CZECH REPUBLIC Law and Practice Contributed by: Petr Janů, Vladislav Klimeš and Leoš Vavřík, BADOKH
1. Trends 1.1 M&A Market
• exits by domestic entrepreneurs from their companies established in the 1990s and early 2000s. These trends are expected to continue in 2025. Due to the increasing scarcity of available financ - ing sources and the rise of financing costs, the proportion of equity financing has increased. Deals are not as competitive as before. However, the market is still generally on the seller-friendly side, despite the M&A market having cooled off The Czech economy is highly dependent on the automotive industry and energy-intensive manu - facturing. Industries that have recently seen significant M&A activity include energy, logistics, manu - facturing, real estate and retail sector. Software, automation, digitisation and robotisation, and telecommunications are becoming increasingly attractive sectors. a bit in recent years. 1.3 Key Industries 2. Overview of Regulatory Field 2.1 Acquiring a Company The two main acquisition structures used most frequently in the Czech Republic are share deals and asset deals. Share deals involve the acquisition of the shares or ownership interest in the target company directly from its current shareholder(s). All assets, liabilities, licences, authorisations, employees, etc, of the target company are retained in their entirety. The business of the target company is therefore not altered and continues without any interruption.
Both the volume and overall value of transac - tions in 2024 indicate a recovery compared to previous years. However, the Czech M&A mar - ket continues to face structural challenges, including limited economic growth, persistent inflation, elevated interest rates, and the ongo - ing war in Ukraine. Furthermore, geopolitical volatility – particularly the impact of retaliatory tariffs adversely impacting the automotive sec - tor – may pose additional risks to the market outlook for 2025. Notable transactions include Doosan Skoda Power’s (a leading manufacturer of steam tur - bines) initial public offering on the Prime Market of the Prague Stock Exchange, and ČEZ Group’s acquisition of a 55.21% stake in the GasNet Group (the largest gas distribution infrastructure operator in the Czech Republic). Czech inves - tors were also active in foreign jurisdictions, with key transactions including the Czechoslovak Group’s acquisition of Vista’s Kinetic Group (a major ammunition manufacturer) and EP Group’s takeover of International Distributions Services, the owner of Royal Mail (the United Kingdom’s national postal service provider). 1.2 Key Trends The top trends in the Czech M&A market in the last 12 months include: • the consolidation of the energy market; • a cautious shift to green technology/sustain - ability; • the increasing popularity of locked-box pric - ing mechanisms, a close-to-nil liability con - cept, warranty and indemnity insurance and earn-out structures; and
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