Buying companies in the Netherlands: experience and specialization counts!
At the purchase of a company in the Netherlands, it is important to work with experienced consultants. For example your accountant, an experienced corporate finance consultant and an experienced lawyer; people who are daily engaged in these types of transactions.
It is important to have the legal work well arranged when you buy a company in the Netherlands. Getting support of legal professionals when buying a company in the Netherlands can prevent possible legal issues in a later stage.
Different interests between a buyer and a seller
Please be aware of your position. Seller and buyer have the same interest ("the deal"), but their position is – from the nature – the opposite:
- will be able to live with a shorter, easy (er) contract;
- will preferably issue limited guarantees;
- wants to limit his liability contractually;
- will prefer not to give financial guarantees and/or not to provide a loan to the buyer
while a buyer:
- does have interest in a good and often longer contract;
- wants to have rigorous and extended warranties by the seller;
- wants to be able to hold a seller liable (without – many - restrictions);
- will prefer to receive financial guarantees and/or a loan from the seller.
In this contradiction, during the negotiating process and during the process of making the contracts a mutually acceptable compromise needs to be found.
What is being sold or bought?
Assets/liabilities: individual transfer of assets and liabilities
- advantage: selection of assets/liabilities possible (' cherry-picking ')
- disadvantage: all assets and liabilities must be delivered separately and you need cooperation of creditors/third parties (possible more complex handling)
•Shares: legal ' coat ' of the company remains the same, just change of control
- advantage: simple settlement (delivery by notarial deed) and tax advantages if holding structure
- disadvantage: all assets/liabilities remain the property of the company (for example property). If real estate is not part of the (intended) transaction, real estate must be carried forward to other entity/owner.
Buying process from the BUYER:
a possible route might be:
- choose an appropriate legal and tax structure: let you advise, e.g. by an accountant, tax specialist and/or notary;
- Offer a (non-binding) bid and negotiate;
- Drafting of letter of intent (LOI). As a buyer, ensure good whether you want to reach a binding agreement or not;
- Start timely with your request for financing the deal and write a good business plan;
- LOI signed? Due Diligence (DD): the (books) research by buyer, in order to:
- check (financial) information, legal, personnel and fiscal affairs;
- In case of an agreement: prepare a purchase agreement. Ask for warranties of seller;
- In case of sale of shares delivery via a notary needs to take place.
In each stage of the buying process, Dutch legislation and case law is applicable and of influence. These include the civil code, legislation in the field of employment law, competition, pension law, works councils etc. During for example negotiations there is in principle freedom to negotiate, but you can – unintentionally- be bound. Assistance of experienced specialists is therefore advisable in order to try to prevent unwanted effects (e.g. claims). Experience and specialization: one works critically but deal-oriented, negotiations are therefore smoother and faster so your deal can be closed earlier.
Get in touch with Enno Schets if you want to prevent legal issues when buying a company in the Netherlands.