DENMARK Law and Practice Contributed by: Morten Krogsgaard and Lennart Meyer Østenfjeld, Moalem Weitemeyer
2. Documentation 2.1 Governing Law
1.2 Corporates and LBOs Impact of Global Events on Denmark’s Economic Stability Denmark, like other European countries, has been significantly affected by international uncertainty and market fluctuations, which have affected investor confidence and business investments. Unfortunately, this trend has con- tinued into 2025. Market sentiment affects the valuation of risk, leading to prolonged times required for nego- tiating M&A transactions as well as arranging financing and negotiating financing terms. This situation has opened doors for private debt pro- viders, who are able to evaluate and benchmark risk in a different way. Increased M&A Activity The Danish market experienced an increase in M&A activity in 2024 but transaction volumes remained well below 2021 levels. M&A trans- actions in 2024 included large and high-profile transactions involving Danish buyers or targets evidencing a qualitative increase in deal value over the previous year. The average quarterly transaction value rose by nearly 15% in 2024 compared to 2023. This was primarily driven by corporate M&A activity where there were record- breaking transactions, both in terms of deal val- ue and the ability to bridge debt capital markets and equity capital markets. The market for large private equity transactions remained quiet. Additionally, small transactions showed a quanti- tative increase in the number of deals compared to 2023. These deals did not require significant debt financing and were managed bilaterally with relationship banks and/or with the use of alternative financing structures.
There is no mandatory Danish law requirement for facility agreement documents to be governed by Danish law, subject to customary public order qualifications. The governing law of security documents will be determined applying Danish international private law (and agreed security principles). For domestic transactions, including those involving foreign subsidiaries or targets where the parent company is Danish, the finance doc- uments are typically governed by Danish law. Acquisition financing through Danish regional banks is almost exclusively governed by Dan- ish law. Danish corporates often have diverse financing structures and are accustomed to certain prod- ucts being governed by non-Danish law and they are generally open to accepting foreign law. However, there is a tendency to push for Danish law in facility agreements, especially in bilateral deals or club deals involving a majority of Dan- ish lenders. This preference is based on several factors, including: • precedent argumentation: the use of Danish law is often justified by previous transactions and alignment of terms between financiers; • jurisdiction argumentation: Danish law is pre- ferred for its familiarity and the convenience of local jurisdiction; and • enforceability: following Brexit, there are enforceability of English judgments concerns that make Danish law more attractive. Danish private equity funds are typically suc- cessful in pushing for Danish law. In contrast, non-Danish private equity funds tend to use
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