NETHERLANDS Trends and Developments Contributed by: Maarten de Boorder, Bas Vletter, Samuel Garcia Nelen and Rutger Sterk, Greenberg Traurig, LLP
were exacerbated by the banks’ decreased appetite to lend significant funds, especially in the large-cap segment, due to uncertainties in the economic cli - mate. The gap between seller and buyer expectations regarding valuations continues to be a major theme, likely leading to the use of creative consideration mechanisms such as earn-outs or share considera - tions. With banks tightening their belts, direct lend - ers (such as credit funds, frequently managed by the larger private equity funds) have gained market share, particularly in acquisition financing. These direct lend - ers have a preference for buy-and-build initiatives, giving lenders the opportunity to deploy more capital. Increasing scrutiny of foreign investment In the past few years, an increasing number of juris - dictions subjected foreign and national investments to prior screening by means of a system known as “foreign direct investment screening”. On 1 June 2023, the Netherlands introduced its National Secu - rity Investment Act ( Wet veiligheidstoets investeringen, fusies en overnames or the “NSI Act”). Based on this new legislation, investments that pose risks to Dutch national security can be blocked. The Act is country- neutral and as such applies to Dutch, non-Dutch and non-EU investors. In essence, the NSI Act establishes a national security regime, rather than a foreign direct investment regime. The NSI Act is based on national security considera - tions relevant to the maintenance of democratic order, state interests and social stability – more specifically, to ensuring the uninterrupted functioning of vital pro - cesses, safeguarding the exclusivity of knowledge relating to sensitive technologies/vital processes and averting the creation of undesirable strategic depend - encies. Accordingly, the NSI Act establishes a screening pro - cedure only for investments targeting vital providers, companies active in the area of sensitive technolo - gies and operators of business campuses. A com - pany that operates, manages or makes available a service whose continuity is vital to Dutch society is considered a vital provider, such as key financial market infrastructure providers like significant banks, payment services providers, trading platforms, major transport hubs (eg, Schiphol Airport, the Port of Rot -
terdam), heat network and gas storage operators, and extractable energy and nuclear power companies. The NSI Act will have a substantial impact on acquisi - tions in the Netherlands, necessitating careful assess - ment of whether a transaction falls within its scope. Parties should expect an additional administrative burden and an impact on their transaction timetables if their M&A activities fall within the scope of the NSI Act. Introduction of the EU Foreign Subsidies Regulation The EU Foreign Subsidies Regulation (FSR) entered into force on 12 January 2023 and creates a regime aimed at combating distortions of competition in the EU internal market caused by foreign subsidies. It imposes mandatory notification and approval require - ments on the acquisition of businesses with significant EU operations and large EU public tenders, and gives the European Commission (EC) the power to launch ex officio investigations. The notification obligations have been fully applicable since 12 October 2023. Companies active in the EU (or plan to invest in the EU or participate in EU public tenders) that have received “financial contributions” from non-EU countries need to put in place systems for gathering the information required for FSR. To avoid delaying transactions, any company potentially active in larger M&A transactions having an effect within the EU should start prepara - tions well in advance. Notifiable transactions must be approved by the EC before they can close, creating a standstill obligation. Given the above, companies contemplating an M&A deal should consider FSR, in addition to foreign direct investments and other regulatory aspects. Besides the impact of FSR on the transaction itself, the FSR should also be taken into account in the context of the due diligence on the target. Fund structure and compensation After considering a listing for a while, CVC Capi - tal completed its IPO and debuted on the Amster - dam stock exchange in 2024. This is in line with a longer-term trend of private equity sponsors grow - ing from small private firms with a few partners to
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