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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