How to Conduct Mergers & Acquisitions in Finland: A Comprehensive Guide

How to Conduct Mergers & Acquisitions in Finland

Mergers and acquisitions (M&A) are strategic moves that can significantly impact businesses. In Finland, the M&A landscape combines robust legal frameworks with specific regulatory considerations. Whether you're considering a share purchase, business acquisition, merger, or joint venture, understanding the nuances of the Finnish M&A process is essential for success.

Structuring an M&A Deal in Finland

The structure of an M&A deal in Finland depends on transaction goals, legal, tax, and commercial factors. Common structures include:

Share Sales

This is the simplest way to secure ownership of a company’s assets and liabilities. Key benefits include:

• Automatic transfer of intellectual property and contracts (unless restricted by change-of-control clauses).
  
• Minimal formalities for asset transfer.

However, buyers may assume unknown liabilities tied to the target company.

Business Sales

1. Business acquisitions allow buyers to selectively acquire assets and liabilities, reducing risk exposure. Challenges include:

• The need for third-party consent to transfer contracts.
  
• Specific identification and transfer of assets, which can be time-intensive.

Mergers and Demergers

These can simplify legal structures but involve lengthy procedures due to creditor notification and regulatory approvals.

Joint Ventures and Strategic Alliances

Flexible arrangements governed by Finnish contract and company law, ideal for collaborative ventures.

Takeovers

For listed companies, takeovers are often the only option, governed by stringent securities laws.

Private Share Purchases: The Finnish Approach

Private share purchases dominate the M&A landscape in Finland due to their simplicity and efficiency.

Key Steps in Private Share Purchases

Preliminary Agreements

1. Letter of Intent (LOI): Outlines preliminary terms, non-binding by nature.
2. Confidentiality Agreement: Protects sensitive information during due diligence.

1. Purchase Price Adjustments: Often based on locked-box accounts or closing accounts.
2. Conditions Precedent: Regulatory approvals, consents, and material adverse change (MAC) clauses.
   
3. Warranties and Indemnities: Seller guarantees on asset ownership and liabilities.
   
4. Remedies and Escrows: Protect against breaches.
5. Warranty & Indemnity Insurance: Mitigates risks identified during due diligence.

Regulatory Compliance

Articles of association may restrict share transfers, requiring board or shareholder approval.

Business Acquisitions: Tailoring Risk in Finland

Business acquisitions allow buyers to acquire specific operations or assets, reducing exposure to liabilities. However, these transactions require comprehensive due diligence to ensure business continuity.

Labor Considerations in Business Transfers

Under Finnish labor law, employees automatically transfer to the buyer in a business transfer. Key statutes include:

• Employment Contracts Act: Prohibits terminations solely due to transfer.
• Cooperation Act: Requires detailed communication and negotiations with employees.

Failure to comply with these obligations can result in legal and financial penalties.

Mergers in Finland: Navigating Complexity

Mergers are less common for initial market entry but are effective for post-acquisition restructuring. Finnish merger procedures are governed by the Limited Liability Companies Act and require a minimum six-month timeline.

Types of Mergers

1. Absorption Merger: One company absorbs another.
   
2. Combination Merger: Two or more companies form a new entity.
3. Subsidiary Merger: Parent and subsidiary merge seamlessly.

Process Highlights

1. Draft and file a merger plan.
2. Notify creditors and obtain approvals.
3. Secure shareholder votes (two-thirds majority required).
4. File and register the merger with the Trade Register.

Upon completion, all assets and liabilities transfer to the receiving company, and the merging entity dissolves.

Joint Ventures and Strategic Alliances in Finland

Finnish law provides flexibility for joint ventures (JVs), allowing parties to design governance structures through shareholder agreements and corporate vehicles. Key considerations include:

• Ensuring minority protections under the Limited Liability Companies Act.
• Establishing clear terms for control and decision-making.

Merger Control and Competition Regulation

M&A transactions in Finland are subject to merger control rules under the Finnish Competition Act. Transactions requiring notification include:

• Acquisitions where the combined Finnish turnover exceeds € 100 million.
• Cases were at least two parties generate over € 10 million in Finland.

The Finnish Competition and Consumer Authority (FCCA) assesses whether a transaction significantly impedes competition, especially by creating or strengthening a dominant position. The same rules apply to foreign-to-foreign acquisitions.

Sector-Specific Considerations

Certain industries, like financial institutions and insurance companies, have specific rules for turnover calculation and merger notifications. Additionally, labor-related arrangements are exempt from competition law scrutiny, ensuring fair employee treatment.

Conclusion

M&A in Finland requires careful planning and adherence to legal and regulatory frameworks. From selecting the right transaction structure to conducting due diligence and securing approvals, each step is vital for a successful deal. By understanding Finnish labor laws, merger control rules, and sector-specific requirements, businesses can navigate the complexities of M&A with confidence.

Ready to Navigate Mergers & Acquisitions in Finland?

Successfully conducting mergers and acquisitions in Finland requires strategic planning, legal expertise, and meticulous attention to detail. Whether you're acquiring a business, entering a joint venture, or restructuring through a merger, the process can be complex—but with the right guidance, your goals are within reach.

Let us support your journey

At LKOS Law Office, we specialize in M&A transactions, combining deep legal expertise with a strategic business mindset. From initial structuring to final execution, our team ensures every step is aligned with your objectives.

📞 Contact us today to schedule a consultation and learn how we can help streamline your M&A process. Together, we’ll build a solid foundation for your next business move.

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Schedule a Consultation or call us at +358 (0)40 67242 85. Let's turn your M&A ambitions into a reality.