In this article, the Dutch attorneys of MAAK Advocaten explain important points of a (cross-border) business takeover and what you should look out for in management buy-outs under Dutch law. A so-called management buy-out under Dutch law is a takeover of a company (in part) by the management already entrusted with it, possibly through external financing. This is an ideal opportunity for a managing director to take over the company who he has been working for years. They know the company well and usually have a good relationship with the shareholders. A takeover is not only a career step for the managing director in question but can also bring many advantages for the company; maintaining well-functioning processes, structures and relationships in place.
A management buy-out can also be advantageous if a business unit of a larger company is to be sold. By appointing a new managing director, the relevant part can, under certain circumstances, be continued as an independent company.
In recent years there has also been an increase in (cross-border) takeovers of well-positioned family businesses, some of which have been managed in generations, as no successor can regularly be found within the family.
Management buy-out in the Netherlands
An advantage of a management buy-out is the continuity that is guaranteed, unlike the case with a takeover of the company by a completely external party, as would be the case with a management buy-in. Especially banks and investors will appreciate this step.
A management buy-in has the great advantage that the company is usually already established. The start-up risks that come with founding a new company are avoided and one immediately enters into an economically stable company.
These advantages are usually reflected in a higher takeover price compared to the amount that would be required to set up a new company. The person who has (co-)built up the business at the time wants to be remunerated accordingly. In addition, there is a risk that certain partners or customers may no longer wish to remain in business with the new owner after a takeover. It is therefore important to bring up these points in the preliminary negotiations in order to be able to coordinate with all parties and not be perceived as an external threat but as a cooperative partner who wants to act in the interest of the company and connected third parties.
Emotions can play a role on different levels, after all there is a lot at stake. It is then a wise idea to consult a takeover attorney who can advise and accompany you from the preliminary negotiations to the closing.
Steps under Dutch law from preparation to successful takeover
MAAK Advocaten can guide you through all steps, from preparation to successful takeover:
- Inventory and analysis of the company
- Evaluation (DD)
- Financing (via bank or investor)
- Memorandum of Understanding
Dutch specialist attorney specialised in management buy-outs
Do you have questions about Dutch company law or do you need specific legal advice in the Netherland on the subject of business takeovers in the Netherlands? Our Dutch specialist attorney specialized in management buy-outs will be happy to help you.