Last week, we discussed the pitfalls of sourcing software M&A acquisitions in France. Today, we are dialling it up a notch: let’s discuss what happens once you’re past the LOI stage. Namely:
What transactions structures do and don’t work in France
How to lose headcount without losing your mind
What on earth are “Minefi approval” and “Loi Hamon”, and why these matter
Allez-y!
Deal structures that are a non-starter in France
It is common for serial acquirers to use the upstream merger structure to facilitate purchase price repayment. This structure, which is commonly used in many European jurisdictions, such as Germany and the UK, entails the following steps:
The acquirer incorporates a NewCo, which is capitalised with €1 in equity and the remainder in the form of a shareholder loan
The NewCo acquires the shares in TargetCo
Post closing, the two entities are merged through an upstream merger
Does this structure work in France?