SLOVAKIA Law and Practice Contributed by: Lukáš Michálik, Peter Makýš and Šimon Hora, Ments s.r.o.
Stock Exchange’s main regulated PRIME mar- ket. This company has also recently entered the Bra- tislava Stock Exchange in Slovakia as part of a dual listing. This shows that, even from Slovakia, it is possible to do business based on a strong presence on the local capital market. 3.3 Impact of the Choice of Listing on Future M&A Transactions In Slovak law, there is no restriction that would limit the feasibility of a future sale due to the listing of shares for trading on a foreign stock exchange. Overall, the capital markets within the EU member states are very well harmo- nised, which should minimise any restrictions on the applicability of a future sale in the event of a listing of the company’s shares on a stock exchange in a foreign jurisdiction. However, this only applies to companies whose shares are traded within an EU member state. Specifically, it should also be noted that there is even greater proximity and similarity between the Slovak and Czech legal systems, which is often a destination for Slovak companies to list- ing for shares on the stock exchange. 4. Sale as a Liquidity Event (Sale of a Privately Held Venture Capital- Financed Company) 4.1 Liquidity Event: Sale Process Both the auction and the direct bilateral nego- tiation with a chosen buyer are viable options in the Slovak jurisdiction. However, direct bilateral negotiation tends to prevail. In this case, mar- ket research, intermediaries (eg, financial or legal advisors) or various investment platforms repre-
sent a method to connect potential buyers with the potential sellers. 4.2 Liquidity Event: Transaction Structure The most typical transaction structure in Slova- kia is the direct sale of a privately held tech- nology company, even if it has a number of VC investors. Generally, the owners of a technol- ogy company would enter into shareholders’ agreements outlining liquidity events, together with various tag-along, drag-along, and call/put option rights which would often be triggered when a sale is initiated. Should there be a large number of smaller VC investors, it is customary that an investment vehicle is formed one layer above the technol- ogy company to make the direct sale a little less complicated. Such VC investors then have limited rights in blocking the sale through the investment vehicle. In some cases, VC investors have the option to continue to remain shareholders, but this is less frequent, and well-structured investment rounds usually aim to achieve complete sale. 4.3 Liquidity Event: Form of Consideration In the Slovak jurisdiction, the sale of a company (or part of it) for a consideration in the form of cash is still common. However, in recent times, several sales of start-ups have taken place in which large foreign technology companies have been on the buyers’ side. In such cases, the instigators of the sale must have information that part of the consideration was paid in the form of shares of the buyer. In Slovak law, there are no restrictions that would limit a possible stock-for-stock transaction. It is therefore to be expected that, as in foreign juris-
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