SWITZERLAND Trends and Developments Contributed by: Marco Toni and Lara Pafumi, Loyens & Loeff
zerland’s TMT sector, as businesses seek innovative solutions and strategic growth opportunities. Despite ongoing geopolitical tensions and economic policy challenges, such as the US tariffs, the outlook for the Swiss TMT M&A market remains cautiously optimistic. Easing inflation and lower interest rates are gradually improving overall conditions for deal- making. Furthermore, Switzerland’s stable economy, sound financial system and business-friendly legal and political environment continue to position the country as a highly attractive destination for technol- ogy-focused transactions. Zurich’s role as a leading European tech hub contrib- utes to a generally positive outlook. Its active start-up scene, skilled talent pool and concentration of soft- ware and IT firms make it a magnet for innovation and investment, reinforcing Switzerland’s appeal for tech M&A. However, while these factors support Switzer- land’s appeal for tech M&A, broader market uncertain- ties may still influence deal activity. Deal Structures and Other Key Aspects in Tech M&A Earn-out clauses The adequate valuation of a target company can be challenging in technology deals, especially regard- ing start-ups that have only been operating for a few years and can therefore only provide limited financial metrics. Performance estimates often rely heavily on future forecasts, and at closing, uncertainty around the company’s trajectory and or digital business model can lead to valuation gaps and differing price expectations between the seller and the buyer. To bridge this gap, M&A agreements in technology deals often include earn-out clauses. The earn-out is a performance-related, variable purchase price compo- nent paid in addition to a fixed base price. The perfor- mance indicators can be defined by the parties. Often financial performance indicators such as net income or operating cash flow are used. This ties the earn- out to actual revenues, helping offset uncertainties regarding future returns. Earn-outs allow both parties to share post-acquisi- tion risks and opportunities. For sellers, it is a way to
maximise proceeds without discounting the price due to buyer scepticism. For buyers, it enables a more accurate valuation of the target company and reduces future risks. If the seller remains involved post-closing, the earn-out can further incentivise strong perfor- mance during the earn-out period. Due diligence The general scope of due diligence in tech M&A deals needs to be determined on a case-by-case basis. Beyond typical legal, tax and financial checks, special attention is needed for IP, software and IT (including AI-related systems), and employees. The core value of tech companies naturally lies in their intangible assets, making IP due diligence central. It usually involves identifying the IP portfolio and assess- ing ownership. Legal and technical IP due diligence often go hand in hand. Understanding the technology is key to determining necessary IP rights. During the due diligence process, software owned and used by the target must be identified to assess its type (includ- ing any AI-generated components), developers, own- ership claims, licensing and marketing legality. IP due diligence should also cover past, current or emerging disputes. Corporate IT environments are becoming increasingly complex, not least due to AI. IT due diligence aims to identify risks such as system vulnerabilities and data breaches and ensure integration or divestiture does not disrupt critical business processes. AI-specific due diligence is gaining importance, par- ticularly when the target’s value relies on proprietary AI capabilities. Buyers should assess the maturity and scalability of AI solutions, the quality and ownership of underlying data assets, and the robustness of gov- ernance and compliance frameworks. It is essential to determine whether AI features are genuinely differ- entiating or easily replicable, and whether responsible AI practices are in place to mitigate reputational and regulatory risks. Overlooking these aspects may result in missed opportunities for value creation or exposure to significant post-deal challenges. Employment due diligence includes reviewing con- tracts – in particular, those of the founders and other
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