DENMARK Law and Practice Contributed by: Dan Moalem, Jakob Skafte-Pedersen, Poul Guo and Thomas Enevoldsen, Moalem Weitemeyer
10.2 Drag and Tag Rights Standard Features of Danish Private Equity Structures Drag-along and tag-along rights are standard features in Danish private equity ownership structures. They serve to ensure exit flexibility for the majority investor and protect minority shareholders, including manage - ment and co-investors. Typical Thresholds Drag-along rights are typically structured to ensure that the private-equity fund controls the exit – also in a (large) minority investment. In situations with a strong founder having a high ownership stake, a qualified majority may be negotiated. Tag-along rights are generally granted to all minority shareholders and are triggered when the majority sells a controlling stake, usually defined as more than 50%. Differences Between Management and Institutional Co-Investors Institutional co-investors may negotiate stronger tag- along protections and may also seek approval rights over certain drag-along sales, particularly if they are significant minority holders. Management sharehold - ers, by contrast, typically have more limited influence and are bound by standard drag provisions and may further be required to accept restrictive covenants and/or reinvestment in connection with a sale. 10.3 IPO Lock-Up Arrangements Are Market Standard In Danish IPOs involving private equity sellers, it is customary for the sponsor to be subject to a lock-up period, typically ranging from 180 to 360 days post- listing. The exact duration depends on market con - ditions, size of the offering and underwriter require - ments. The lock-up is often staggered for different shareholder groups. Relationship Agreements Ensure Arm’s Length Governance Relationship agreements are usually not entered into between the sponsor and the listed company. Other Particularities in PE-Led IPOs Private equity-led IPOs in Denmark often involve:
generally uphold this approach and are reluctant to impose shareholder liability without compelling jus - tification. 10. Exits 10.1 Types of Exit Private Sales Remain the Dominant Exit Route In Denmark, the most common forms of private equity exit continue to be secondary sales to other financial sponsors and trade sales to strategic buyers. IPOs are less frequent but remain an option for larger, growth- oriented companies, especially those in sectors like tech, life sciences or infrastructure. However, continuation vehicles have become increas - ingly utilised as sponsors seek alternative ways to retain high-performing assets in a depressed M&A environment. Dual-Track Processes Used Selectively Dual-track exit processes are rare, but may be used occasionally, particularly in high-value or high-visibility assets. Also given the depressed Danish IPO mar - ket (though dual-track sometimes pursue an IPO in other jurisdictions) and the resource-intensive nature of such processes, they are rarely used. Triple-Track Structures Are Rare Triple-track exits, which combine an IPO process, a trade/sponsor sale and a refinancing or recapitalisa - tion option, are rare in the Danish market. They are more likely to be seen in cross-border or regional exits led by international sponsors with scalable assets. Reinvestment or Roll-Over Private equity sellers do not typically roll over equity upon exit, unless the exit is structured as a partial sale or merger where the sponsor retains a minority position. In some sponsor-to-sponsor transactions, especially at the upper end of the market, the selling fund may retain a small stake or reinvest alongside the new sponsor to align interests or support future value creation.
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