International Corporate / M&A - Switzerland

International Corporate / M&A - Switzerland

Published October 2019


Christophe de Kalbermatten, LL.M., M.C.J (NYU)

Country: Switzerland

Practice Area: Corporate

  • Rue Charles-Bonnet 2

Guide Content

Python is one of the largest Swiss law firms with head office in Geneva, Switzerland. The firm is truly independent in all directions. Its partners are not politicians nor holding State functions so that the firm is politically independent. The firm is not part of a large international law group either and its partners have therefore developed individual, personal and work-effective relationships with numerous law firms without obligation to refer or reward other lawyers outside the firm. The firm’s partners are true entrepreneurs and bring this flair to their clients, predominantly at the level of the top management and shareholders for companies based or controlled in Switzerland.

In 2018 and 2019, we have first seen a continued large progression in the Swiss real estate market. Construction and transactions with respect to apartment houses are at historically high levels. We are among the key legal advisors to pension funds and real estate investment funds, which are leading the trend.

Secondly, biotechnologies, energy and IT are proving strong fields of activity in the Swiss M&A market. In 2018–2019, we have been active in several transactions involving companies in the field of artificial intelligence, biotechnology, energy (electricity and oil). We have, for example, been active for start-ups in the field of artificial intelligence (analysis of behaviour through videos, with use in the field of automative and banking industry) as well as for large caps (sale of a division of a leader in the field of electrical commands).

These fields have been fuelled by negative interest rates (for construction) and by the high investments in research in the past four years.

Pension funds and investment funds are investing in Swiss real estate because they need to find returns in Swiss francs. Currently, bank deposits in Swiss francs are being charged a negative interest rate of -0.75%, which is harming returns. In addition, pension funds cannot invest more than a limited percentage of their assets in shares. Because the assets under management of these funds are growing, there are not many other possibilities than investment in real estate.

Research is booming in Switzerland. There are 1,000 patents filed yearly for 1 million residents, which brings Switzerland to the first place worldwide in this classification. In addition, half of the researchers in Switzerland are foreigners and can thus easily bring worldwide attention to their research. Finally, pharmaceutical companies are expanding quickly their research facilities (for example, Lonza and Sanofi are currently investing more than 1 billion in a biotech facility in Valais to produce vaccines). As a result, there is a lot of M&A and investment activity in the technology field. Considering the worldwide use of this technology and the origins of the researchers, international aspects of the transactions have to be systematically taken into effect in these transactions. Thanks to one of our partners who was in charge of negotiating international tax treaties and to our uncommitted connections with foreign law firms, we are in a position to determine the best set-up for each situation.

Our teams are not blocked or confined to a group, as deals are increasingly complex and spreading over several legal areas (for example, for a real estate fund, there will be a need to assess aspects of the financing, of the regulatory framework and of the real estate acquisition). Creativity implies looking at solutions rather than lengthy measures or rigid matrixes.

Swiss companies are more active in acquisitions abroad than foreign entities acquiring in Switzerland, but both markets have been increasing in 2018 and 2019 in terms of number of transactions and volume. Python is able to provide a full service to foreign entities establishing a business in Switzerland. We are thus able to advise on the choice of the best legal entity and then to incorporate the legal entity (providing lawyer and notary services), select local board members, assess the best operational set-up, negotiate one or several tax rulings, draft employment agreements and policies, review lease agreements… We help our clients select contractors such as insurances, landlords, accountants, with no vested interest in them. As a result, we are oftentimes the first point of entry in Switzerland for foreign companies, be it for the set-up of a new European platform or local business, or for the acquisition of a Swiss company.

In early 2019, for example, we worked for the group Steinhoff (publicly listed retail group including more than 40 brands including Conforama) in relation with the sale of business entities in Poland, Hungary and Germany (Steinpol division) to group Cotta. The share purchase agreement and the main agreements were subject to Swiss law and we were in charge of drafting them. Vendor due diligence and local transfer agreements were prepared by several local counsels, which were counsels selected by Steinhoff. We did not impose any local adviser. On the contrary, it was better to use local counsels that already had a knowledge of the business. The challenge was of course to adapt and align the work of several firms, but this is exactly something that we are used to do.

The FINMA is the federal supervisory authority in charge of regulating and supervising banks, insurances and financial intermediaries in Switzerland.

The FINMA works with a selected number of law firms to assist them in performing audits or acting as liquidator. We have been in the last few years selected to perform specific audits for a bank and for an insurance. The FINMA also appointed me as liquidator of a several financial intermediaries as well as a foreign bank (Stanford International Bank). In the liquidation process, we have to manage all affairs of the company, from publication of calls to creditors, drawing of a schedule of claims, liquidation of current affairs (termination of employees, leases, contracts, claims…) until the company is struck-off from the commercial register. The liquidation process is under continued supervision of the FINMA, and we have to work with foreign law firms for matters abroad as well as with local specialists such as accountants.

There are many projects under way with a significant impact on corporate law and business in Switzerland. The most important is the revision of corporate tax rates. Companies will, in the future, be taxed on profits at a rate between 11% and 14%, in most if not all places. This is, in many places, a substantial rate reduction. In addition, there will be tax reductions for specific activities and assets such as intellectual property, making Switzerland a very attractive place of business again for companies. In the field of corporate law, it is contemplated that the law will be changed to allow the incorporation of companies without a notary public and to allow distribution of interim dividends. These legal changes, among others in discussion currently, will provide more flexibility to Swiss entities.

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