DENMARK Law and Practice Contributed by: Dan Moalem, Jakob Skafte-Pedersen, Poul Guo and Thomas Enevoldsen, Moalem Weitemeyer
• non-solicitation or no-talk clauses with the target (subject to fiduciary out); and • limited break fees, though these are rare and must be justifiable. 7.6 Acquiring Less Than 100% Governance Rights for Significant Minority Shareholders If a private equity bidder acquires less than 100% of a listed target but more than 50%, it generally controls the company, including that it can elect the majority of the board of directors. Debt Push-Down Mechanisms Subject to complying with general corporate law, a debt push-down will typically be adopted through declaration of ordinary or extraordinary dividends. Dividends are decided by simple majority and if the private equity bidder holds more than 50% a debt push-down can be achieved. Squeeze-Out and Sell-Out Rights A bidder who acquires more than 90% of the share capital and voting rights in a listed company may initiate a compulsory squeeze-out of the remaining minority shareholders at a fair price. Minority share - holders also have a corresponding sell-out right. If the +90% is achieved by way of the voluntary offer, the offer price will be deemed a fair price. If the +90% is only obtained subsequently, the process is court- supervised, and minority shareholders may request a formal valuation but must pay for such valuation if not successful in challenging the price offered. 7.7 Irrevocable Commitments Irrevocable Commitments Are Common in Danish Takeover Practice Irrevocable commitments from principal shareholders are common in Danish public takeover offers, par - ticularly where a private equity bidder needs to dem - onstrate support to regulators or secure minimum acceptance levels. These commitments are typically obtained from large institutional investors, founders,
offer preparation. In some cases, cornerstone share - holders are approached even earlier to assess deal feasibility and signal market support. The undertakings are often executed shortly before public announce - ment of the offer. Nature and Flexibility of the Commitments Irrevocable undertakings in Denmark are usually bind - ing and do not include “fiduciary outs”. However, there are instances such as where undertakings lapse if a competing offer is made at a clearly higher price and the original bidder does not match it. 8. Management Incentives 8.1 Equity Incentivisation and Ownership Widely Used in Danish Private Equity Transactions Equity incentivisation of the management team is a common and well-established feature of private equity The management team’s collective equity stake typi - cally ranges from 5% to 15% of the fully diluted share capital of the holding structure, depending on the size of the business, the level of reinvestment by existing management, and the relative bargaining power of the parties. In founder-led or growth equity deals, the management team may hold a larger stake, whereas in classic buyouts, their ownership is more often in the lower end of the range. In most cases, the structure is designed to offer mean - ingful upside while retaining leaver and vesting protec - tions to ensure retention and alignment throughout the investment horizon. transactions in Denmark. Typical Ownership Levels In Danish private equity transactions, management participation is typically structured through a sweet equity model. This allows the management team to invest in a junior class of equity that provides dis - proportionate upside if certain value thresholds or exit multiples are achieved, while also bearing higher downside risk. 8.2 Management Participation Sweet Equity is Commonly Used
or strategic shareholders. Timing of Negotiations
Negotiations for irrevocable undertakings usually take place in parallel with the bidder’s due diligence and
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