DENMARK Law and Practice Contributed by: Simon Milthers, Thomas Bøgedal Kristiansen, Mikkel Friis Rossa and Emil Steenberg, Bech-Bruun
4.2 Liquidity Event: Transaction Structure The transaction structure for the sale of a privately held tech company with venture capital investors can vary, but there are some common trends and struc- tures typically observed. One common structure is the full sale of the company, where 100% of the shares are sold to the buyer, allowing founders and venture capital investors to fully exit and realise their returns. This is often preferred by strategic acquirers or private equity firms seeking complete control. Another structure is the sale of a controlling inter- est, where the buyer acquires a majority stake while some existing shareholders (including venture capital investors) retain a minority interest. This allows ven- ture capital investors to stay involved and benefit from future growth, and buyers may prefer this to lever- age the expertise and network of existing investors and management. Venture capital investors may seek secondary sales or liquidity options, allowing them to sell their shares to the buyer or other investors, provid- ing an exit opportunity while the company continues with new ownership. In some cases, the management team may partner with a financial sponsor to buy out the company from existing shareholders (including venture capital investors), providing continuity and stability while allowing the management team to take a more significant ownership stake. The current trend in Denmark favours flexibility in transaction structures so as to accommodate the interests both of buyers and sellers. While full sales are common, there is also growing interest in struc- tures that allow venture capital investors to retain a stake, especially if they believe in the company’s long-term growth potential. The choice of transaction structure depends on the specific circumstances, the goals of the shareholders, and the strategic objectives of the buyers. 4.3 Liquidity Event: Form of Consideration The standard approach for transactions involving pri- vately held technology companies has been to com- plete the sale entirely for cash. However, there is a growing trend towards structuring deals that include stock-for-stock exchanges or a combination of stock and cash. This flexible transaction structure allows the involved parties to consider various strategic options,
EU Takeover Directive, which also forms the basis of the Danish takeover regulation. In the event of an initial dual-listing domestically and in another EU jurisdiction, the company must on the first day of trading announce whether it has opted to be subject to the Danish takeover regulations or the applicable regulations in the other jurisdiction. The Danish takeover regime does not apply to takeo- vers of companies listed on a non-regulated market (eg, multilateral trading facilities such as Nasdaq First North Growth Market Denmark), nor does it apply to companies solely listed on a stock exchange outside the EU. Accordingly, feasibility of a future sale of a company listed on a foreign exchange is subject to an analysis of the specific applicable rules. Generally, the Danish takeover rules are not considered prohibitive to a sale/ takeover. Notwithstanding applicable stock exchange laws, minority squeeze-outs (available to shareholders hold- ing more than 90% of the share capital and voting rights) in Danish companies are regulated by the Dan- ish Companies Act. This applies to all Danish compa- nies, regardless of a company being listed on a foreign stock exchange. 4. Sale as a Liquidity Event (Sale of a Privately Held Venture Capital- Financed Company) 4.1 Liquidity Event: Sale Process In Denmark, the approach to sales processes var- ies, encompassing auction methods as well as direct negotiations with a chosen buyer. Lately, there has been a noticeable shift towards direct negotiations or auctions that swiftly evolve into one-on-one discus- sions – a shift indicative of a market that favours buy- ers. Nonetheless, technology firms with considerable valuations or promising potential still predominantly undergo auction processes to ensure competitive offers and achieve the highest possible sale price.
83 CHAMBERS.COM
Powered by FlippingBook