1. Introduction – 2. The preliminary phase: the focus on the capital structure of the target company – 3. The strategic approach: the timing of the completion, the conditions precedent to the closing – 4. The SPA tools to minimize the buyer’s risk
The current lack of available credit and the migration of the downturn in the financial economy to a downturn in the real economy have had a significant impact not only on the volume – due to the lack of high value transactions - but also on the kind of M&A deals getting done compared with the previous yearly trends. The picture of the Italian M&A market in the second quarter of 2013 reveals that the majority of the deals done have been buy out transactions, followed by expansion and early stage transactions, especially this latter in the private equity and venture capital activities. In this scenario there has been an increase of distressed transactions which has shown an upward trend in the third and four quarter of 2013.
The assessment of the health of the target is material for choosing the deal structure of an M&A transaction (i.e. asset deal vs share deal) both at cross border and Italian level. For sake of concision it is worth focusing on the main features of share deals targeting distressed companies under the Italian law.