VIRGIN ISLANDS Law and Practice p.54 Contributed by Maples Group
BULGARIA Trends and Developments p.64 Contributed by Komarevski Dimitrov & Partners
INDIA Trends and Developments p.248 Contributed by JSA IRELAND Law and Practice p.254 Contributed by Matheson LLP Trends and Developments p.273 Contributed by Matheson LLP ITALY Law and Practice p.278 Contributed by Alma LED Trends and Developments p.295 Contributed by Alma LED
CANADA Law and Practice p.72 Contributed by Fasken Trends and Developments p.93 Contributed by Fasken CAYMAN ISLANDS Trends and Developments p.102 Contributed by Maples Group CHINA Law and Practice p.111 Contributed by Lifeng Partners Trends and Developments p.122 Contributed by Global Law Office CONGO BRAZZAVILLE Law and Practice p.130 Contributed by Cabinet Gomes
JAPAN Law and Practice p.302 Contributed by Mori Hamada & Matsumoto Trends and Developments p.321 Contributed by Nagashima Ohno & Tsunematsu
DENMARK Law and Practice p.141
JERSEY Law and Practice p.325 Contributed by Maples Group Trends and Developments p.340 Contributed by Carey Olsen Jersey LLP
Contributed by Moalem Weitemeyer Trends and Developments p.160 Contributed by Moalem Weitemeyer
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KENYA Law and Practice p.344 Contributed by Cliffe Dekker Hofmeyr
ROMANIA Law and Practice p.526 Contributed by Wolf Theiss Trends and Developments p.548 Contributed by Wolf Theiss
LUXEMBOURG Law and Practice p.363 Contributed by Maples Group
SINGAPORE Law and Practice p.555 Contributed by Rajah & Tann Singapore LLP Trends and Developments p.572 Contributed by Rajah & Tann Asia Singapore LLP
Trends and Developments p.376 Contributed by GSK Stockmann SA
MALAYSIA Law and Practice p.382
Contributed by Wong & Partners Trends and Developments p.398 Contributed by Wong & Partners MEXICO Law and Practice p.403 Contributed by Ritch Mueller Trends and Developments p.417 Contributed by Ritch Mueller NETHERLANDS Law and Practice p.423 Contributed by Greenberg Traurig, LLP Trends and Developments p.437 Contributed by Greenberg Traurig, LLP NEW ZEALAND Law and Practice p.443 Contributed by Russell McVeagh NORWAY Law and Practice p.462 Contributed by Wikborg Rein Advokatfirma AS Trends and Developments p.481 Contributed by BAHR
SOUTH KOREA Law and Practice p.580 Contributed by Lee & Ko Trends and Developments p.594 Contributed by Lee & Ko
SPAIN Law and Practice p.600 Contributed by Deloitte Abogados y Asesores Tributarios, S.L.U. Trends and Developments p.620 Contributed by Deloitte Abogados y Asesores Tributarios, S.L.U. SWEDEN Law and Practice p.626 Contributed by Gernandt & Danielsson Advokatbyrå
SWITZERLAND Law and Practice p.645 Contributed by Bär & Karrer Ltd Trends and Developments p.662 Contributed by Advestra
TAIWAN Law and Practice p.667 Contributed by Lee and Li Attorneys-at-Law Trends and Developments p.680 Contributed by Lee and Li Attorneys-at-Law
PORTUGAL Law and Practice p.486 Contributed by Morais Leitão, Galvão Teles, Soares da Silva & Associados Trends and Developments p.503 Contributed by PLMJ
USA Law and Practice p.686
Contributed by Sidley Austin LLP Trends and Developments p.704 Contributed by Debevoise & Plimpton LLP
PUERTO RICO Law and Practice p.508 Contributed by Ferraiuoli LLC Trends and Developments p.521 Contributed by Pietrantoni Mendez & Alvarez LLC
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Contents
USA – CALIFORNIA Trends and Developments p.711 Contributed by Sidley Austin LLP USA – ILLINOIS Trends and Developments p.719 Contributed by Much Shelist, P.C. USA – MARYLAND Trends and Developments p.724 Contributed by Duane Morris LLP
USA – NEW YORK Trends and Developments p.732 Contributed by Wachtell, Lipton, Rosen & Katz
USA – TEXAS Trends and Developments p.739 Contributed by Clifford Chance
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INTRODUCTION
Contributed by: Markus Paul, Freshfields
Freshfields has more than 270 years’ experience globally and helps clients grow, strengthen and de - fend their businesses. Across the entire private capital spectrum, Freshfields acts for financial investors in - cluding private equity, pension and sovereign wealth funds, infrastructure funds, alternative capital provid -
ers and real estate investors. Freshfields covers deal structuring and execution, acquisition financing, fund structuring, tax, restructuring, competition and regu - lation, compliance and litigation, and delivers fully in - tegrated advice to financial investors wherever in the world they invest.
Contributing Editor
Markus Paul is a partner in Freshfields’ private capital group. He advises private equity funds and other financial investors on their transactions, and he has a track record of well over two decades of
successful deal-making across a wide range of industries and jurisdictions. Chambers Europe recognises Markus as an Eminent Practitioner in Private Equity and describes him as “a well-known figure in the market who has long-standing relationships with prominent private equity companies”.
Freshfields PartG mbB Große Gallusstraße 14 60315 Frankfurt am Main Germany Tel: +49 69 27 30 80 Email: markus.paul@freshfields.com Web: www.freshfields.com
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INTRODUCTION Contributed by: Markus Paul, Freshfields
The 2025 Landscape for Private Equity Transactions
dies or in relation to outbound investments. The ever- changing sanctions landscape impacts investments in times of geopolitical volatility. And recent events have shown that we have to expect both disruptive and gradual changes to global trade and tariff regimes to impact businesses and transactions. Private Equity Transactions by Negotiated Agreement Most private equity transactions are concluded by negotiated sale and purchase agreement. Private equity investors may take the role of buyer or seller (upon exit) – or, in a secondary buyout, both. M&A market terms tend to vary from one jurisdiction to another. There are markets that typically are more seller-friendly (most European jurisdictions, with the UK known to be particularly seller-friendly). Other mar - kets are more buyer-friendly (with the USA as a good example). Sometimes, market terms are also a func - tion of market maturity; eg, less developed markets tend to have greater variability in terms. Notwithstanding different M&A market terms around the world, private equity investors typically take very similar positions in negotiated transactions, regard - less of jurisdiction and market practice. It is useful to look at these typical private equity positions both from a buy-side and a sell-side perspective. Private Equity Buyers Consideration mechanism Private equity buyers are usually comfortable with either a locked-box or a completion accounts con - sideration mechanism. In a locked-box sale and purchase agreement, the purchase price is determined based on a historic balance sheet of the target business. The purchase price is then fixed in the sale and purchase agreement (sometimes subject to interest or a per diem amount). The buyer is protected by ordinary course and no leakage provisions (ie, the locked box). For a private equity buyer, this has the advantage of high certainty at signing regarding the amount of the purchase price that will become due at completion. There is little risk of unexpected over- or underfunding. Market practice in European jurisdictions, such as France, Germany,
Just when everyone thought that M&A markets finally were recovering from a prolonged period of disruption, market volatility struck again. In early 2025, global capital and financing markets suffered when the new US administration introduced measures impacting global trade and tariffs, and geopolitical events con - tinued to challenge economies in many parts of the world. M&A deal flow concurrently slowed down (yet) again, adversely impacting both the exits of financial investors from portfolio businesses and their ability to put to work the funds that their investors had com - mitted. Outlook In the short term, we can expect financial investors to continue efforts to generate liquidity for their investors by fund-level transactions, such as continuation fund, other fund-to-fund and secondary deals. At the same time, market participants are hoping for less disrup - tion and a further closing of the pricing gap between seller and buyer expectations. This would allow more traditional sponsor transactions to proceed in the sec - ond half of the year 2025 and beyond. The mid- and longer-term outlooks for private equity remain very positive. Global mega-trends will drive attractive investment opportunities; these include digitalisation, population growth and ageing socie - ties, energy transition, and efforts to address deficits in infrastructure and defence spending. Globally, the amount of capital available for private equity and other private capital investments stands at unprecedented levels. An increasing number of private equity investors continue to branch out and expand the types of asset classes and transactions they target. Whether it is infrastructure, debt, venture capital, growth or minority investments, “private equi - ty” has become “private capital” and has expanded its reach accordingly. Private Equity in an Increasingly Regulated World The continuous evolution of regulation is an ongoing legal trend impacting private equity across jurisdic - tions. There is rising scrutiny, whether in antitrust or foreign investment regulation, regarding foreign subsi -
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INTRODUCTION Contributed by: Markus Paul, Freshfields
the UK, Austria, Switzerland, Sweden and Spain, favours locked-box consideration mechanisms. By contrast, in a completion accounts mechanism, the purchase price is not calculated and trued up until after completion. The purchase price is based on a completion date balance sheet of the target business and calculation rules set out in the sale and purchase agreement. This gives the buyer the comfort that the purchase price is determined concurrently with it taking control of the target, with no interim (locked- box) period. There are situations where completion accounts are the only appropriate approach, such as in complex carve-outs or other circumstances where there are no historic accounts for the target business that a locked box could be based on. Also, longer regulatory clearance periods may lead to comple - tion accounts becoming more popular with buyers to reduce the risk of changes in the target business until completion. Completion accounts mechanisms are common in the USA, China, Canada, Japan, Brazil Like any other buyer, a private equity investor will aim to use conditionality as a risk mitigant if possible and where advisable. However, market practice and the level of competition in the specific deal environment generally dictate which conditions are acceptable to sellers. In all jurisdictions, market practice allows regula - tory conditions, particularly in respect of suspensory antitrust, foreign investment and foreign subsidies regimes. and Singapore. Conditionality However, financing conditions are uncommon in most jurisdictions, where instead sellers typically expect buyers to provide proof of “certain funds” at signing – regarding both equity and debt financing. Financ - ing conditions are seen in the US market and are not wholly unusual in China. US M&A transactions will often include the repetition of representations and warranties and the absence of litigation as conditions. Third-party consents and “no material adverse effect/change” (MAE or MAC) condi - tions are often included in US deals as well. MAE or
MAC conditions have been uncommon in Europe in the last decade. In the USA, a buyer is often required to pay a reverse break fee if it exercises a termination right, particularly if a debt financing condition was included and not satisfied. In Europe, however, (reverse) break fees are not a common feature, even where transactions face material concerns that conditions may not be satisfied Notwithstanding the thorough due diligence that they typically conduct, private equity buyers usually seek contractual protection against identified risk items. This often includes pre-closing tax and other risks that buyers are aware of at signing and that can be covered by indemnities (rather than price reductions, which tend to be seen unfavourably in competitive situations). In all markets, private equity buyers try to ensure robust warranty protection in respect of fundamen - tal risks, such as ensuring title to shares. In more seller-friendly markets, such as in Europe, warranties covering business risks are sometimes not offered or significantly limited. In these situations, private equity buyers, in addition to relying on their due diligence, often consider bridging the gap between the seller’s and their respective positions by taking out warranty and indemnity (W&I) insurance. Often this can be done for a modest additional cost. W&I insurance is, how - ever, still unusual in some markets, such as China, Japan, the Philippines and Brazil. Private Equity Sellers Exit certainty and control Firstly, an important prerequisite for selling, and a common feature in all private equity deals, is that the private equity investor seeks to retain full flexibility and freedom to trigger and successfully drive an exit on its own terms, without restrictions from, for exam - ple, management shareholders or co-investors. Cor - responding rights of the private equity investor are typically included in the shareholders’ agreement. It is also important to a private equity seller to be able to deliver the entire target business to the chosen by the agreed longstop dates. Warranties and indemnities
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INTRODUCTION Contributed by: Markus Paul, Freshfields
buyer. This is often achieved by structuring an exit so that it takes place at a level of the investment struc - ture where the investor has sole control over the sold entity. If that is not possible, the investor will want to rely on drag-along rights – whereby it can force minority shareholders to sell at the same terms. Drag- along rights are common in private equity transactions globally. Sometimes, these are subject to economic protection for the minority shareholders, such as in the form of minimum price or return thresholds. In some jurisdictions, there are specific conditions that must be satisfied for a drag to be enforceable. It is common in many markets for co-shareholders that are subject to a drag to also have a tag-along right under certain circumstances. Terms of sale In most cases, a private equity seller will prefer a locked-box consideration mechanism in the sale and purchase agreement, as this entails far-reaching pro - tection on price. In addition, and subject to what market practice (and buyers) allow, private equity sellers usually seek to limit the conditionality of transactions so that they enjoy completion certainty. In all markets, the excep - tions are conditions in respect of suspensory regula - tory clearance requirements. Private equity sellers are very focused on minimising post-closing liability to maximise flexibility of a swift repatriation of proceeds to fund investors. Typically, therefore, they aim not to provide business warranties or indemnities, and try not to have to hold back pro - ceeds in escrow or similar mechanisms. In all markets, remaining warranty protection is subject to limitations, such as caps, thresholds and de minimis provisions. If indemnities cannot be avoided, they tend to be nar - rowly tailored and have bespoke limitations. One of the reasons why W&I insurance has risen to previously unknown levels of popularity in many jurisdictions is that it is an effective bridge-building tool, allowing pri - vate equity sellers a clean exit while at the same time providing buyers with insurance protection. In some jurisdictions, such as the UK, it is not unu - sual for members of management to provide warran -
ties, particularly if they are themselves shareholders. Sometimes, management warranties are used in com - bination with W&I insurance to cover the substantive risk. Public Deals and IPOs Public-to-private transactions represent a small por - tion of all private equity transactions. They are com - monly seen for example in the USA, Germany and the UK. Public deals are often voluminous and yield an attractive differential between the public and private market valuations of the target business. However, in many markets, the likelihood of the successful execu - tion of public deals tends to be lower than that of pri - vate deals. Also, there are legal barriers to public-to- private transactions in some jurisdictions, such as in China. Most public takeover regimes have mandatory offer thresholds, pricing rules and a disclosure regime for significant shareholdings (and, in some jurisdic - tions, there are broad concepts of attribution of target shareholdings between funds and investment/portfo - lio companies). The popularity and frequency of private equity exits by IPO varies as a function of the volatility of capital markets more generally. In Europe in particular, dual- track exits (ie, where a sale and an IPO are pursued in parallel) are common for larger portfolio businesses, in times where the capital markets are receptive. Management Equity and Other Incentives The alignment of interests between the private equity investor and the portfolio company management is a key feature of private equity transactions globally. The approach to management incentivisation varies from jurisdiction to jurisdiction. The structuring of man - agement incentives is often tax-led. In many jurisdic - tions, equity investments by management are frequent and the easiest way of ensuring “skin in the game”. Sometimes, management equity is combined with a management co-investment, which further increases alignment. Alternative approaches such as options, participation in investor proceeds, virtual share pro - grammes and exit bonus arrangements are also com - mon in some jurisdictions. Management incentive schemes typically include mechanisms that allow the investor to call or forfeit
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INTRODUCTION Contributed by: Markus Paul, Freshfields
the incentives of a leaver, with the economic conse - quences varying according to the nature of the cir - cumstances of the departure (ie, whether the situation concerns a “good leaver” or a “bad leaver”). Many schemes include vesting features that allow manag - ers to secure their position in the scheme over time. In almost all markets, managers are subject to restric - tive covenants, such as non-compete and non-solic - itation. These can be part of the equity arrangements or set out separately in employment agreements.
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AUSTRIA
Czech Republic
Germany
Slovak
Vienna
Austria
Law and Practice Contributed by: Horst Ebhardt, Philipp Kapl, Hartwig Kienast and Matija Bernat Kinstellar
Hungary
Italy
Slovenia
Croatia
Contents 1. Transaction Activity p.14
1.1 Private Equity Transactions and M&A Deals in General p.14 1.2 Market Activity and Impact of Macro-Economic Factors p.15 2. Private Equity Developments p.15 2.1 Impact of Legal Developments on Funds and Transactions p.15 3. Regulatory Framework p.15 3.1 Primary Regulators and Regulatory Issues p.15 4. Due Diligence p.16 5. Structure of Transactions p.16 5.1 Structure of the Acquisition p.16 5.2 Structure of the Buyer p.17 5.3 Funding Structure of Private Equity Transactions p.17 5.4 Multiple Investors p.17 6. Terms of Acquisition Documentation p.17 4.1 General Information p.16 4.2 Vendor Due Diligence p.16 6.3 Dispute Resolution for Consideration Structures p.18 6.4 Conditionality in Acquisition Documentation p.18 6.5 “Hell or High Water” Undertakings p.19 6.6 Break Fees p.19 6.7 Termination Rights in Acquisition Documentation p.19 6.8 Allocation of Risk p.19 6.9 Warranty and Indemnity Protection p.20 6.10 Other Protections in Acquisition Documentation p.20 6.11 Commonly Litigated Provisions p.20 7. Takeovers p.21 7.1 Public-to-Private p.21 7.2 Material Shareholding Thresholds and Disclosure in Tender Offers p.21 7.3 Mandatory Offer Thresholds p.21 7.4 Consideration p.22 6.1 Types of Consideration Mechanism p.17 6.2 Locked-Box Consideration Structures p.18
7.5 Conditions in Takeovers p.22 7.6 Acquiring Less Than 100% p.22 7.7 Irrevocable Commitments p.22
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AUSTRIA CONTENTS
8. Management Incentives p.23 8.1 Equity Incentivisation and Ownership p.23 8.2 Management Participation p.23 8.3 Vesting/Leaver Provisions p.23 8.4 Restrictions on Manager Shareholders p.23 8.5 Minority Protection for Manager Shareholders p.23 9. Portfolio Company Oversight p.24 9.1 Shareholder Control and Information Rights p.24 9.2 Shareholder Liability p.24 10. Exits p.24 10.1 Types of Exit p.24 10.2 Drag and Tag Rights p.24 10.3 IPO p.25
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AUSTRIA Law and Practice Contributed by: Horst Ebhardt, Philipp Kapl, Hartwig Kienast and Matija Bernat, Kinstellar
Kinstellar handles some of the most significant M&A and corporate deals in Central and Eastern Europe (CEE), Southeast Europe (SEE) and Central Asia. Its highly experienced team advises on acquisitions, disposals, joint ventures, corporate reorganisations, restructurings, mergers, spin-offs, public takeovers and IPOs. The firm combines an in-depth understand - ing of business objectives with on-the-ground mar - ket knowledge to deliver results. It offers expertise in implementing complex cross-border transactions, providing timely, clear and commercially focused
advice based on deep knowledge and practical ex - perience, and has the networks to move faster and bring deals together. The lawyers regularly advise on both the buy-side and sell-side of M&A transactions for financial sponsors and strategic investors across the region. Opened in January 2025 with 24 lawyers (seven partners, 17 lawyers), Kinstellar’s Vienna office has quickly become a hub for private equity and cor - porate work, further strengthening the firm’s unique regional platform.
Authors
Horst Ebhardt is a partner in Kinstellar’s Vienna office and a member of the Corporate/M&A service line. He has more than 20 years’ experience in private practice, specialising in complex cross-border
Hartwig Kienast is a partner in Kinstellar’s Vienna office and a member of the Corporate/M&A
service line. He specialises in M&A, private equity and venture capital transactions, as well as corporate reorganisations. Hartwig has recently advised on large cross-border M&A transactions and restructurings, acting for both strategic and financial investors. He has extensive experience across the infrastructure, energy, consumer goods, software and pharmaceutical sectors, and also focuses on growth companies in the technology sector, advising start-ups at all stages of development as well as venture capital and private equity investors on investments in innovative businesses.
M&A and private equity transactions across Austria and the CEE/SEE region. Horst regularly advises on corporate finance and governance matters, with a strong focus on financial institutions, life sciences and infrastructure. Over the past decade, he has been involved in some of the most significant M&A and private equity transactions in Austria and Central Europe, providing strategic advice to corporates, investors and financial sponsors. Philipp Kapl is a partner in Kinstellar’s Vienna office and a member of the Corporate/M&A service line, with a special focus on private equity. He has over a decade of experience in advising on high-profile M&A transactions, private equity matters, joint ventures, growth capital investments, divestitures, infrastructure investments and shareholder arrangements, and frequently advises on cross- border deals across Central and Eastern Europe. Philipp also serves as a supervisory board member of Klinikum Austria Health Group.
Matija Bernat is an associate in Kinstellar’s Vienna office, focusing on M&A, corporate and private equity. He has extensive experience in advising on high-profile M&A transactions, private equity matters, joint ventures,
growth capital investments, divestitures, infrastructure investments and shareholder arrangements. Matija regularly assists both financial sponsors and strategic investors on complex cross-border deals, supporting clients through all stages of the transaction process. His practice also includes advising growth companies on investment rounds and corporate structuring matters.
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AUSTRIA Law and Practice Contributed by: Horst Ebhardt, Philipp Kapl, Hartwig Kienast and Matija Bernat, Kinstellar
Kinstellar Dominikanerbastei 11 1010 Vienna Austria Tel: +43 1 3860 700 Email: vienna.office@kinstellar.com Web: www.kinstellar.com
1. Transaction Activity 1.1 Private Equity Transactions and M&A Deals in General Private equity (PE) continues to represent only a mod - est portion of Austria’s transactional landscape. The Austrian corporate environment is traditionally charac - terised by a high density of small and medium-sized enterprises (SMEs), many of which are family-owned and place a strong emphasis on long-term independ - ence. These businesses have historically taken a cau - tious stance towards financial sponsors and continue to favour conventional bank financing over equity- based investment models (ie, a PE sponsor acquiring a minority or majority stake). However, this preference is expected to shift gradually, driven by evolving mar - ket dynamics and increased financial sponsor activity. In Austrian auction processes, PE sponsors play a prominent and increasing role, often acting through their platform companies. As a result, Austria has remained relatively insulat - ed from the more aggressive PE-driven transaction dynamics seen in other European markets. This trend persisted in H1 2025: strategic investors were involved in 109 of the 118 recorded transactions. In contrast, transactions involving PE or venture capital (VC) made up only around 8% of the total transaction volume, with just nine transactions. In comparison, H1 2024 saw 113 transactions involving strategic investors and 11 transactions involving financial sponsors such as PE or VC investors. This corresponds to a decline of approximately 3.5% in strategic activity and 18.2% in investor-backed transactions in H1 2025. These statistics disregard PE sponsors acting through their
platform companies. The figures also reflect a more restrained investment climate across both investor categories, shaped by macroeconomic uncertainty, tighter financing conditions and continued valuation discipline. The number of strategic M&A transactions is expected to reach the 2024 level of approximately 220 transac - tions, assuming a steady pace throughout the year. However, given the limited number of investor-backed transactions recorded in H1 2025, it remains uncertain whether the Austrian PE market will meet the 2024 benchmark of 25 financial investor transactions by year-end. In H1 2025, the Austrian PE market focused increas - ingly on innovation-led and sustainability-oriented businesses, driven by growing investor interest in environmental, social and governance (ESG) aligned assets and Austria’s emerging role as a regional hub for green technology and digital transformation. In particular, the defence sector is experiencing strong growth, along with closely related areas such as arti - ficial intelligence and advanced technology. Similarly, the healthcare and life sciences sectors continue to expand significantly, driven by innovation and increas - ing cross-border activity. Strategic M&A transactions were primarily concentrated in the industrial and life sciences sectors. A notable development is the rising number of dis - tressed M&A transactions. Austria has seen a steady increase in corporate insolvencies, including in H1 2025, with high-profile cases such as the Signa Group contributing to a sharp uptick in restructuring-driven
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AUSTRIA Law and Practice Contributed by: Horst Ebhardt, Philipp Kapl, Hartwig Kienast and Matija Bernat, Kinstellar
transactions. Given the ongoing economic pressures, and with no immediate easing of insolvency trends in sight, distressed M&A is expected to remain a highly active and relevant transaction category in the near term. 1.2 Market Activity and Impact of Macro- Economic Factors The PE market in Austria is demonstrating growing appetite for investments in innovative technology- driven businesses and sustainability-focused com - panies. This trend reflects both increasing investor demand for ESG-aligned assets and the country’s strong positioning as a regional hub for green tech - nologies and digital innovation. Transaction timelines have lengthened due to increased regulatory scrutiny, especially foreign direct investment (FDI) reviews. Geopolitical uncertainty – particularly the ongoing war in Ukraine, EU-level security concerns and the complex tariff environment – has led to increased due diligence in cross-border transactions and greater caution in sensitive sectors (eg, defence-related tech, critical infrastructure, com - panies relying on complex supply chains, or high-tariff sales markets). 2. Private Equity Developments 2.1 Impact of Legal Developments on Funds and Transactions The newly introduced corporate form of the Flexible Corporation (FlexCo) is relatively popular with the start-up sector, making it the main area of applica - tion. By mid-2025, approximately 1,200 FlexCos had already been established across Austria – an indica - tion of the market’s interest in this hybrid entity, which blends elements of a limited liability company (GmbH) with characteristics traditionally associated with a stock company (AG). Although the FlexCo has estab - lished itself as a company form, it is unclear whether it will gain significance beyond the start-up sector. Ongoing legal uncertainties, the absence of case law on critical questions, limited transactional experience and PE funds’ general lack of familiarity with this type of corporate vehicle have thus far prevented the Flex -
Co from emerging as a viable alternative to the more established GmbH structure. As part of the EU’s effort to “strengthen competi - tiveness”, the application of two major sustainability directives has been postponed. The Corporate Sus - tainability Due Diligence Directive (CSDDD), which obliges companies to identify and mitigate adverse impacts on human rights and the environment, has been delayed by one year, with EU member states now required to transpose the rules into national law by 26 July 2027. Meanwhile, the Corporate Sustain - ability Reporting Directive (CSRD), which mandates extensive ESG disclosures, has been postponed by two years. Large companies (with over 250 employ - ees) must now begin reporting in 2028, while listed SMEs will follow in 2029. These delays give compa - nies additional time to prepare, but the emerging need for ESG compliance remains a growing due diligence and transactional focus. 3. Regulatory Framework 3.1 Primary Regulators and Regulatory Issues PE transactions in Austria are shaped by a regulatory framework involving several key authorities in charge of clearing transactions from the merger control (MC) and FDI screening perspectives, as follows. • The Federal Ministry of Labour and Economy ( Bundesministerium für Wirtschaft, Energie und Tourismus – BMWET) oversees FDI control, requir - ing mandatory approval for investments in sensitive sectors (eg, health, energy, critical technology), even for minority stakes. • The Federal Competition Authority ( Bundeswettbe- werbsbehörde – BWB) is responsible for MC and must be notified when certain turnover thresholds are met. The Austrian FDI regime applies to many transactions, even small ones, given its very broad scope and low de minimis thresholds. As the violation of FDI rules is subject to criminal liability and can result in the nul - lity of the underlying transaction, it is typically recom - mendable to seek FDI clearance.
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AUSTRIA Law and Practice Contributed by: Horst Ebhardt, Philipp Kapl, Hartwig Kienast and Matija Bernat, Kinstellar
PE-backed buyers in Austria are generally subject to the same regulatory requirements as other acquirers, particularly under FDI screening and MC rules. Regu - latory scrutiny increases when investors involve com - plex fund structures, state-backed limited partners (eg, sovereign wealth funds) or co-investments with entities from non-EU countries. Authorities typically apply a “look-through” approach to assess actual control and influence. Even indirect state involvement may trigger a heightened review or lead to clearance with conditions, or to a denial in sensitive sectors. Early disclosure of ownership and governance struc - tures is critical to avoid delays or regulatory risks. The Foreign Subsidies Regulation (FSR) has been rel - evant for PE transactions in Austria since mid-2023. It requires mandatory filings for large transactions for the regulator to assess whether the buyer benefits from foreign financial contributions that may qualify as subsidies under the FSR (eg, from sovereign funds or state-backed investors). The preparation of such filings is time-consuming and may delay clearance beyond customary long-stop date timeframes. In a competitive auction, a bidder that is likely to fall under significant FSR scrutiny may face competitive disad - vantages compared to other bidders that are unlikely to have benefitted from foreign subsidies. In the past 12 months, Austria has also seen increased regulatory focus on anti-bribery, sanctions compli - ance (especially regarding Russia) and ESG require - ments under the CSRD and the Sustainable Finance Disclosure Regulation. As a result, PE transactions now require more robust due diligence on corruption risks, supply chains and sustainability compliance across portfolios.
tions now provide for warranty and indemnity (W&I) insurance protection, the legal due diligence must be robust so that the W&I insurance provider is able to underwrite transaction risk based on warranties where the underlying facts and circumstances have been duly investigated in the course of the due diligence process. The better the due diligence process, the more likely it is that the W&I insurance provider will fully underwrite the W&I insurance coverage. Due diligence is usually conducted by Austrian coun - sel in close co-operation with the PE investor and often in close alignment with other due diligence workstreams (tax, commercial, technical, compliance, etc). Due diligence information is commonly made available via virtual data rooms, with Q&A processes co-ordinated by the seller or its advisers. 4.2 Vendor Due Diligence Vendor due diligence is a common feature in Austrian PE transactions, especially in structured auction pro - cesses or larger transactions. Sell-side legal advisers typically provide red-flag reports or legal fact books covering key legal areas. Such reports help streamline the process and provide early risk visibility for bidders or buyers. Reliance on vendor due diligence reports is not typi - cally granted to a bidder or buyer. Most PE acquisitions are structured as private share sale and purchase transactions. These are typically share deals governed by Austrian law. Share deals are generally preferred over asset deals due to their tax and legal simplicity. For example, in an asset deal a third-party contract partner of the target business has the statutory right to oppose the transfer of the con - tract to the buyer (a practical issue that can be over - come by certain transaction structures but is difficult to implement and monitor by the transaction parties). However, depending on the deal structure, asset deals may be preferable in certain situations as they allow buyers to select specific assets and exclude unwant - ed liabilities, and typically do not require a notarial 5. Structure of Transactions 5.1 Structure of the Acquisition
4. Due Diligence 4.1 General Information
The level of legal due diligence typically depends on the size and complexity of the transaction, as well as the structure (auction v bilateral sale). In PE trans - actions, a risk-based (red flag) legal due diligence is standard, focusing on identifying material risks that could affect valuation, transaction structure or post- closing integration. In addition, as most M&A transac -
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AUSTRIA Law and Practice Contributed by: Horst Ebhardt, Philipp Kapl, Hartwig Kienast and Matija Bernat, Kinstellar
deed as a formal requirement, unlike share sale and purchase agreements governed by Austrian law. Court-approved schemes, statutory mergers and pub - lic tender offers are not common in the context of Austrian PE transactions; these structures are more relevant in public M&A and/or intra-group reorganisa - tions. In contrast, auction sales are most common, particularly for attractive or competitive targets. In auction settings, transaction terms tend to be more seller friendly. Sellers often provide initial draft acquisi - tion agreements, and buyers typically are not in a posi - tion to negotiate key provisions such as warranties, indemnity coverage and conditionality. Closing cer - tainty is a significant priority so that material adverse change (MAC) clauses are hardly ever accepted, and closing conditions are generally restricted to manda - tory regulatory approvals (with stringent requirements for buyers to accept conditions imposed by such reg - ulators). 5.2 Structure of the Buyer Tax and real estate transfer considerations play a cen - tral role in structuring PE-backed acquisitions in Aus - tria. Transactions are typically executed through one or more Austrian special purpose vehicles (BidCos) in the legal form of a GmbH, often held by one or more intermediate holding companies in foreign jurisdic - tions such as Luxembourg or the Netherlands. 5.3 Funding Structure of Private Equity Transactions Financing of PE Transactions PE transactions in Austria are typically financed through a combination of equity and third-party debt, with structures aligned with international market standards. The equity portion is usually provided via a special purpose vehicle (BidCo) backed by the PE fund and co-investors. To provide contractual certain - ty, especially in competitive processes, PE funds may be requested to issue an equity commitment letter for the benefit of a BidCo, ensuring that the necessary funds will be made available at signing/closing. On the debt side, committed financing at signing/clos - ing is increasingly expected. This may include term sheets, mandate letters or fully negotiated “certain funds” debt facilities, particularly in mid- to large-cap
transactions. In transactions where committed financ - ing is not yet available at signing/closing, sellers typi - cally require a financing comfort package, including documentation and representations around the avail - ability of funds (eg, debt commitment letters). Over the past 12 months, tighter credit conditions have led to a greater reliance on equity financing, increased involvement of alternative lenders, and more rigorous scrutiny of financing certainty. Overall, Austrian PE transaction financing remains robust but has adjusted to reflect current market reality. 5.4 Multiple Investors PE Consortia and Co-Investments Consortium transactions involving multiple PE spon - sors or a combination of strategic investors and PE sponsors usually occur in larger and/or complex trans - actions. Co-investments alongside the lead PE fund or GP are more common and typically involve either existing LPs participating as passive investors, or external co-investors such as family offices or institu - tional investors. Consortia that include a PE fund and a corporate strategic investor are less frequent but are seen in sectors where deep operational expertise is a key factor. Overall, single-lead sponsor transactions remain the norm in Austria’s mid-cap market. 6. Terms of Acquisition Documentation 6.1 Types of Consideration Mechanism Consideration Structures in Austrian PE Transactions PE transactions typically follow international market standards, with locked-box and completion accounts being the predominant consideration mechanisms. Among these, the locked-box structure is typically preferred in transactions, where PE funds act as sell - ers. Completion accounts are also prominent, particularly in transactions involving more complex or volatile tar - gets, where the purchaser is a strategic investor or when the transaction involves a business carve-out. Earn-outs and deferred consideration are increasingly common, particularly when the target is a high-growth
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AUSTRIA Law and Practice Contributed by: Horst Ebhardt, Philipp Kapl, Hartwig Kienast and Matija Bernat, Kinstellar
6.3 Dispute Resolution for Consideration Structures The use of dispute resolution mechanisms in PE trans - actions depends largely on the type of consideration structure. In locked-box structures, disputes are rel - atively rare due to the fixed nature of the purchase price. While specific provisions may address potential disputes over “leakage”, these are typically resolved through contractual negotiation, a valuation expert or accounting firm, or via courts or arbitration. By contrast, completion account structures almost always include a dedicated expert determination procedure. The purchaser or the seller prepares the closing accounts, and the buyer or seller has the right to object to such accounts (or parts of such accounts) within a pre-defined period. If no agreement is reached, the matter is referred to an independent expert (often a reputable audit firm), whose decision is usually final and binding, except in cases of mani - fest error or fraud. This is standard market practice in Austria. For earn-out provisions, expert or hybrid mechanisms are also commonly used, especially when perfor - mance metrics require an objective assessment. In general, a neutral expert determination is preferred for accounting-related disputes, while arbitration is frequently chosen for broader legal disputes. Overall, Austrian PE share acquisition agreements are tailored to include efficient and transaction-specific dispute resolution tools, with expert determination being the norm for variable purchase price compo - nents. 6.4 Conditionality in Acquisition Documentation Conditionality in Austrian PE Transactions In Austrian PE transactions, the level of conditionality is generally limited, particularly where the seller is a PE fund aiming for a clean exit and minimal signing/clos - ing risk. Regulatory approvals (especially MC and FDI clearance) are typically the only accepted conditions precedent, as they are mandatory and suspensory in nature.
company or a start-up, or where there is a need to overcome a valuation gap. Earn-out structures tend to be tailored solutions but are typically linked to future EBITDA thresholds, an annual net profit or other spe - cific performance targets. On the other hand, PE sell - ers are reluctant to agree to earn-outs. Roll-over structures are a common feature in Austrian PE transactions, particularly in management buyouts or growth investments. These involve management or founders reinvesting part of their sale proceeds or otherwise retaining equity in the buyer’s structure, thereby aligning growth incentives and overcoming valuation gaps. The involvement of a PE fund, whether on the buy- side or sell-side, strongly influences the choice of consideration mechanism. PE purchasers favour price certainty and efficient transaction execution, and fre - quently rely on W&I insurance to cover warranty risks. On the sell-side, PE funds typically push for minimal residual liability, favouring simple and final mecha - nisms like locked-box pricing and avoiding earn-outs or complex post-closing adjustments. 6.2 Locked-Box Consideration Structures Locked-Box Interest and Leakage Adjustments in Austria It is common for PE transactions using a locked-box purchase price mechanism to include interest on the equity price. This interest compensates the seller for the period between the locked-box date and sign - ing/closing. Alternatively, the interest may be factored implicitly into the agreed purchase price if the closing is expected shortly after signing. It is not uncommon to agree that, in the event of a leakage (ie, unauthorised value transfers by the seller or its affiliates during the locked-box period), the seller must not only reimburse the leakage amount in full but also pay reverse interest on it. These interest mecha - nisms are standard in Austrian PE transactions using a locked-box structure and are intended to preserve the economic effect of the fixed purchase price. However, the specific rates and application remain subject to negotiation in each transaction.
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AUSTRIA Law and Practice Contributed by: Horst Ebhardt, Philipp Kapl, Hartwig Kienast and Matija Bernat, Kinstellar
Financing conditions (so-called “financing-out” claus - es) are unusual in Austria and strongly resisted by sell - ers. Buyers, especially PE funds, are expected to have committed funds in place at signing. “Certain funds” undertakings constitute standard market practice. Shareholder approval conditions are rare and only rel - evant in exceptional cases (eg, if the buyer or seller is a listed company or subject to special internal govern - ance constraints). MAC clauses as conditions to closing are almost nev - er seen in Austrian PE transactions. If used, they are narrowly defined and heavily negotiated. PE sellers generally resist such clauses. 6.5 “Hell or High Water” Undertakings Regulatory Undertakings in Austrian PE Transactions PE buyers are generally reluctant to accept full “hell or high water” undertakings in transactions subject to regulatory conditions. Such commitments – which require the buyer to comply with all competition authority remedies unconditionally – are often heav - ily negotiated, limited or excluded altogether. Instead, buyers typically agree to extensive co-operation and information obligations without an outright obligation of having to accept any and all imposed conditions. In some cases, parties to a transaction have agreed to a “corridor” of conditions that have to be accepted by the buyer, typically measured by way of the adverse financial impact that would fall on the buyer group if it were to accept the conditions imposed. “Hell or high water” obligations are historically more relevant in MC, where conditions such as divestments are commonly required. Increasingly, the FDI authority imposes conditions in approval decisions, although the substance of such conditions has thus far not reached a dimension that would make compliance by buyers overly costly. 6.6 Break Fees Break fees in favour of the seller are often seen in PE transactions. Break fees typically range between 1% and 3% of the purchase price and are triggered by events such as the buyer’s failure to obtain required approvals (despite a best effort obligation) or a fail -
ure to close without due cause. Austrian law permits break fees, but they are typically subject to mandatory mitigation by courts (such mitigation option cannot be waived by the parties to the share purchase agree - ment). Reverse break fees – where the purchaser agrees to pay the seller a fixed amount if the transaction fails due to the buyer’s fault – are also not uncommon in Austrian PE transactions. 6.7 Termination Rights in Acquisition Documentation PE sellers and buyers can typically terminate an acquisition agreement under narrow, contractually defined circumstances. The most common grounds for termination include the failure by a party to satisfy a condition precedent (such as regulatory approval) prior to the agreed long-stop date, or the failure by a party to complete the transaction prior to the long- stop date. The typical long-stop date in Austrian PE transactions ranges from six to 18 months after signing, depending on the complexity of required regulatory clearances. 6.8 Allocation of Risk Risk Allocation in Austrian M&A Transactions: PE v Corporate Parties The typical allocation of risk differs noticeably depend - ing on whether the seller or buyer is PE-backed or a corporate entity. These differences are particularly evident in the scope of warranties, liability limitations, transaction structures and the use of W&I insurance. PE sellers generally aim for a “clean exit” and there - fore seek to limit their post-closing liability to the greatest extent possible. To address buyer concerns, W&I insurance is more often used, allowing the seller to limit or exclude its liability under the sale and pur - chase agreement. Escrow arrangements or holdbacks are usually avoided, with purchase price payments structured to be made in full at closing. By contrast, corporate sellers are often more will - ing to accept broader warranty coverage and higher liability caps, particularly in cases where reputational considerations or long-term business relationships are
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