As a rule, Chinese investors have all possible options of mergers and acquisitions in Switzerland. The acquisition of Swiss companies by foreigners is not restricted, however, the acquisition of a controlling stake by foreigners may not be authorized in a few regulated fields requiring a licence (energy, radio and television, telecommunications, financial services and public transportation).
Private share asset deal
The acquisition of privately held companies by a share deal follows typical western M&A standards: non-disclosure agreement, letter of intent, due diligence examination, negotiation, execution and consummation.
The same applies to the acquisition of a business in the form of an asset deal. Nevertheless, asset deals are mainly more complex than share deals for two reasons.
- The law provides for an instrument – a business transfer – by which various assets and liabilities can easily be transferred in one single act, but sellers usually refuse this, as it would make them jointly and severally liable for all transferred liabilities for three years after closing. Therefore, asset deals are usually shaped as individual item-per-item transfers, which adds complexity.
- Employees working for the transferred business will transfer per the law but may terminate employment via notice effective at the end of the applicable statutory notice period. They must be consulted in advance, which also adds complexity.
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Felix Egli is a senior partner and the head of the China Desk at VISCHER. He can be contacted on +41 58 211 34 90 or by email at fegli@vischer.com
Fiona Gao is an associate on VISCHER’s China Desk. She can be contacted on +41 58 211 32 05 or by email at fgao@vischer.com
