The Mergers & Acquisitions Review: Belgium

Overview of M&A activity

According to the 2020 M&A Monitor published by the Vlerick Business School in May 20202, the Belgian mergers and acquisitions market experienced a good and stable year in 2019, with slight growth in the smaller transactions segment (less than €5 million) in comparison with the outstanding results in 2018. 2019 was fuelled by the high amount of activity of private equity players in the Belgian market. The solid economic conditions, abundant cash, strong demand and historical low interest rates, and the favourable impact these elements have for investors, helped confidence in the M&A market in 2019. However, it may be noticed that there was a decrease in foreign acquisitions by Belgian companies, which may be explained by global economic and politic uncertainties that unfolded in 2019 such as Brexit, the yellow vest movement in France and the continuing trade tensions between the US and China.

Acquisition prices also remained very stable. In 2019, an average of 6.5 times the earnings before interest, tax, depreciation and amortisation (EBITDA) value (i.e., the operating cash flow) was paid for the acquisition of a company across all size segments. This is the same as in 2018.

Since the outbreak of the covid-19 pandemic at the end of Q1 2020 in Belgium, a substantial drop in M&A activity has been experienced. In the longer term, it is mainly the economic impact of covid-19 that could lead to a dip in the acquisitions market. Past months have shown bankruptcies of important economic players in Belgium (e.g., fashion group FNG (the parent company of shoe retailer Brantano), fashion group Camaïeu, bus company Eurolines, airport ground handler Swissport, baby clothing chain Orchestra), which might reveal the start of an extended economic downturn if such trend continues. This could have a detrimental effect on the acquisitions market in Belgium in the coming months, both in terms of volume of transactions as well as in terms of valuations, as experts expect a decrease in multiples and enterprise values if and to the extent the financial results of targets are negatively impacted by the ongoing pandemic crisis.

However, it is likely that the covid-19 crisis will also create acquisition opportunities for companies and private equity firms with sufficient cash and strong leveraging positions. Restructuring and refinancing activities are also expected to increase in the coming year as a direct result of the covid-19 crisis across many sectors (leisure, retail and travel in particular).

Introduction

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General introduction to the legal framework for M&A

The acquisition of a company may be structured as a share deal or an asset deal. Tax considerations play an important role when considering the acquisition of a business through a transfer of shares or a transfer of assets.

i Share deal

A share deal is the most straightforward structure used to acquire a business. Formalities for transferring shares are fairly limited. Share deals are in principle not subject to any transfer tax, except for the stock exchange tax (various rates apply, depending on the nature of the security concerned; however, various exemptions also apply). However, a share deal implies that all the underlying assets and liabilities of an acquired business are also (indirectly) transferred. The acquirer cannot pick and choose certain assets and liabilities of the business, unless those assets and liabilities were to be transferred from the target company prior to closing the transfer of shares (through an asset deal, a demerger, a transfer of a branch of activities or any other similar operation).

Alternatively, it is also possible for an investor to acquire a participation in a company by subscribing to a capital increase (or contributing to the equity in the case of a private limited company by shares without capital (SRL/BV)) whereby new shares in said company are issued, in which case an investment agreement will generally be entered into.

i Asset deal

By contrast, an asset deal does allow the acquirer to pick and choose the assets and liabilities it deems useful or necessary. The other assets and liabilities remain with the business. This is often the preferred route in the case of deals involving distressed companies, where potential tax and bankruptcy liability issues may be at stake.

In the case of an asset deal, the assets may be purchased individually (ut singuli), as a universality of goods (ut universali) or as a branch of activities.

In the case of a transfer of individual assets and liabilities, all legal formalities required to transfer such individual assets and liabilities must be complied with. For example, the transfer of an agreement requires the consent of the other contracting party. In addition, specific rather onerous, cumbersome and time-consuming formalities apply to the transfer of intellectual property rights and real property.

In the case of a transfer of a universality of goods or a branch of activities in accordance with the procedure set out in the Belgian Companies and Associations' Code (BCAC), all assets and liabilities that are part of the universality of goods or branch of activities are automatically transferred by operation of law, provided that the specific requirements for these procedures have been fulfilled. As a result, the acquirer has less flexibility to cherry pick the assets and liabilities of the business.

In addition, the BCAC contains a regime for mergers through the acquisition of an existing company or the incorporation of a new company. The BCAC also contains provisions on demergers into an existing company or a newly incorporated company, as well as mixed demergers.

Share purchase agreements, asset purchase agreements and investment agreements partly differ due to their particular subject matter, but are also comparable in numerous aspects (e.g., they often include comparable indemnification and limitation mechanisms).

Strategies to increase transparency and predictability

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Developments in corporate and takeover law and their impact

In terms of policymaking, the federal government has continued its efforts (started a few years ago) to increase the attractiveness of the Belgian investment climate.

The most noteworthy legal reform from an M&A perspective is the introduction of the new BCAC. On 1 May 2019, the BCAC entered into force and became applicable to all companies incorporated after that date, as well as to existing companies that decided to opt in. Since 1 January 2020, the mandatory provisions of the BCAC apply to all companies. In addition, the supplementary provisions apply, unless the articles of association of companies contain contradictory provisions. By 1 January 2024, all companies must bring their articles of association into line with the BCAC.

It is expected that the new BCAC will impact M&A practice in a positive way:

  1. First, the real seat of a company, meaning its effective place of management and control, no longer determines which law governs that company (lex societatis). The registered office, meaning the place of incorporation, is the new criterion. This brings clarity and enhances legal certainty. Indeed, Belgian companies will now be able, for example, to easily move their headquarters abroad with no need to relocate their corporate address. They may also convert into a foreign company form, or convert foreign companies into Belgian ones, without having to create, wind-up or involve other companies; such conversion must be done in front of a notary public. However, for corporate income tax purposes, the place of effective management remains a criterion for determining qualification as a Belgian tax resident.
  2. The change of control clauses contained in credit or commercial agreements no longer require special shareholders' approval, except in listed companies.
  3. Furthermore, the structure and functioning of Belgian companies has been simplified and made more flexible so that there is now ample room for contractual arrangements. For instance, Belgium now has a limited liability company form where, subject to financial requirements, no capital is required (i.e., a limited liability company without capital (SRL or BV)). In addition, the minimum number of shareholders and directors has been reduced to one in the most commonly used Belgian company forms (i.e., in the above-mentioned SRL and in the limited liability company with capital (SA or NV). This simplifies group structures and housekeeping. Moreover, shares with multiple votes are now possible in both the SA and the SRL, as well as interim dividends with no waiting period. It is also now possible to set up a two-tier governance structure in an SA consisting of two separate governance bodies, the supervisory board and the management board. When it comes to internal communication, modern and quicker channels have also been taken into account, such as emails between a company and its shareholders, or directors being authorised not to meet physically anymore but to take written resolutions instead, even when there is no particular urgency.
  4. The articles of association of private limited liability companies (SRL or BV) can now provide for free transferability of the shares: such a provision would then also make it possible for shareholders to grant a pledge on their shares without needing the consent of the other shareholders.
  5. The articles of association can provide for multiple voting rights: this creates new opportunities, such as having minority shareholders with full control over a company, as the voting power of a shareholder is not linked to the amount of their contribution anymore.

Other new regulatory amendments impacting the M&A market include the following:

  1. The Public Takeover Law3 was changed as a result of the introduction by the BCAC of double voting rights attached to shares of listed companies. The resulting technical change neutralises these multiple voting rights for the threshold calculations, (such as the threshold for a mandatory bid) by only considering the number of shares with attached voting rights rather than the number of voting rights.
  2. The law of 11 July 2018 on the public offer of financial instruments and the admission of financial instruments to trading on a regulated market, which entered into force on 21 July 2019 and implements EU Regulations 2017/1129 and 2017/1131, also introduced some other technical changes to the Public Takeover Law. These changes modernised the rules regarding public takeover offers, added the possibility of setting out specific rules for public takeover bids for debt instruments issued by the issuer of such instruments and added details regarding the documents to be approved by the Financial Services and Markets Authority.
  3. The Shareholders' Rights Directive II ((EU) 2017/828) (SRD II) was implemented into Belgian law by the law of 16 April 2020 (SRD II Law). The SRD II Law brings a variety of changes to the BCAC, the law of 2 May 2007 on the disclosure of major holdings in issuers whose shares are admitted to trading on a regulated market and sector-specific financial laws. In general, the legislator opted for a faithful transposition of SRD II and, in the areas where SRD II granted discretion to EU Member States, chose continuity based on policy choices that had already been made in the past.
  4. The new 2020 Belgian Code on Corporate Governance, as published on 9 May 2019, applies compulsorily to reporting years beginning on or after 1 January 2020 and replaces the former Code of 2009. This 2020 Corporate Governance Code applies to companies incorporated in Belgium whose shares are admitted to trading on a regulated market as defined by the BCAC.
  5. As of 30 September 20194, directors of companies are required to submit identification of the ultimate beneficial owners (UBOs) of such company to the UBO register. A UBO is the natural person owning the company or exercising control. There is an assumption that any natural person having at least 25 per cent of the voting rights in a company is a UBO. If no UBO can be identified, the directors themselves will be appointed as UBOs.
  6. On 30 January 2020, the Belgian parliament adopted an important piece of legislation that will significantly affect the real estate sector. The reform represents a comprehensive overhaul of the provisions of the Belgian Civil Code governing goods and is particularly relevant to real estate transactions and the structuring thereof. It should enter into force and apply (subject to publication) to new transactions as from July 2021, but in many cases, parties can already decide to apply the new regime.

Us antitrust enforcement: the year in review

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Foreign involvement in M&A transactions

Belgium's open economy usually welcomes foreign investors and Belgium is typically considered to be one of the most flexible countries for foreign investment in Europe. With Belgium being a country with many medium-sized companies with an international presence or ambitions, foreign investors continuously look at the Belgian market for industrial or financial opportunities.

However, there is no comprehensive information publicly available about foreign private investments in Belgium or about investments made abroad by Belgian investors, which renders difficult any overall overview.

Significant transactions, key trends and hot industries

The Belgian M&A market is characterised by a majority of smaller and medium-sized transactions, in relation to which publicly available information is rather limited. A continued interest from international private equity players in the Belgian market does exist, and buy-and-build strategies continue to be many investors' preferred route.

In addition, a number of high level transactions took place in 2019 involving foreign purchasers, showing the continued traction of Belgium as a target country for M&A. Total deal value in 2019 involving Belgian companies (inbound and outbound) was €40 billion, with four deals having a deal value above €1 billion and nine more deals having a deal value above €500 million.

The pharmaceutical, technology and biotechnology, energy and renewable energy and health care sectors remain highly valued in Belgium. The US-based listed biopharmaceutical company Gilead Sciences increased its equity stake in Belgian listed biopharmaceutical company Galapagos for €1.1 billion and paid €3.9 billion to access Galapagos' portfolio of drug compounds. This is arguably one of the highest-profile transactions in the biopharmaceutical sector.

Other recent landmark transactions involved the Belgian beer giant AB Inbev. AB Inbev sold its Australian division Carlton & United Breweries to Asahi for a sale price of €10 billion paid in cash. Asahi also bought the rights to commercialise AB Inbev brands in Australia. On 30 September 2019, AB Inbev listed 13 per cent of the shares of its Asian subsidiary Budweiser Brewing Company APAC on the Honk Kong Stock Exchange for a value of approximately €4,5 billion.

Other notable Belgian M&A deals in 2019 and 2020 include the following:

  1. On 7 February 2020, the existing shareholders of the Studio 100 Group, a successful Belgian entertainment group with more than 950 employees worldwide, sold 25 per cent of their shares to new investors. The amount of the transaction was not disclosed.
  2. In 2019, the investment funds Macquarie European Infrastructure Fund 1 and 3 entered into an agreement to sell their 36 per cent stake in Brussels Airport Company to a consortium formed by the Dutch pension fund APG, the Australian investor QIC and the insurer Swiss Life. The deal value is not known but is estimated by observers to be between €1.5 to €2 billion.
  3. In May 2019, Belgium's Umicore acquired Freeport Cobalt's cobalt refining and cathode precursor activities in Kokkola, Finland, for a total consideration of €134 million.
  4. Colisée, a leading player in the elderly care segment in France, Italy and Spain, signed an agreement to acquire Armonea Group NV, a leading independent senior care organisation in Belgium also active in Spain and Germany. The cash consideration of the transaction was approximately €550 million.
  5. In November 2019, Aedifica, a Belgian listed healthcare real estate company specialised in retirement housing, launched an acquisition bid for Finnish healthcare property investor Hoivatilat. The deal value was reported to amount to €609 million.
  6. UCB completed the acquisition of US-based Ra Pharmaceuticals a company specialised in the development of treatments against diseases affecting the immune system located in Cambridge, Massachusetts, for a total cash transaction value of approximately €2.1 billion.
  7. The Agfa-Gevaert Group successfully completed the sale of part of Agfa HealthCare's IT business to the Dedalus Group at an enterprise value of €975 million.
  8. On 15 April 2019, Swiss insurance company Baloise Group agreed to acquire Belgian insurer Fidea for €480 million in cash from China-based Anbang Insurance Group. This acquisition of Fidea has boosted the position of Baloise in the Belgian non-life and life insurance market.
  9. On 2 August 2019, the investment group of the Frère family Group Bruxelles Lambert acquired 61 per cent of Webhelp Group, one of the world's leading providers of customer experience and business process outsourcing, for an investment amount of approximately €800 million, on the basis of an enterprise value of €2.4 billion for 100 per cent of the Webhelp group.

Five companies obtained a listing on the Brussels stock exchange in 2019, and a handful of public takeover bids took place. Notwithstanding the covid-19 crisis, Euronext Brussels continues to attract new companies in 2020, such as Hyloris Pharmaceuticals SA, Unifiedpost Group SA and Nyxoah SA. While stock markets do not seem to be greatly impacted by the current crisis, experts warn that the market may be overheated.

Financing of m&a: main sources and developments

Bank financing remains an important driver of M&A activity in Belgium due to the low interest rate. On average, a purchaser only needs to provide semi-equity or equity5 of up to 31 per cent of the acquisition price (2020 M&A Monitor published by the Vlerick Business School). Vendor loans are also very popular to finance M&A transactions, in particular with respect to small to mid-sized transactions (but not for very small transactions with a value below €1 million). According to the Vlerick Business School 2020 M&A Monitor, vendor loans are used, on average, to finance 19 per cent of the value of deals at an average annual interest rate of 2.75 per cent.

Employment law

In the context of negotiated M&A transactions in Belgium, sellers and buyers carry specific information and consultation obligations towards employees (and their representatives). Generally, most (if not all) M&A transactions (share or asset deal) would attract an obligation to inform or consult with the works council, or both, for both the seller as for the buyer. In the absence of a work council, there is an obligation to at least inform in writing all involved employees prior to the consummation of a transaction.

It should be noted that if a transaction takes the form of an asset purchase, it will fall within the scope of EC Directive 2001/23 of 12 March 2001 (Directive 2001/230 and the Collective Bargaining Agreement No. 32 bis of 7 June 1985 (CBA 32 bis) regarding the protection of employees' rights in the case of a change of employer.

Pursuant to CBA 32 bis, the transfer of an undertaking will entail the automatic transfer of all rights and obligations of the transferred employees arising from the employment agreements or arrangements entered into by the employer to the purchaser. In other words, on the date of the completion of a transaction, all employees of the target company will be automatically transferred from the transferring employer to the acquiring company, with the preservation of all rights (except for pension rights) and obligations resulting from the employment contract.

Under the CBA 32 bis, the acquirer cannot choose which employees will be transferred and the transfer may not entail any dismissals, except for serious faults or economic, organisational or technical reasons. The transfer of a business as such does not constitute justified grounds for dismissal. In addition, it must be pointed out that the purchaser is bound by all the terms and conditions of all employment contracts and collective bargaining agreements existing at the time of the transfer. The former and new employer are also jointly and severally liable for the payment of all debts existing at the time of transfer.

In the event the transfer of an undertaking occurs within the context of a judicial restructuring by transfer under judicial supervision, it is worth nothing that the Court of Justice of the European Union recently ruled in Plessers6 that such transfers do not fall under the exception of Article 5 of Directive 2001/23, allowing greater freedom for acquirers of undertakings subject to bankruptcy or similar proceedings to decide which employees to retain or dismiss. Given this ruling, the Belgian legislator will, in all likelihood, soon have to modify the applicable legislation (Title V of the Belgian Economic Code) to make it consistent with Directive 2001/23 and thus restrain the freedom of choice enjoyed so far by potential acquirers acting under this specific procedure.

Tax law

The standard corporate tax rate for Belgian companies and branch offices has been gradually reduced in recent years, from 33.99 to 25 per cent in the financial year starting in 2020. Additionally, small and medium-sized companies benefit from a 20 per cent tax rate on the first €100,000 of their profits.

Tax treaties concluded by Belgium must be carefully reviewed to determine which authority can levy tax on capital gains from a sale of shares in a Belgian company by a non-Belgian resident or corporate entity. In principle, the tax laws of the state where the shareholder is resident for income tax purposes will determine the tax regime applicable to capital gains.

Under certain conditions the capital gains realised by Belgian corporate shareholders (legal entities) on the sale of their shares in a company will be exempt from corporate income tax so that the capital gains will not be taxed at 25 per cent. The conditions to benefit from this exemption are aligned with the conditions for applying the dividends-received deduction. Therefore, the minimum participation threshold requirement amounts to 10 per cent or a €2.5 million acquisition value. If the participation exemption can only be partially granted, the exemption of the capital gains on these shares will be granted to the same extent. The shares must also have been held for at least one year in full legal ownership.

Belgian tax residents (natural persons) are generally subject to income tax on capital gains from a sale of shares at a rate of 33 per cent. The sale will be exempt if all of the following apply:

  1. the sale falls within the scope of the normal management of the tax resident's estate;
  2. it does not involve the sale of a substantial participation in a Belgian company to a non-EEA resident entity; and
  3. it does not relate to listed shares realised within a period of six months.

A 16.5 per cent tax rate will apply if the shares are part of a substantial shareholding and are transferred directly or indirectly to a non-EEA legal entity within 12 months following closing. Therefore, a clause will usually be inserted that prohibits the shares from being sold within 12 months to a non-EEA person.

Gains realised on a sale of tangible or intangible assets are subject to the standard corporate income tax rate of 25 per cent (for example, the sale of real estate). However, a deferred taxation regime on capital gains may be enjoyed in the case of an asset sale. In addition, certain types of transactions (for instance, mergers and demergers) may, subject to conditions, benefit from a tax-neutral regime.

The transfer of certain types of assets (either ut singuli or as part of a universality of assets) might, depending of the structure of the transaction, be subject to registration duties. For instance, the transfer of a real estate asset in Flanders will trigger a registration duty of 10 per cent, while this will be 12.5 per cent in the Brussels and Walloon regions. This registration duty is calculated upon the higher of the purchase price or the market value of the concerned real estate asset.

The standard value added tax (VAT) rate is 21 per cent, with a reduced rate of 6 or 12 per cent for certain goods and services. There is no VAT or transfer tax due on the sale of shares in a Belgian company. However, VAT is due on the costs related to the transfer of shares, such as the fees of the Belgian financial intermediary that intervenes in the sale of the shares.

As of the tax year 2020 (the financial year ending on 31 December 2019), Belgium applies a tax consolidation mechanism for corporate income tax, whereby Belgian companies can transfer taxable profits to other Belgian-affiliated companies to offset these profits against current year losses. The scope of this regime is limited to companies that have concluded a group contribution document that meets certain requirements.

Competition law

In Belgium, Book IV of the Code of Economic Law on the protection of competition, its implementing royal decrees and the Merger Regulation7 regulate competition issues. EU law and case law are also important when assessing concentration control in Belgium.

Concentrations meeting both of the following thresholds are subject to merger control in Belgium:

  1. the combined turnover of all the companies concerned exceeds €100 million; and
  2. at least two of the companies concerned each have a turnover of at least €40 million in Belgium.

If these thresholds are met, the parties to a transaction must notify their concentration to the Belgian Competition Authority, even if they do not have a registered office or own assets in Belgium. Therefore, mergers or acquisitions of foreign companies with substantial sales in Belgium, but which have no facilities or offices there, may be subject to Belgian merger control if they do not exceed the EU thresholds.

If Belgian merger control does apply, the Belgian Competition Authority must be notified of the transaction and approve it before it is concluded. Therefore, merger approval is in most cases included as a condition precedent in a purchase agreement.

Certain transactions can be notified under a simplified procedure that is less time-consuming; for example, if the parties' market share is lower.

Outlook

The covid-19 virus is having a significant impact on entire sectors of our economies, whether local, national, European or global. The financial markets are highly volatile. The public authorities have announced numerous rescue plans for the benefit of strategic companies and companies of national interest. On a micro-economic level, the cash position of many companies is tightening without taking into account the restructurings and redundancy plans announced recently by several companies.

These difficulties are generating, or will generate, a cascade of bankruptcies, liquidations or restructurings, with their fair share of harmful consequences on the economy. However, they will also create various opportunities, both with regards to certain ongoing operations and possible future takeovers, whether these are intended to strengthen an existing business, and its growth or diversification policy, or to serve as pure risk-taking. This economic context therefore raises the question as to the effects of covid-19 on business M&A operations and the possible opportunities generated by this current health crisis.

In this period of uncertainty, coupled however with the massive support of central banks, the cash is king principle has never been more true. Candidate buyers with cash, or who are able to secure credit lines in the short term, will be able to adjust current operations or seize good opportunities that were (too) expensive in the past.

With respect to the transactions under discussion, potential acquirers and potential sellers will be able to re-examine the appropriateness of the fundamentals used to determine the sale price and decide unilaterally to terminate negotiations. In any event, this withdrawal will have to be adequately justified and take place in a timely manner (i.e., without delay as soon as the trigger for a withdrawal decision is known or deemed to be known) to avoid incurring extracontractual civil liability for wrongful termination of the talks.

For transactions concluded (i.e., after signature of the binding transfer agreement) but not yet executed (e.g., because of an outstanding condition precedent), certain legal mechanisms may allow, provided they have been expressly provided for, the acquiring party to either withdraw from the transaction (material adverse change or material adverse effect clause) or impose the adaptation of the economic conditions of a transaction, allowing a renegotiation of the initial conditions (hardship clause). It is also necessary to ensure that the conditions precedent are fulfilled, which may in particular be linked to financial performance, such as EBITDA or turnover to be achieved. If no contractual provision has been made for the occurrence of an event affecting the economic balance of the transaction, it is necessary to check what the applicable law allows or does not allow. In the absence of termination by mutual agreement, a specific contractual clause or a regulatory framework authorising the rebalancing of the transaction, or a walk away right, the unilateral withdrawal of the unsatisfied party before performance – which cannot be excluded – may give rise to litigation with an uncertain outcome.

Furthermore, it is not impossible that potential acquirers may use the crisis as an opportunity to revive discussions that had previously failed.

While it is clear that the pandemic is having an impact on ongoing transmission operations as mentioned above, it is equally clear that, on the one hand, business transfers will return to a more favourable period, and on the other, transferors, transferees and their respective advisers will have to adapt to new realities.

For example, we can already see the concern of potential acquirers to apprehend a target in the context of an extended due diligence based on an approach linked to the risks of the sector in which it operates (e.g., is the target directly or indirectly impacted by the effects of the current pandemic or its possible resurgence?). For example, the candidate acquirer will seek to examine, inter alia:

  1. the extent to which the target can adapt to crisis situations;
  2. its dependence (or not) on its suppliers;
  3. the robustness and integrity of its IT system; and
  4. its compliance with the conditions of state aid or subsidies from which it has benefited in the context of the pandemic.

Another important change concerns the financial fundamentals on the basis of which company valuations will be carried out and the payment methods of the price to allow risk allocation in line with the general economic situation, and the situation of the target and the parties involved in the deal. As the impact of the health and economic crisis on a target's activities is not easily measurable to date, a potential acquirer could legitimately consider that a sale price defined within the framework of a locked box (i.e., with no possibility of price adjustment after completion of the transaction on the basis of financial statements at the closing date) does not sufficiently protect it, since the target's financial position at the time of the transaction may not reflect the actual situation of its activities. Conversely, potential acquirers may wish to provide for pricing mechanisms that allow for post-closing adjustments based on targets in terms of debt levels, working capital requirements or net assets at closing.

For its part, the potential seller will ensure that a ceiling is placed on the reduction of the sale price in the context of an adjustment.

If the parties cannot agree on a price adjustment mechanism in the context of the covid-19 crisis, they may use other risk allocation techniques, such as:

  1. a price accompanied by an earnout;
  2. a right for the seller to benefit from a portion of the sale proceeds received by the buyer in the event of a subsequent resale (anti-embarrassment clause);
  3. tranches of the price to be paid deferred in time;
  4. a reinvestment of part of the sale price by the seller in the capital of the target company (rollover clause); or
  5. recourse to a vendor loan (vendor loan clause).

Finally, it is particularly important for the parties to agree precisely on the criteria to be taken into account in the calculation of the earnout (e.g., EBITDA, turnover) and on the associated periods of time.

Despite the covid-19 crisis, we anticipate Belgian M&A activity to resume and to be steady in 2021 due to the combination of low interest and the presence of numerous targets in Belgium with significant growth potential.

Footnotes

1 Adrien Hanoteau is a partner and Thomas Sion is a senior associate at ebl redsky.

3 Belgian law of 1 April 2007 on public takeovers.

4 A tolerance policy was foreseen until 31 December 2019.

5 Semi-equity relates to mezzanine financing such as preferred shares or subordinated loans.

6 C-509/17, Plessers case of 16 May 2019.

7 Regulation (EC) 139/2004 on the control of concentrations between undertakings.

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