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M&A Belgium 2015: Tips & Tricks

By Steven De Schrijver, Frédéric Verspreeuwen & Dieter Veestraeten
Posted: 18th May 2015 09:11
Building on the momentum of 2014, Belgium is establishing itself once more as an attractive jurisdiction for international investors.  Combining its strategic and logistic value with the investment policy currently maintained by the ECB, the M&A forecasts for Belgium are quite positive.
In the first quarter of 2015, the acquisition by Perigo of Omega Pharma and by Telenet of Base have established an upward trend.  Due to macro-economic circumstances, European companies are not only forced to co-operate or risk being exposed to hostile takeovers, but also constitute a very interesting asset for overseas investors.  Those investors look at the Belgian market to meet their strategic and growth objectives and are being supported by the Belgian government.  The combination of tax measures such as the notional interest deduction and the support for new investments in material and equipment as well as the simplification of the company law rules, the encouragement of employment and the creation of regional support areas all mean that Belgium constitutes an attractive investment climate.
In addition, Belgium is a centre of knowledge where top tier universities play an important role in the development of, amongst other, the biotech and pharmaceutical industries.  The Belgian workforce is highly skilled, very productive and multilingual. 
As we are slowly moving again from a buyer-friendly market to a seller friendly market, it is very important for potential buyers to ensure a proper acquisition process and carry out a thorough due diligence.
More in particular, the following issues should be addressed, when acquiring a Belgian company:

 - Be careful with the letter of intent (LOI).  Under Belgian law, there is a binding agreement as soon as there is consent between the parties regarding the object and the price of the sale.  Hence, it is important to indicate in the LOI which provisions are binding and which are not.  The LOI usually includes exclusivity and confidentiality provisions, sets the timing and arrangements of the due diligence and transaction process and can be used to negotiate some important deal points.
 - Pay a lot of attention to your due diligence.  Define the scope carefully, implement a realistic but strict timetable and execute a thorough research on the business.  Besides investigating the business culture of the target in order to examine organisational health, leadership talent and managerial abilities, special attention should be given to legal issues with respect to the ownership of shares, loans, real estate, environment, assets, employment, regulatory, insurance, (potential) litigation and IT/IP. 

If the Belgian target is active in IP-heavy industries such as biotech/pharma (patent law) or IT (copyright), investigate to what extent the R&D of the targeted company is protected by intellectual property. 
Also, check the compatibility between your IT-system and that of the target.  In view of the current IT-outsourcing and cloud computing trends, do not forget to examine carefully any Service Level Agreements (SLA) regarding the information technology services of the target to ensure continuity of those services at all time. 

 - Check whether the merger notification thresholds are met.  Under Belgian law, mergers, acquisitions or joint ventures may need to be notified under Article IV 9 of the new Belgian Code of Economic Law to and approved by the Belgian Competition Authority before implementation, when certain turnover thresholds are exceeded.  An acquisition of EU internal market dimension may also have to be notified to the European Commission.  Be advised that the notification thresholds are currently being revised by the European Commission. 
 - Educate the seller.  Convince your counterpart to hire a good lawyer, to start preparing the data room as soon as possible, to answer all questions and to start timely with the preparation of the disclosures. 
 - Start timely with the preparation of the tax structure of the transaction(e.g., share deal v. asset deal).  It makes no sense to prepare the acquisition documents if the tax structure is not yet in place. 
 - When setting up a deal structure, take into account Belgian rules on financial assistance, corporate interest, thin capitalisationetc.  Involve your Belgian lawyer rather sooner than later.
 - Make sure that you get the management of the target on board.  Specify roles for the top executives that will remain with the target.  Put the right executive compensation system and incentives in place.
 - Be careful with earn-outs.  The sellers will usually wish to maintain some form of legal status, control, or power of veto, in view of ensuring the ‘earn-out’ is successful for them.  This may cause anxiety for the buyer as far as formulating long-term planning integration.  Make sure that all details are clearly outlined as far as both parties’ interests are concerned before finalisation.
 - Design the post-closing integration as carefully as the takeover itself.  Apply the guiding principles that were important to the success of the acquiring company to the acquired business but do not change things too quickly.  Nevertheless, get the transition over as quickly as possible. 
Astrea is an independent law firm in based in Antwerp and Brussels with over 35 attorneys (10 of whom are partners).  Established in 2006, the Firm has experienced continued growth and advises a growing list of domestic and international clients in all major areas of business law (including corporate/M&A, finance, employment, commercial, IP, ICT, Media & Entertainment, real estate, , administrative, environmental, transport & logistics, litigation and tax).  Working closely with some of the finest law firms around the world, Astrea’s partners advise on complex, cross-border and domestic transactions and legal matters. 
Astrea’s corporate department, elected rising star firm in the 2015 Legal 500 edition, consists of 12 attorneys (3 of whom are partners), who all have extensive experience in multi-jurisdictional M&A transactions, private equity, corporate restructuring and corporate litigation.  Our attorneys are multilingual and combine specific legal expertise with relevant industry knowledge and a pragmatic and solution-oriented approach.
Steven De Schrijver is a partner in the Brussels office of Astrea.  He has more than 20 years of experience advising Belgian and multinational companies on mergers and acquisitions, joint ventures, corporate restructurings, acquisition financing, private equity and venture capital.  He has been involved in several national and cross-border transactions mostly in technology-oriented sectors.  Steven is also recognised as one of the leading commercial IT lawyers in Belgium specialising in new technologies (such as data protection, e-commerce, software licensing, technology transfer, IT-outsourcing, cloud computing, etc.). 
Steven holds a law degree from the University of Antwerp (magna cum laude, 1992) and an LLM degree from University of Virginia School of Law(1993).  He received the ILO Client Choice Award 2012 in the General Corporate Category for Belgium, and received for the second time the Who’s Who Legal award in 2014, as the Information Technology Lawyer of the Year. He is fluent in Dutch, French and English and has good notions of German and Spanish.
Frédéric Verspreeuwen is a partner in the Antwerp office of Astrea.  He advises domestic and International clients on national and international acquisitions and restructurings, general corporate law, financial law and bankruptcy matters.  Frédéric holds a law degree from the Antwerp University (2000) as well as a Master after Master in Company Law from the University of Ghent (2001) and the University of Brussels(2003).  He is fluent in Dutch, French, English and German. 
Dieter Veestraeten is a partner in the Brussels office of Astrea.  He has more than 14 years of experience advising Belgian and international companies in the field of financing (including general corporate finance and, acquisition finance), restructurings, secured loans and debt transactions.  He has been involved in several domestic and cross-border transactions.  Dieter is mentioned as a leading expert in his field by IFLR 1000 (2012 edition) and is an active member of the Association Internationale des Jeunes Avocats (AIJA) and the International Bar Association.  Dieter holds a law degree from the University of Leuven (cum laude, 1998) an LLM Degree from the University of Konstanz, Germany (2000) and a Master of Business Law Degree from the University of Antwerp (2004).  He is fluent in Dutch, French, English and German.

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