SWITZERLAND Law and Practice Contributed by: Marco Toni, Gilles Pitschen and Leonard Baumann, Loyens & Loeff
In the past few years, the number of IPOs at the SIX Swiss Exchange has been rather low. There- fore, in 2022, the SIX Swiss Exchange launched a new segment for small and mid-caps to revive the IPO market as an alternative to sale pro- cesses. However, the effects have been limited so far. The costs, time and efforts for an exit via an IPO remain significantly higher than via a sale process. 3.2 Choice of Listing A Swiss company is most likely to list in Switzer- land unless it has specific interests in listing in another country. Usually, the decisive factor for a listing abroad would be a larger investment base and higher industry/sector valuations. Currently, such trends are not noted in Switzerland. The main advantages of a “home country” listing in Switzerland are: • the efficiency of the listing procedure and list- ing maintenance; and • the avoidance of heavier regulatory burdens and additional exposure to litigation risks in multiple jurisdictions. In general, although there are Swiss companies that are listed on multiple stock exchanges in different jurisdictions, the costs of such multiple listings are usually considered higher than their benefits. 3.3 Impact of the Choice of Listing on Future M&A Transactions A listing on a foreign exchange will have the effect that the company will continue to be sub- ject to Swiss corporate law but must, in addition, comply with the rules of the foreign exchange. This dual applicability of legal systems may lead to increased complexity in structuring a future sale, especially in case of potential conflicts between domestic and foreign law.
Moreover, the Swiss tender offer rules (includ- ing squeeze-out rules in the context of tender offers) will not apply to a sale of a company that is only listed on a foreign exchange. Therefore, additional steps, such as the implementation of a squeeze-out merger pursuant to the Swiss Merger Act, may be necessary to successfully achieve a sale of 100% of the shares in the com- pany. 4. Sale as a Liquidity Event (Sale of a Privately Held Venture Capital- Financed Company) 4.1 Liquidity Event: Sale Process There is no typical rule for a sale being run as an auction or in a bilateral negotiation. Auctions are usually chosen if the investors are keen to maximise the purchase price. However, the uncertainties and costs of an auction process may keep potential buyers from participating in the auction. Bilateral negotiations are usually conducted by strategic investors that approach potential targets directly if they see a strategic fit. 4.2 Liquidity Event: Transaction Structure Usually, the sale of a privately held technology company is structured as a share purchase whereby all the shares in the company are sold to the purchaser. Key members of the manage- ment holding equity in the company are usually required to roll over part of their sale proceeds in the equity of the buyer. 4.3 Liquidity Event: Form of Consideration The consideration in a sale of a Swiss privately held venture capital-financed technology com- pany is usually cash. Certain rollovers for the key management are structured in a way that
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