Mergers & Acquisitions

Comistar provides support for both international and domestic mergers and acquisitions (M&A). International cases vary and require comprehensive familiarisation and research.

Domestic changes in company structure from a legal perspective:


A merger signifies a change in company structure in which a company (the merging company) is merged with another company (the acquiring company), wherein the assets and liabilities of the merging company are transferred to the acquiring company and the shareholders of the merging company receive shares in the acquiring company as a merger consideration (which may also consist of cash, other assets and future undertakings). The application of neutral taxing regulations requires that the merger consideration consist of new shares in the acquiring company or, in addition, max. 10% cash of the shares’ nominal value.

Mergers start with the drawing-up of the terms of the merger, which are dated and signed. The draft terms must contain, among other things, the reasons for the merger and define the merger consideration. The contents of the terms of a merger are now defined more specifically than in previous legislation. The companies involved in the merger must designate an auditor to issue a statement on the draft terms of the merger to each of the companies involved. Usually the decision on a merger is made by a company’s General Meeting.

The draft terms of the merger and the statement of the auditor must be notified for registration within one month of the signing of the proposal. The registration authority issues a public notice to the creditors. According to previous law, the company was required to deliver various financial documents (e.g. financial statements) to the trade register. Nowadays it is enough to make and keep the documents available to shareholders. The procedure in the registration authority has also been simplified, and in certain cases made faster.

It is possible to carry out a merger process in less than four months, but in many cases the process can take more than half a year.


The new Limited Liability Companies Act provides for a new company change structure: the triangular merger. The difference between a triangular and traditional merger is that in a triangular merger a party other than the acquiring company provides the merger consideration. This means that the merger consideration can be shares in the parent company of the consolidated company. In many cases this would be more practical than the (minority) shareholders of the merged company becoming shareholders in the company’s indirectly owned company.

The problem here is that the regulation of the Commercial Activity Taxation Act which states that the taxation of a merger is neutral does not apply to triangular mergers. In this respect, taxation regulations were not changed when passing the new law, and nor did the Arvela’s II Working Group suggest changes in relation to triangular mergers. Even if a triangular merger is implemented in accordance with the requirements of the law, is the merging company considered dissolved when it comes to taxation? As such, the property transferred to the acquiring company is valued at market value and the profit is viewed as taxable income. Also, in the taxation of the shareholder, a triangular merger is considered to be a taxable transfer. For these reasons, a triangular merger is usually not the best option.


A demerger is a reverse change in company structure, compared to a merger. In a demerger, the assets and liabilities of the demerging company are transferred in full or in part to one or several companies and the shareholders of the demerging company receive shares in the acquiring company as the demerger consideration (which may also consist of cash, but according to the Industrial and Economic Activity Act, this amount shall not exceed 10% of the nominal value of the shares given as the demerger consideration).

A proposal for the division of the assets and liabilities of the demerging company between each of the acquiring companies is defined in the draft terms of the demerger. This division is binding on the creditor as well, unless they object to the division. The same changes described above in the chapter about mergers also relate to the demerger procedure and draft terms.

When a demerger is carried out correctly it is possible to divide the business and property into practical units. This is suitable, for example, in the case of corporate acquisition, a change of generation or when new shareholders join a company.


According to the previous Limited Liability Companies Act, a demerger was only supposed to be carried out in such a way that the acquiring company would be established in the context of the demerger. Now it is possible to demerge into an existing company. This structural change can be used, for example, when there is a wish to combine one of many business areas with another company’s business. In this case the other party to the draft terms of the demerger is the other company in question.

The regulations of the Commercial Activity Taxation Act make neutral taxation possible even in this type of demerger, but without similar regulations in the Limited Liability Act this could not be carried out.


M&As are different every time: there is great variation among buyers and sellers. A number of factors must be considered when carrying out a valuation, including timing, which can make a big difference.

In practice, small and medium-sized businesses are valued based on discounted cash flows and the company’s net asset value.


If you wish to use acquisitions to expand your business, you need the best experts with the most up-to-date knowledge at your disposal. Comistar has extensive experience of executing acquisitions of different sizes.


When exiting a business, Comistar can be a strong partner in negotiations and drawing up contract specifications. These can be crucial when seeking the best deal.


The timing of a sale, the country in which it takes place, the seller’s home country, definitions of ownership… These are all issues you have to keep in mind when selling a business. As such, your plan regarding taxation should be effectively implemented in order to ensure an efficient result.


Comistar’s law experts will provide all of the contracts needed for a deal. These contracts should always be prepared in cooperation with the owners/responsible person of the business. Using third-party experts tends to be favourable.


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