SWITZERLAND Law and Practice Contributed by: Daniel Haeberli and Simone Gloor, Homburger
1. Market 1.1 Major Lender-Side Players
liberal cross-border regulatory regime. Howev- er, since the implementation of the new Swiss financial regulatory regime on 1 January 2020, debt funds are now subject to supervision and specific regulatory requirements. In particular, most fund distributors must be registered as investment advisers. However, pure cross-bor- der lending without the physical presence of the lender in Switzerland is generally unregulated. The only exception is for so-called “lombard (margin) loans” , which qualify as financial ser- vices that are subject to the Financial Services Act. In addition, platforms connecting institutional investors and borrowers are attempting to enter the Swiss lending market and to increase their share. 1.2 Corporates and LBOs In 2024, private equity (PE) firms modestly increased their involvement in Swiss M&A transactions. Despite this increase, PE activ- ity remained below pre-2022 levels, with no PE-backed transactions among the top ten by value in 2023. Regular leveraged buyouts (LBOs) continued to be the predominant strategy for most transactions, particularly in the lower and mid-market segments, which are less reliant on international debt markets and often financed by Swiss banks.
The Swiss M&A market is driven mainly by stra- tegic investors. However, investors are being challenged to find more creative ways to get deals done, particularly in terms of financing. Large transactions are facing financing difficul- ties due to more expensive debt, and investors have to look for sophisticated financing struc- tures that go beyond term loans. Moreover, financial investors have recently suffered from the recession and higher prices, which have slowed their activism. Swiss banks – in particular UBS and Zürcher Kantonalbank – are usually involved as arrang- ers in connection with bank financings of Swiss acquisitions financed in the Swiss market. In these transactions, a small group of Swiss banks, including the Swiss cantonal banks, par- ticipate in the banking syndicate. On 1 July 2024, the merger between the Swiss operating companies of UBS and Credit Suisse was legally completed, and UBS has started to transfer client relationships and products of Credit Suisse to the UBS systems. International banks usually take the lead in arranging large Swiss acquisitions, through the London market, which – in the recent low inter- est rate environment – typically consisted of only a senior term loan provided by a syndicate of international banks. However, as interest rates have risen, there has been a trend towards com- bined bank/bond structures, which are placed internationally with institutional high-yield inves- tors and other international banks. The activity of foreign debt funds has remained stable in Switzerland due to the country’s mostly
2. Documentation 2.1 Governing Law
The law governing an acquisition finance trans- action is determined by several factors, such as the parties involved, the transaction structure, the size of the transaction and the financing instruments used.
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