Private Equity

Author:Dr. Christoph Neeracher, Philippe Seiler and Raphael Annasohn
Profession:Baer & Karrer

This country-specific Q&A provides an overview to private equity laws and regulations that may occur in Switzerland. This Q&A is part of the global guide to Private Equity. For a full list of jurisdictional Q&As visit

What proportion of transactions have involved a financial sponsor as a buyer or seller in the jurisdiction over the last 24 months? In Switzerland, private equity investors remain very active on the market and were involved in 36 per cent of all transactions amounting to 50 recorded deals in the first half of 2018 (compared to 28 per cent in the first half 2017). The involvement of financial sponsors in Switzerland has increased over the last 24 months as the ongoing environment with (still) low interest rates and generous borrowing conditions continues to facilitate the funding of possible acquisitions and puts pressure on financial sponsors to invest. In addition, Switzerland remains very attractive for financial sponsors with interesting investment opportunities (notably small- and medium-sized enterprises which will need to deal with succession planning in the coming years) and no (or very little) investment restrictions. What are the main differences in M&A transaction terms between acquiring a business from a trade seller and financial sponsor backed company in your jurisdiction? The key difference we see is that financial sponsors are often more reluctant to give representations and warranties or indemnities than trade sellers. The two main reasons for this difference are in our view the following: First, financial sponsors' aim to have a clean exit with limited (potential) outstanding liabilities in order to be able to distribute the exit proceeds to the investors. Second, financial sponsors are, by trend, less involved in the day-to-day business of the target group and, therefore, not in the same position as trade sellers to assess potential risks. On an acquisition of shares, what is the process for effecting the transfer of the shares and are transfer taxes payable? To transfer the shares of a (private) Swiss company limited by shares, a share purchase agreement between seller and buyer setting out the obligations to sell and purchase as well as further contractual terms of the transfer is required. In order to effect the transfer of the ownership in such shares at the closing of the share purchase agreement the following additional steps are required: In case no physical shares or share certificates are issued, a written assignment agreement between seller and buyer as well as a board resolution approving the transfer (if articles of association contain a transfer restriction regarding the registered shares) is required. In case physical shares or share certificates are issued, it is required that seller delivers to buyer such shares or share certificates, duly endorsed to buyer, together with a board resolution approving the transfer (in case of a transfer restriction). Securities transfer tax is payable on the sale of (Swiss or foreign) shares if a Swiss securities dealer is party to the agreement or is involved as intermediary and amounts to up to 0.15% for Swiss shares and 0.3% for foreign shares (if no exemption applies). How do financial sponsors provide comfort to sellers where the purchasing entity is a special purpose vehicle? As transaction certainty is key for sellers, financial sponsors often are required to provide sellers with a sufficient proof of funds. This is normally done with an equity and/or debt commitment letter for (at least part of) the purchase price in cases where the purchasing entity is a special purpose vehicle. Under the equity commitment letters, sellers are usually only entitled to claim payment to the special purpose vehicle (and not directly to them). In the context of...

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