Business Acquisition in Greece: Due Diligence

1. Typical Sequence

• preliminary selection of possible target companies (“screening”), where no specific target has yet been identified;
• initial contact, where appropriate involving M&A advisers, lawyers and tax advisers;
• conclusion of a non-disclosure agreement (NDA) where there is a basic willingness to sell;
• signing of a letter of intent (LOI) where both sides are interested in continuing negotiations;
• careful examination of the company in the course of “due diligence” (legal and financial);
• drafting of the final transaction structure on the basis of the due diligence findings;
• price negotiations;
• for larger transactions: notification to the competent competition authority before the contract is concluded, where the statutory thresholds are met;
• conclusion of the contract, together with arrangements for the handover and continuation of operating business.

2. Due Diligence

Due diligence serves to evaluate the target company and to uncover both open and hidden risks of the transaction. It should cover, in particular, the following areas: company data since formation, strategic direction and business policy, the market and competitive environment, the financial situation (assets, cash flow, liquidity, earning power), organisation and technical standards, staffing levels, the legal and tax situation, and any environmental or other legacy liabilities.

3. The Purchase Agreement

Business purchase agreements in Greece are subject to the general civil-law provisions of the Civil Code (ΑΚ – Astikos Kodikas) on sale and warranty law, together with – depending on the content of the arrangement – supplementary commercial-law provisions. In addition to the essentialia negotii (the parties, the object of purchase, the purchase price), the contract regularly contains representations and warranties, provisions on the assumption of the target company’s existing contractual relationships, exclusions of liability and claims, contractual penalties, non-compete clauses, and unwinding provisions for the event of non-performance. Where the seller performs defectively, the buyer has the usual warranty rights available (price reduction, cure, rescission, damages).

For capital companies, acquisition takes place by way of a share deal: for the GmbH (EPE), through a notarially certified transfer of the company interests; for the non-listed AE, through the transfer of shares. Important correction to the previous legal position: since bearer shares no longer exist following the 2018 reform of stock corporation law (Law 4548/2018) – all shares of a Greek AE have, since 1 January 2020, had to take the form of registered shares – transfer today uniformly follows the formalities prescribed for registered shares (including entry in the company’s share register), regardless of how the company was originally formed. For listed stock corporations, the acquisition of shares continues to take place through stock exchange trading. The acquisition of a company’s assets without taking over the legal entity itself is referred to as an asset deal.

4. Competition Law

Where the takeover creates a particularly large enterprise or an exposed market position, the transaction must always also be examined from a competition-law perspective. At national level, the relevant law is Law 3959/2011 (see our package “Competition Law and Industrial Property Rights” for the current notification thresholds); for cross-border mergers, the European merger control regime (EU Merger Regulation (EC) No 139/2004) additionally applies.