SWITZERLAND Law and Practice Contributed by: Marco Toni, Gilles Pitschen and Leonard Baumann, Loyens & Loeff
Loyens & Loeff Alfred-Escher-Strasse 50 CH-8002 Zurich Switzerland Tel: +41 43 434 67 00 Email: zurich@loyensloeff.com Web: www.loyensloeff.com
1. Market Trends 1.1 Technology M&A Market
as a business location and the many tech start- ups that are constantly emerging from the highly active start-up community, software companies and IT service providers have been popular tar- gets for inbound transactions. In terms of regulatory trends potentially affect- ing M&A activity in the tech industry, the new Swiss Data Protection Act (“revDPA”) and recent developments in the field of foreign direct invest- ment (FDI) screening as well as AI are particu- larly worth mentioning. The revDPA modernises Swiss data protection law, aligning it with EU law – in particular, the EU General Data Protection Regulation (GDPR). Given that Switzerland has no general FDI screening mechanisms in place, a consultation process on a preliminary draft of a new law on FDI screening took place in 2022. Based on the rejective results of this consultation process, the Federal Council adopted a significantly reduced scope for the Investment Screening Act in mid- December 2023. The draft legislation is currently being debated in the Swiss Parliament. A par- ticularly controversial issue is whether private, non-state investors should also be subject to FDI control. The EU Artificial Intelligence Act (the “EU AI Act”), which came into force on 1 August 2024,
Numerous challenges such as higher interest rates, a strong Swiss franc, turbulence in the financial sector, and ongoing global geopolitical tensions affected deal activity in 2024. This also impacted M&A activity in the Swiss TMT sector, which saw a significant decline in the first half of 2024 compared to the previous years. However, it is noteworthy that private equity and financial investors remained highly active in the Swiss TMT M&A market, accounting for a significantly higher share of deals compared to the global average. This underscores the sector’s attrac- tiveness to financial investors. 1.2 Key Trends In the TMT sector, the ongoing need for compa- nies to transform their businesses, drive innova - tion and enhance digitalisation – particularly with advances in AI – remains a key growth driver. While cross-border M&A activity in Switzerland in general could see a shift from inbound to more outbound transactions since mid-2022, there has been a strong interest from foreign inves- tors in Swiss IT service providers. Compared to other sectors, TMT deals in Switzerland have a higher proportion of foreign investors, highlight- ing the generally more international orientation of the sector. Given Switzerland’s attractiveness
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