BRAZIL Law and Practice Contributed by: Vitor Henriques and Gabriela Sella, Franco Leutewiler Henriques Advogados
process, as well as the possibility of maintaining a certain level of the company’s business. 5.5 Definitive Agreements M&A transactions that require the implementa - tion of a tender offer are documented in defini - tive agreements, the content of which shall be reflected in the offer instrument and the terms and conditions of which shall comply with the applicable laws and regulation from the CVM. 6. Structuring 6.1 Length of Process for Acquisition/ Sale In Brazil, the process for acquiring or selling a business can vary widely depending on the com - plexity of the deal and the regulatory approvals required. On average, the process can take sev - eral months to a year to finalise. Brazilian gov - ernmental measures enacted in response to the pandemic, such as mandates for remote work and restricted access to government facilities, have notably introduced practical delays and hurdles to the deal-closure process. However, the digitalisation process implemented by the government and the courts during the pandemic has had a positive impact on M&A transaction processes. 6.2 Mandatory Offer Threshold Brazil’s mandatory offer thresholds vary depend - ing on the type of transaction and the securities involved. These thresholds are closely overseen and regulated by the CVM, which is the country’s primary regulatory authority concerning securi - ties transactions. The thresholds themselves can vary based on factors such as the type of trans - action, the nature of the securities involved (eg, common stock, preferred stock) and the owner - ship percentage being sought by the acquiring
party. As such, compliance with these thresh - olds is imperative for parties engaged in acquisi - tions or sales within Brazil, ensuring adherence to regulatory requirements and transparency in the transaction process. 6.3 Consideration Cash is more commonly used as consideration in Brazil, although shares are also largely used in M&A transactions. Common tools to bridge value gaps include earn-outs, two-step sale structures and adjustment mechanisms based on post-closing performance. 6.4 Common Conditions for a Takeover Offer In Brazil, common conditions for a takeover offer typically encompass a range of factors aimed at ensuring regulatory compliance and share - holder consent. These conditions often include obtaining the requisite regulatory authorisations or approvals from entities such as the CVM, CADE and regulatory agencies, when applicable. Shareholder approval is also frequently sought, aligning with corporate governance standards and promoting transparency in the decision- making process. Material adverse change clauses are commonly incorporated to address unforeseen events or developments that could significantly impact the target company’s value or operations. These clauses serve to protect the interests of both the acquiring and target entities by allowing for adjustments to the terms of the offer in response to material adverse changes in the target com - pany’s condition. It is worth noting that, while certain conditions are common in takeover offers, regulators in Brazil impose restrictions on the use of offer conditions to prevent undue impediments to
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