SPAIN Law and Practice Contributed by: Ignacio Sanjurjo, Ignacio Echenagusia, Alejandro Espín and Román Cantín, Deloitte Abogados y Asesores Tributarios, S.L.U.
5. Structure of Transactions 5.1 Structure of the Acquisition Private SPAs
• if certain specific contingencies are identified and quantified during the due diligence process, spe - cific indemnities could be included in favour of the purchaser; • for any issue identified that must be attended to by third parties, and which is of material importance to the execution of the transaction, a CP could be included; and • the parties may also agree to take measures prior to or simultaneous with closing. Due Diligence Findings In due diligence processes, it is common to include an executive summary, which is a brief overview of the identified contingencies that could have an impact on the transaction. Additionally, the annexes and appendices to the due diligence report provide a more detailed analysis of the documents reviewed. The documents provided by the sellers during the due diligence process – and, in some cases, the due dili - gence itself – are among the most discussed points in the negotiation process, which typically focuses on whether the information reviewed or provided exempts the seller from any liability in relation to issues raised in such documents or the report. 4.2 Vendor Due Diligence Vendor due diligence (VDD) processes are those in which the seller commissions an advisor to carry out a due diligence review of the target company it intends to sell. These due diligence processes are generally not as broad as the buyer’s due diligence review. In any event, the scope of a due diligence process will depend on each seller needs and requirements. This type of due diligence is usually commissioned by the sellers for competitive processes in which the VDD is provided to the bidders participating in the competitive process, and their advisors, so that they can be privy to an initial overview of the target, or when the seller wants to obtain a clearer understand - ing of specific matters that could have an impact on the transaction.
Private SPAs remain the predominant structure for PE transactions in Spain. Court-approved schemes are reserved for insolvency or liquidation procedures, while tender offers are restricted to listed companies. Private SPAs are typically formalised as public deeds before a Spanish notary public. In this regard, although the presence of a notary public is only mandatory in certain transactions (eg, in the acquisition of shares in a limited liability company; sociedad limitada or SL), they are commonly involved in PE deals, given that the legal certainty they offer benefits all the parties involved. Deeds granted before the notary become enforceable titles for all purposes provided for under the applicable Spanish law, and the parties may request certified or simple copies of said deeds at any time. Bilateral and Auction Processes PE transactions may be structured either as bilateral negotiations or as competitive (auction) processes, depending on the specific characteristics of each transaction. The number of PE deals structured as auctions with multiple prospective bidders fell from 2022 onwards; there was a slight rebound in 2023, with auction pro - cesses returning to usual levels according to historical market trend, but the decrease continued in 2024. In general terms, for medium- and large-cap compa - nies, transactions are generally carried out through competitive auction processes that tend to place the seller in a stronger position, aiming to maximise the price and ensure the best contractual conditions. Nonetheless, the extent of this advantage varies depending on the specific features of the transaction. Small-cap company transactions usually entail a bilat - eral negotiation between the seller and buyer. Share and Asset Deals Share deals remain significantly more common than asset deals. While the acquisition of a company’s
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