SPAIN Law and Practice Contributed by: Ignacio Sanjurjo, Ignacio Echenagusia, Alejandro Espín and Román Cantín, Deloitte Abogados y Asesores Tributarios, S.L.U.
conditions. Purchasers typically resort to various mechanisms, including: • obtaining a commitment letter from lenders; • including provisions in the SPA allowing adjust - ment, retention and/or deferral of the purchase price as a guarantee; and • termination of the transaction. When the acquisition of the target is implemented by the PE fund through an SPV, it is standard market practice for sellers to require a commitment letter to be issued by the parent company (the PE fund) con - firming the availability of both equity and debt. Acquired Stake Direct or indirect acquisition of the entire share capital of the target company is the most common PE trans - action in Spain, followed by an alternative structure consisting of the acquisition of a majority sharehold - ing; this is customary in order for key management • retain talent and their management functions; and • provide them with a major incentive in exchange for maximising the target company’s value after the acquisition. 5.4 Multiple Investors team personnel and founders to: • remain as minority shareholders; In Spain, PE transactions involving multiple investors remain uncommon, except in the context of large- cap deals. Although some exceptional PE transac - tions involve other investors alongside the PE fund, this structure is infrequent and more characteristic of VC deals, and is usually driven by the modus operandi of the PE fund. External co-investors generally hold limited governance and political rights over the target company, which remains under the control of the PE fund. Consortia of multiple investors – comprising both PE funds and corporate investors – are less common in Spain compared to other investment structures, as these two types of investor have opposing interests: PE funds tend to prioritise an active ownership and value creation, whereas corporate investors tend to focus on strategic investments aligned with their core
business objectives, the creation of synergies and expansion of their business.
6. Terms of Acquisition Documentation 6.1 Types of Consideration Mechanism The predominant consideration mechanisms in the PE market in Spain are locked-box and completion accounts, along with fixed-price mechanisms. The combination of locked-box and completion accounts mechanisms is becoming increasingly common, where both parties seek to balance consideration cer - tainty with the ability to adjust specific post-closing financial items. Completion Accounts Mechanism According to this mechanism, the initially agreed purchase price is subject to potential post-closing adjustments. On the closing date, the seller’s audi - tor typically determines the relevant parameters used to agree the equity value (mainly net debt and work - ing capital). The purchaser usually has a post-closing review period (normally several months in duration) to review these parameters and, where appropriate, challenge the calculation of the purchase price. Locked-Box Mechanism The locked-box mechanism has continued to gain traction and remains the most widely used pricing structure in 2024 in sell- and buy-side transactions. Under this mechanism, the parties agree on a fixed purchase price, based on financial statements, on a specific closing date. Typically, the parties agree that the financial statements must be audited or at least mutually agreed. The locked-box mechanism allows adjustment of the purchase price in the event of leakages, which are actions executed by the seller between the reference date and the closing date that fall outside the ordinary course of business. Earn-Outs, Deferred Consideration and Roll-Over Structures Earn-outs, deferred consideration and roll-over struc - tures are relatively common in PE transactions in Spain. PE funds focus on maximising returns within a
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