NETHERLANDS Law and Practice Contributed by: Herald Jongen, Maarten de Boorder, Samuel Garcia Nelen and Jelmer Kalisvaart, Greenberg Traurig, LLP
3.2 Choice of Listing Generally, if a Dutch company pursues a list- ing, Euronext Amsterdam is considered since it is one of the major stock exchanges having international exposure, and because some well- known tech companies (eg, Adyen) are listed on Euronext Amsterdam. 3.3 Impact of the Choice of Listing on Future M&A Transactions If a Dutch company chooses to list on a foreign exchange, this does not in principle affect the feasibility of a future sale. Furthermore, on a for- eign stock exchange, similar corporate govern- ance rules generally apply to the company, and Dutch statutory minority squeeze-out rules also apply equally. 4. Sale as a Liquidity Event (Sale of a Privately Held Venture Capital- Financed Company) 4.1 Liquidity Event: Sale Process Typically, the sale of a privately held venture cap- ital-backed tech company is conducted through bilateral negotiation, often on an exclusive basis with a selected candidate, rather than through an auction process. Specific strategic buyers who possess the necessary expertise and can unlock future value are preferred over a range of bidders in an auction. Bilateral negotiations facilitate speed and efficiency and allow for more bespoke transaction structures compared to an auction-based disposal. 4.2 Liquidity Event: Transaction Structure The sale of privately held technology companies that have a number of venture capital investors is typically structured as a sale of shares in the top-holding company. The current trend is to sell a controlling interest, while the venture capital
funds stay on as minority investors. However, full acquisitions are also not uncommon, and the choice between a full and partial exit often depends on (i) the strategic goals of the buyer, (ii) the preference of the existing shareholders and (iii) the macroeconomic environment at large. Venture capital investors may prefer structures that allow them to stay on as shareholders if they see significant upside potential. Continued access to the venture capital’s networks and Consideration for transactions involving privately held venture capital-financed companies is often a mix of cash and stock. The stock can be equity in the capital of an acquisition entity (in case of a private equity buyer) or in the parent (in case of a strategic buyer). That being said, this very much depends on the deal dynamics and stra- tegic plans of the buyer. We also see (often) full cash and (less often) full stock deals. 4.4 Liquidity Event: Certain Transaction Terms Founders and venture capital investors are typically expected to provide warranties, a tax indemnity and sometimes specific indemnities, depending on the due diligence findings and the leverage position between parties. As in many industries, a continuous increase in the use of warranty and indemnity (W&I) policies for venture capital-backed transactions can be seen in the Netherlands. expertise can also play a role. 4.3 Liquidity Event: Form of Consideration Sellers usually provide a customary set of war- ranties (categorised as business, fundamental and tax warranties) and a tax indemnity, in some cases insured via a W&I insurance policy with no or limited residual liability for the respective sell- er. A distinction is often made between found-
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