In the case of a planned investment in Greece, the takeover of an already existing Greek company can hold advantages (see also Mergers & Acquisitions in Greece). However, the purchase of a company in Greece represents a complex process with a large number of detailed questions requiring clarification, whereby a distinction must be made between the respective phases of preparation, transaction, and integration. First, a project plan for the individual steps and the planned process must be determined in close consultation with a lawyer.
1. The Process for a Company Purchase is Usually as Follows:
- To the extent that a specific company has not already been selected for the intended purchase, a pre-selection (“Screening”) of possible target companies must first be made based on the specifications.
- As soon as a target object (“Target”) has been found, contact is made with the target company. The involvement of an M & A consultant, lawyer, tax advisor, etc., can be helpful.
- If the target company signals a fundamental willingness to sell, a confidentiality agreement should be signed regarding the further exchange of information (approach, determination of converging interests, etc.) for understandable reasons.
- If both sides then express an interest in continuing the takeover negotiations within the framework of the initial discussions, they usually sign a “LOI” (Letter of Intent) and agree—possibly with the involvement of hired consultants—on the further negotiation tactics.
- In the next step, a careful company valuation is required. In this so-called “Due Diligence”, a further distinction is made between “Legal Due Diligence” and “Financial Due Diligence”, i.e., legal and economic review of the target company.
- Based on the results of the “Due Diligence”, the final design of the planned company purchase is then drafted.
- Subsequently (or also in parallel), price negotiations are conducted.
- In the case of larger deals, a contract is usually only concluded after notification of the planned company sale to the competent competition authority.
- Once the contract is signed, the optimal handover and continuation of the operational business must still be regulated.
2. “Due Diligence” (Company Valuation)
The “Due Diligence” plays an essential role in the sale of a company. To evaluate the company and reduce the open and hidden risks associated with the transaction, company-relevant information must be collected so that, on the one hand, the strengths and weaknesses and, on the other hand, the opportunities and risks of the planned company purchase can be assessed. In the “Due Diligence” report, which must be prepared in writing, all information, facts, and peculiarities are recorded (not least for documentation and evidence purposes!). The “Due Diligence” should contain all company-relevant information, namely:
- the company data since its founding
- information regarding the strategic orientation of the company, its business policy, etc.
- the company environment and the existing framework conditions
- the financial situation and especially the asset position, Cash-flow, liquidity, and earning power of the company
- the organization management and the technical status of the company
- the personnel (staff)
- the legal and tax situation
- the question of environmental and legacy liabilities
3. The Purchase Agreement
Once the “Due Diligence” has been satisfactorily completed and the purchase price has been set, the contract for the purchase of the company must be drafted by a lawyer. Company purchase agreements in Greece are governed by the respective general civil law provisions of the Greek Civil Code (G.C.C. / AK = Astikos Kodikas) from the area of sales and warranty law, as well as—depending on the regulatory content of the contract—other relevant provisions of the Greek Civil Code. Further relevant regulations are contained in the Greek Commercial Code (Emporikos Kodikas).
In addition to the “essentialia negotii” (i.e., information on the parties), the purchase agreement contains the precise description of the purchase object and the purchase price, as well as regulations on warranty, assurance, and guarantees, which constitute essential components of every company purchase agreement. Furthermore, issues regarding the transfer of rights and obligations arising from existing contractual relationships of the target company, possible exclusions of liability and claims, contractual penalties, non-competition clauses, and regulations for reversal of the transaction in case of non-fulfillment of the main performance obligations are usually included.
In the event of a breach of contractual obligations by the seller, the buyer has the options of purchase price reduction as well as a claim for rectification or substitute delivery. If the contractually owed performance is provided late or not at all, the buyer can demand fulfillment and compensation for damages or withdraw from the purchase agreement and claim compensation for non-fulfillment.
The purchase or participation in a capital company is carried out within the framework of a so-called “Share Deal” through the transfer of shares in the respective company. In the case of the GmbH (LLC), this is done through the transfer of business shares, while in the case of the non-listed AG (SA), the transfer is carried out through the acquisition of shares (stock). While a notarized purchase agreement is necessary for the sale of business shares in a GmbH, bearer shares in the AG can be transferred through a simple (private written) sales agreement. However, certain formalities must be observed when transferring registered shares. In the case of listed AGs, the share purchase is carried out via stock exchange trading.
The purchase of the assets of a Greek company is called an “Asset Deal” and is considered when the transfer of its assets—rather than the transfer of the company itself—is the priority.
4. Antitrust Law
If the takeover of the company results in a particularly large company or if it occupies an exposed market position, the purchase must always be examined under the aspect of Greek antitrust law. Here, Greek antitrust law pursuant to Law 3959/2011 applies initially for the takeover of companies at the national level, as does European antitrust law for cross-border company purchases.