SWITZERLAND Trends and Developments Contributed by: Beda Kaufmann and Alexander von Jeinsen, Advestra
ber of successful and fast-paced processes, including exits by financial sponsors. Secondly, we have seen more deals in the distressed space with targets affect - ed, among other things, by AI-driven disruption, tariffs and economic uncertainty as well as high leverages and borrowing costs. We have seen private equity houses on both sides of these deals. Some sponsors decided or were forced to offload underperforming portfolio companies since they reached the end of their fund life cycle or did not see a viable road for recovery. Others have been able to purchase targets at very attractive valuations and are working towards these targets’ turnaround. From the buyers’ perspective, pre-emptive bids con - tinue to be an often-used tool in trying to gain an edge over competitors in such processes. On the other side of the spectrum, in line with a trend towards fewer auctions, there has been a tendency towards more protracted transaction timelines and more buyer- friendly terms. This includes the increased use of clos - ing conditions in certain cases, as well as earn-outs and other deferred purchase price elements. While structured processes generally tend to accelerate the time to signing, one-on-one negotiations are more prone to delays, in particular when parties take more of a “wait and see approach” as a way of dealing with the current uncertainties regarding the economic out - look and the challenges imposed by the new US tariff regime. In the same vein, a significant part of private equity deal activity in Switzerland recently has been focused on implementing buy-and-build strategies around existing platforms. These transactions frequently involve targets in the smaller-cap segment of the market that are in turn often sourced on the basis of proprietary intelligence. The healthcare, software and professional services sectors are all examples of industries that have seen plenty of add-on transac - tions lately. Parallel to the decline in auctions, there has been a discernible shift towards the use of continuation funds and so-called GP-led secondaries in the Swiss mar - ket. As is not uncommon for trends and developments in the private equity sector, utilisation of these struc - tures appears to have been less prevalent in Switzer -
land than elsewhere initially. However, the popularity of these structures has certainly grown recently. This is considered part of a larger trend of GPs finding ways to return capital to LPs against the backdrop of a still challenging exit environment and longer holding periods for assets. In spite of the considerable interest that private equity houses have shown in taking Swiss-listed companies private in recent years and months, not many of these transactions have ultimately been announced. IPOs as a potential exit strategy also remain tricky in today’s environment, with several potential listings having been pushed into 2026. Regulatory Environment and Legal Developments Foreign direct investment control Switzerland still has very limited restrictions on invest - ments by persons from abroad. It has not yet intro - duced a comprehensive foreign direct investment (FDI) control regime, and existing restrictions are cur - rently confined to specific sectors such as residential real estate and the financial sector. Specific additional licensing requirements also apply to foreign inves - tors in such sectors as aviation, telecommunications, nuclear energy and radio/television. However, Swit - zerland, mirroring recent international developments, has been actively pursuing the introduction of new FDI control legislation for some time. The Federal Council published a draft of the law in December 2023 after being tasked to do so by the Swiss Parliament, which is currently deliberating on the draft. Interestingly, the Federal Council itself has so far been opposed to the introduction of new FDI control regulations; there - fore, the scope of application of the published draft is rather narrow compared to similar legislation in other jurisdictions. Specifically, the Federal Council main - tains that it is not aware of any past transactions that would have jeopardised Switzerland’s public order or national security. It will be interesting to follow further discussions on the topic as the legislative process advances in Switzerland against the backdrop of increasingly protectionist tendencies abroad. So far, it looks as though the final bill may well turn out to be more stringent than the draft proposed by the Federal Council. For now, however, the regulatory FDI environ - ment in Switzerland certainly remains favourable for private equity investors.
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