AUSTRIA Law and Practice Contributed by: Philipp Baubin and Stefan Weber, Weber & Co
option for companies seeking to finance acquisi- tions quickly and efficiently. 1.2 Corporates and LBOs Although considerably smaller than other juris- dictions, the Austrian acquisition financing mar- ket has experienced significant activity in recent years, particularly in terms of corporate acqui- sitions and LBOs. Notably, strategic investors have been prominent in driving these transac- tions. Public sources refer to the following recent largest transactions as illustrations of the robust activity in Austria’s acquisition financing market. • Nippon Express’ acquisition of cargo-partner GmbH in 2023 for EUR1.4 billion. • One Rock Capital Partners’ 61% investment in Constantia Flexibles Group in 2023 for EUR1.1 billion. • Bain Capital’s 20% investment in IMS Nano- fabrication GmbH in 2023 for EUR785 million. It is basically permissible and does not hinder enforcement in Austria to choose a foreign law as governing law in loan agreements. The gov- erning law in acquisition finance varies depend- ing on the complexity of the transaction and the parties involved. If the acquisition is an Austrian domestic deal, Austrian law will usually be the governing law. In cross-border acquisitions, where multiple jurisdictions are involved, the governing law might be selected based on fac- tors such as the location of the target or the juris- dictions of the financing parties (especially when large international banks are involved). Common choices include English law, German law and New York law. While English law was 2. Documentation 2.1 Governing Law
chosen in the past in the majority of transac- tions, as a consequence of Brexit, German law in recent years has become more important for transactions with respect to Austrian targets. Other than for loan and intercreditor agreements, there are restrictions on the granting and perfec- tion of security rights. Depending on the type of security, the security agreements over Austrian assets must be governed by Austrian law. This applies, among others, to pledges over shares in Austrian companies, pledges or security assign- ments of Austrian law governed receivables and the creation of mortgages over real estate locat- ed in Austria. 2.2 Use of Loan Market Association (LMA) Agreements or Other Standard Loans The financing documentation used for Austrian transactions varies considerably depending on the type and size of transaction and the parties involved. Bank loan documentation typically includes standardised terms and forms that are widely recognised and accepted in the market. In par- ticular, the documentation of the Loan Market Association (LMA) is often used as a reference point. However, local practices and legal require- ments also play a significant role. As far as smaller, non-syndicated transactions are concerned, Austrian banks frequently work with in-house form documents. The basis for these smaller financing transactions are usually standardised loan agreements as used by the respective local credit institutions. When it comes to international loan syndicates or large-volume domestic syndicate transac-
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