FINLAND Law and Practice Contributed by: Christoffer Waselius, Jaakko Huhtala and Niko Markkanen, Waselius
sellers. The vendor due diligence report or fact book is typically given on a non-reliance basis to the buyer and its advisers. Hence, separate release and non- reliance letters are typically entered into in connection with the disclosure of the vendor due diligence report. The buy-side legal adviser typically provides the buy - er with reliance on the buy-side legal due diligence report, and, on a less frequent basis, on the buyer’s warranty and indemnity insurer or lenders. A privately held company is typically acquired by entering into either a share purchase or an asset pur - chase agreement, with share purchases being used more often. Buyers may also participate in auction processes arranged by or for the sellers. Auction processes are more common when the seller has engaged an M&A adviser and the target is likely to attract several purchase candidates. Typically, there are no material differences between the terms and conditions of a privately negotiated transaction and an auction sale, but the warranties tend to be less extensive in an auction sale than when negotiating with only one potential buyer. That said, when warranty and indemnity insurance is used, the warranty catalogue offered by the sellers tends to be fairly extensive. In an auction sale, the seller usually prepares the first draft of the agreement. “Stapled” warranty and indemnity insurance is increasingly being used in auction processes, whereby a seller- nominated insurance broker pre-packages an indem - nity and warranty insurance policy that the buyer is expected to sign. Public tender offers are used in takeover bids made by private equity funds. 5.2 Structure of the Buyer The private-equity-backed buyer is typically struc - tured through one or more SPVs, which are domestic or foreign limited liability companies, while the private equity fund would, for instance, be directly involved in the equity commitment letter, if any. The structures of 5. Structure of Transactions 5.1 Structure of the Acquisition
the transaction and the buyer are typically influenced by tax considerations. 5.3 Funding Structure of Private Equity Transactions Private equity deals are commonly financed through a combination of debt and equity financing, in line with international practices. Equity commitment letters as well as commitment letters from banks are commonly used to provide contractual certainty of funds, particu - larly in deals involving international sponsors. In highly competitive transactions with high-value targets, funds requirements can go further and fully executed loan documentation may be required for submitting a valid bid. Equity and debt funds are typically commit - ted at the signing stage of the transaction. In most private equity deals, the private equity fund buys a majority stake in the target, but there are of course private equity funds whose strategy is to acquire minority stakes only. 5.4 Multiple Investors Consortiums are common where the value of the tar - get is high, and also where the industry sector of the target makes consortiums more useful, such as infra - structure assets where having (in particular, domes - tic) pension funds in the consortium may increase the chances of a winning bid and also assist with public relations issues. Consortiums are quite rare in smaller and mid-sized deals. Co-investors are usually more passive than a general partner, but media coverage critical of private-equity-backed companies, particu - larly in the healthcare sector, has caused co-investors to enforce their corporate social responsibility poli - cies more strongly in companies in which they have invested. 6. Terms of Acquisition Documentation 6.1 Types of Consideration Mechanism Completion Accounts and Locked-Box Structures Both completion accounts and locked-box consid - eration structures are used in Finland, depending on the type of transaction and the parties involved. Fixed price deals without locked-box structure are rarely seen. Locked-box structures became increasingly
172 CHAMBERS.COM
Powered by FlippingBook