Confianz

Etiqueta: m&a

  • Tax strategies before and after an M&A

    Did you know that 40% of mergers and acquisitions fail due to undetected tax issues? A poorly planned M&A transaction can drag along millions in hidden liabilities, trigger the Complementary Tax, or clash with European regulations on legitimate economic purpose.

    The reality is stark. Ignoring these factors can turn your dream transaction into a financial nightmare. However, with the right tax strategy, M&A can be the perfect catalyst to accelerate your company’s growth.

    What to review before signing

    Tax due diligence

    The preliminary tax review should unravel critical risks such as buried tax debts, tax credits without solid documentation, and incentives applied without a real economic basis.

    In 2024, for example, a Spanish technology company had to return €2.3 million in R&D deductions incorrectly applied by the acquired company. The fine and interest doubled the initial impact.

    In 2025, the Supplementary Tax has added complexity. Your obligations are assessed based on the post-merger situation of the consolidated group. Two individually exempt companies may, after the transaction, be subject to this 15% tax on profits exceeding £20 million.

    The European filter that can stop your transaction

    The EU Anti-Tax Abuse Directive requires that all acquisitions have genuine economic motivation. A transaction motivated solely by tax benefits may be declared elusive. In Spain, the Treasury is applying this criterion with increasing rigour.

    Remember to document the commercial reasons for your transaction from day one. A solid business case will shield the transaction from tax scrutiny.

    Acquisition structure

    The choice between purchasing assets, acquiring shares or merging determines the treatment of capital gains, the inheritance of tax credits and the degree of exposure to tax liabilities. An intelligent structure minimises the immediate tax burden without mortgaging the future.

    After signing

    The SPA

    The purchase agreement must include dynamic adjustment clauses for tax contingencies and compensation systems. W&I insurance is now standard in transactions exceeding €10 million in Spain.

    According to KPMG (2025), more than 30% of SPAs include specific clauses on the Complementary Tax. The average cost of a W&I policy represents between 0.8% and 1.2% of the transaction value, but can save you up to 10 times that amount.

    Tax integration

    Once the transaction is closed, integration determines the final success. A poorly executed process can lead to tax duplication, trigger tax inspections and create loopholes that compromise the company’s image with investors.

    Successful integration requires unified filing of corporate income tax and consolidated VAT, consistent accounting criteria and centralised management of tax obligations.

    In complex transactions, we recommend setting up a «tax war room» during the first 90 days after closing to detect and resolve discrepancies in real time.

    In the world of M&A, tax is part of the strategic DNA of any successful transaction. Companies that understand this from day one turn tax planning into a competitive advantage.

    Our integrated approach designs tax-efficient structures, anticipates regulatory changes and executes transitions that protect the value of your investment.

    Are you planning an M&A transaction? The best decision starts with a conversation. Contact us and you will find in Confianz your strategic partners with more than 30 years of experience.

  • How is a company valued

    How much is a company really worth? This is a question that all business owners ask themselves at some point. Especially when the valuations they receive vary surprisingly. And this is no coincidence, as behind each figure there are different assumptions, methodologies and perspectives.

    Business valuation is not just for when someone wants to sell. You also need it when a partner joins, you seek financing, you distribute shares among your children, or you define incentives for your management team. What is at stake is truly understanding how much your business is worth, why it is worth it… and what you could do to make it worth more.

    Price is not value, and confusing the two can be costly

    This confusion is constantly seen. And it is dangerous.

    Value and price are different things. Value is a reasoned estimate of the business based on data, projections, and analysis. Price… well, that’s what someone is willing to pay and what the seller accepts. It can be well above or well below value, depending on urgency, expectations, synergies, or simply how much the buyer likes the business.

    An illustrative case: a logistics company had an estimated value of 8 million, but was sold for 12. Why? Because the buyer specifically needed that geographical location and those contracts. The synergies justified the difference.

    Therefore, before discussing price, you need to know what value you are playing for.

    Methods 

    Discounted Cash Flow (DCF)

    This is the preferred method when there is a certain degree of stability and you can project the future with some confidence. Basically, you project how much cash your business will generate in the coming years and bring it to the present using a discount rate (the famous WACC, which is simply the cost of your capital).

    The advantage? It reflects the real potential of the business. The problem? It depends on many assumptions. If there are errors in the growth projections or the discount rate, the whole house of cards comes crashing down.

    An example: a technology start-up projected 40% annual growth over five years. It sounded great until they analysed where that growth was going to come from. In the end, the most realistic projections were around 15% per annum. The difference in valuation was huge.

    Comparable multiples

    Here, you look at how companies similar to yours have been valued, using ratios such as EV/EBITDA, PER, or multiples on sales. This is useful for quick reference and to explain why your company cannot be worth 50 times its sales when those in the sector are trading at 2x.

    But there are always truly appropriate comparables. We have seen disastrous valuations due to copying multiples from companies that only resembled yours in the name of the sector, but had completely different business models.

    Valuation by assets

    This is the most straightforward: add up the assets, subtract the liabilities, and you have your value. It works well for companies with a lot of tangible assets or that are in the process of liquidation.

    The problem is that it falls short when the company generates value mainly through intangibles, technology, brand, or scalability. A consulting firm may have assets worth €50,000 but be worth €2 million because of its client portfolio and knowledge.

    And if none of this fits 

    The reality is that you often have to combine methods. There are specific models for start-ups, and for companies in very specific sectors too. But the important thing is not to master every formula in the world. It’s knowing when to use each one and, above all, how to explain the results without getting lost in technicalities that no one understands.

    What makes a valuation truly useful

    There are 80-page valuation reports full of beautiful graphs that are useless. And there are 15-page reports that help close million-pound deals. The difference is not in the amount of analysis, but in whether the valuation is useful for decision-making.

    First, you need a financial narrative that makes sense. It’s about clearly explaining what makes the business work: how the money comes in, how much actually stays in the coffers, and whether the whole process is repeatable.

    A client recently said that his company «sold technology.» When we looked deeper, it turned out that his real business was implementation and subsequent maintenance. The technology was almost a commodity. Understanding this completely changed the approach to valuation.

    Second, scalability has to be realistic. Can the company grow? How much and at what cost? Is there room to raise prices without losing customers? Can new sales channels be opened?

    This is where the fine work comes in. Explaining what levers the business really has to multiply value without multiplying problems proportionally. Because growing for the sake of growing is pointless if every additional euro of revenue costs 1.20 euros to achieve.

    The infomemo must be honest. It is not a catalogue of the company’s virtues but a map of the business that must make clear what is done well, what risks exist, where the critical dependencies are (that customer who accounts for 40% of revenue, or the manager without whom nothing works), and how all this affects value.

    And something important: you have to think like an investor. How will the person putting in the money see the company? What can they do with it that is not being done now? This perspective is key to building value, not just calculating it.

    In the end, it’s all about clarity

    Valuing companies is not about mechanically applying formulas. It’s about building a clear, realistic and useful vision of what the business is worth today… and what it could be worth in the right hands.

    Is there a sale, investment search or restructuring process underway? Do you need to know what the business is really worth, not in theory but in the real world? Let’s talk.

  • How to manage the impact of a company sale

    Managing the impact of the sale of a company is a surgical operation that touches sensitive nerves: people, culture, customers, processes. Selling is a milestone, but it is also a shock that, if not handled well, can be expensive for the buyer, the seller and the whole team in between. For the buyer, the seller and the whole team in between. The secret? Planning, empathy and a clear vision of what comes after closing.

    What changes when a company is sold

    All of it. Or almost everything. Selling impacts everything from the internal structure to how customers perceive the brand. One of the first effects is uncertainty in the team: Do I stay? Do they change me? What do they want from me now? These are not minor questions. If they are not answered well, productivity plummets. Added to this is the redesign of processes. What worked before no longer fits. New tools are coming, other KPIs, another management style.

    In parallel, business strategy often mutates. New priorities. Changes in the value proposition. Sometimes, restructuring of products or services. This generates noise among customers, who may become suspicious. Statistics confirm that companies that do not manage this transition well lose brand loyalty and market share. And if the buyer is international, we add the challenge of integrating completely different cultures, systems and ways of working. The intangible becomes the biggest risk.

    Practical keys to managing the impact of a company sale

    The first thing is to stop thinking that this can be solved with a communiqué. Communicate yes, but with a plan. Internally, transparency is not optional. The team needs to understand why it is being sold, what is going to happen and how it affects them. And this is communicated from the top, but also from each line manager. Communication cannot be vertical and static. It must be adapted to the channel and the context of each area.

    Second: processes. Standardisation does not sound glamorous, but it is vital. A sale brings administrative chaos. If processes are not clear, errors multiply. A good CRM system and collaborative tools make the difference between surviving or stagnating in integration. It’s not just about technology, it’s about method.

    Third: customers and suppliers. Talk to them before the market does. Tell them what is changing (and what is not). Listen to doubts. Give signs of continuity. One fact: customer-centric companies are 38% more likely to increase their profitability after restructuring. It’s not marketing, it’s operational reality.

    Fourth: data. In a transition, emotions rule. But decisions must come from numbers. What metrics? Revenue, customer retention, satisfaction, lead conversion, churn, team productivity. Measuring allows you to adjust and anticipate risks. You can’t improve what you don’t measure.

    And the point that many forget: talent. Selling generates a silent drain. Key people leave out of fear or lack of information. Retaining talent is not just a question of salary. It is about explaining their future role, offering stability, training in new processes. And above all, listening. Change management is about accompanying, not imposing.

    And after the closure? That’s where it all starts

    Once the sale is signed, the hard part begins. The urgent part is over. Now comes the important part: getting the company up and running in the new phase. This is where you can see whether the transition was well managed or not. Often, the focus is on closing quickly, not on integrating well. And then come the problems: falling sales, customers leaving, internal blockages.

    The key is to remain vigilant. Follow the integration plan. Measure weekly. Have real feedback meetings, not ceremonial ones. Correct quickly. And, above all, don’t lose sight of what makes the company unique: its culture, its way of doing things. Selling can be an opportunity for growth, but only if the foundations of the business are respected.

    Confianz has accompanied sales processes of all kinds. Large, small, between family groups, between funds. Contact us if you would like our experts to study your case and advise you during this process.

  • The rise of M&A in Spanish family businesses in 2025

    The rise of M&A in Spanish family businesses in 2025 is the result of a structural transformation. Family businesses, which account for 92.4% of the business sector in Spain and generate 70% of private employment (Family Business Institute, 2025), are leading a new cycle of growth.

    According to the report by Maio Legal and Strategy with Purpose (2025), 27% of family owners are planning acquisitions, while 29% are leaning towards strategic alliances. This dynamic reflects a new mindset: less conservatism, more forward-looking.

    Family fusiness drives mergers and acquisitions

    In 2023, 43% of M&A deals in Spain involved family businesses, surpassing private equity (26%) and industrial corporations (19%), according to the INE. This is not anecdotal: it is a solid trend that continues in 2025.

    The report M&A and family business: how to align ownership and management at the moment of truth points out that this boom is supported by a favourable financial context. Corporate indebtedness fell for the second consecutive year to 64.7% of GDP, the lowest level since 2001 (Bank of Spain, quoted by Cinco Días, 31 May 2025).

    But there is more to the story: a generation of business leaders – mainly baby boomers – are now facing key decisions about the future of their businesses. Expand? Find a partner? Sell? For many, M&A becomes the structural answer to these dilemmas.

    Leading sectors and real opportunities

    The rise of M&A in the Spanish family business in 2025 is more visible in fragmented sectors, in consolidation or with technological pressure. According to Business People (2 June 2025), the clearest opportunities are in:

    • Energy: The energy transition requires financial muscle and technical know-how. Many family-owned SMEs are merging or integrating renewable projects to stay competitive.
    • Technology: Digital change is no longer optional. Traditional companies are acquiring technology start-ups to update processes, sales channels and business models.
    • Pharmaceuticals: The concentration of laboratories and distributors is driving acquisitions to gain scale, diversification and access to R&D.
    • Agri-food and manufacturing: Sectors where global competition and tight margins are pushing for integrations. Here, many family-owned companies seek to lead consolidation, rather than be absorbed.

    Maio Legal and Strategy with Purpose note that the most active family businesses share a pattern: sound financial structure, strategic vision and professionalised governance. The key is deciding whether to lead change or to give ground to external capital.

    Succession

    While the enthusiasm is real, so are the challenges. The biggest internal hurdle remains succession. According to the Family Business Institute (2025), 70% of first-generation family businesses do not have a defined succession plan. This puts their continuity beyond the founder at risk.

    EY and the University of St. Gallen, in their Global Family Business Index 2025, warn that only 30% of these companies manage to survive the transition to the second generation. The lack of alignment between family and professional management can have a direct impact on daily operations, slowing down up to 30% of the activity (Maio Legal, 2025).

    This emotional and structural environment makes any M&A process a complex decision. It is not only about growing or selling, but also about redefining the role of the family, professionalising corporate governance and avoiding internal tensions.

    As Nuria Morcillo points out in Cinco Días (31 May 2025), «M&A in family businesses is not a simple transaction. It is an identity transformation that requires maturity, advice and business vision».

    At Confianz we have accompanied hundreds of companies in merger, acquisition or restructuring processes, combining strategic vision, legal knowledge and family sensitivity. If you are evaluating growth or restructuring, let’s talk. We can help you make decisions.

  • What is an indemnity in M&A and how does it protect you?

    In any sale and purchase of a company, there is one element that can save the parties from a million-dollar problem: indemnity in M&A. Sound familiar? It’s time to get it right.

    What exactly does an indemnity cover in M&A?

    Imagine this: you are about to close a deal. You have done your due diligence, but you see a possible tax lawsuit. It hasn’t materialised yet, but alarm bells are ringing. In that scenario, an indemnity clause is not a suggestion: it’s your bulletproof vest. It obligates the seller to bear the cost if that problem is triggered after closing. Without it, that potential lawsuit can become your nightmare, legally and financially.

    Indemnities apply to known risks. We are not talking about vague promises like warranties, but precise guarantees: if X happens, you pay.

    Typical examples:

    • Ongoing litigation
    • Fines for tax inspections in process
    • Outstanding labour debts

    The key is to put it in writing. Because if you know it and you don’t agree to it, you won’t be able to claim. It’s that simple. It’s that dangerous.

    Indemnities vs Civil Code

    This is where the second level of the game comes in: the Civil Code. Article 1484 states that the seller is liable for hidden defects. But beware: if the buyer knows about them, there is no longer any liability. In the M&A world, this is not always the case. That is why sandbagging clauses exist. What do they do? They allow you to claim even if you were already aware of the problem, as long as the seller has concealed it or lied about it in his statements.

    But is that legal in Spain? It depends. Some courts validate them on the grounds of contractual autonomy. Others do not, considering them contrary to mandatory rules. What is clear is this: if you don’t talk about it and don’t agree to it, you lose. This is why it is often decided to directly exclude the application of the Civil Code. But this is not a minor decision. Because in doing so, it also removes its protections. It can be a double-edged sword.

    At Confianz we evaluate each case. It’s not about filling a contract with meaningless clauses. It’s about designing an agreement that works, that holds up and that defends you. We also help to set clear limits: what risks are covered, for how long, with what economic ceiling and under what conditions. Because a poorly negotiated indemnity can be a dead letter.

    How we approach it at Confianz

    At Confianz we do not use templates. Each operation has its own edges, risks and urgencies. And indemnities are too important to improvise. Our approach:

    • We take a closer look at due diligence
    • We detect real risks, not assumed risks
    • We design clauses that make both legal and practical sense.
    • We negotiate without fear and with substance

    We know that a badly drafted clause can cost millions. And we also know that negotiations are often avoided so as not to «strain» the relationship. We say the opposite: you have to tighten it where it is needed, so that it does not break later. Moreover, we help to filter out what is reasonable. Because not everything should be covered by indemnity. They can be limited to clear cases: malice, blatant errors or known but unresolved facts. This protects the buyer, without suffocating the seller.

    That is why we say that indemnities are not small print. They are the heart of the contract. And if they are badly done, there is no turning back.

    An indemnity in M&A is not just a legal formality. It is your life insurance in a complex transaction. It may sound like a technicality, but it is not. If you are in the middle of an M&A transaction or about to enter into one, don’t jump in without it in place. A clear indemnity can save you years of litigation and headaches.

    At Confianz, we have been fine-tuning these clauses for years. Not with theory, but with practice. Real cases. Real people. Real risks. Are you buying or selling a company? Let’s talk.

  • Labour auditing in M&A: the forgotten part of due diligence

    Big or small, no M&A transaction is without risk. And the surest way to minimise them is to carry out thorough due diligence. In this respect, no company involved in a merger or acquisition would skip the step of a tax and accounting audit carried out by external consultants or lawyers. And yet, some are still not fully aware of the importance of also including an in-depth labour due diligence in the investigation. This is despite the fact that failure to do so can have dangerous consequences for the success of the operation.

    Objective: to identify risks in order to negotiate a fair price

    The aim of the labour audit has to be to detect the points of risk that may exist among the labour aspects of the target company, even if they are hidden from the naked eye. Only with this comprehensive information is it possible to negotiate an appropriate purchase price (usually downwards), determine the return on investment, assess the possible requirement for collateral and even take the decision to abort the transaction due to the excessive risk involved.

    A wide range of aspects to be assessed

    The labour audit has to review thoroughly and in depth the formal obligations of the entity and its employees. This covers a very wide range of items: the staff and its organisation chart; the possible oversizing of the staff; absenteeism levels; overtime and attendance control; the legal relationship of partners, administrators and managers with the entity; the corporate culture; the internal work regulations; contracts and subcontracts; professional classification; salaries and remuneration and their monthly and annual economic cost; the salary scale by categories; compliance with social security obligations; inspection reports; administrative and judicial proceedings in progress; potential claims; geographical mobility; substantial modifications of working conditions; suspensions and terminations; health and safety at work; legal representation of workers and pending litigation.

    Depending on the risks identified in the labour due diligence, the terms of the negotiation and the price of the transaction are likely to be affected in one way or another.

    Consequences of a bad labour audit

    The often underestimated area of employment of the target company can lead to numerous problems for the acquiring party. This is because the company’s obligations towards the workforce are directly inherited by the new owner. For example, the target company may have open legal proceedings for unfair or null and void dismissals, accidents at work, infringement of the Employment Safeguard Clause due to exemptions from social security contributions by ERTEs in the COVID period, etc. The casuistry is infinite, and it is not unusual for the sum of several of these cases to end up adding up to tens of thousands of euros to be paid by the buyer.

    Specialist advice is essential

    Due to the complexity of the labour aspects of any company, it is vital to have a team of qualified and experienced professionals to carry out an in-depth labour audit, analysing the risks in order to provide a realistic picture of the target company’s situation in this area.

    At Confianz we can accompany you in all phases of the process: from data collection and analysis to the labour integration process once the operation has been completed, including price negotiation, decision making and contract formalisation. Tell us about your case.

  • Litigation insurance in M&E transactions

    In recent years, a very sophisticated product has burst onto the Spanish M&A market: Litigation Risk Insurance (LRI). More and more companies involved in mergers and acquisitions are taking out this type of insurance to cover the costs associated with litigation that may arise from the transaction.

    Types of M&A insurance

    In M&A transactions, insurance is increasingly used as a tool to protect the parties involved in the transaction against the risks associated with the transaction. By taking out specialised M&A insurance, it is possible to transfer some of the risks arising from the transaction to an insurer.

    Until recently, insurance was reserved for large M&A transactions, but in recent times it has become popular even for transactions with a value of less than EUR 50 million.

    These are the types of insurance we most commonly recommend in the M&A transactions we advise at Confianz:

    • Representations and warranties insurance: This is the most common and is usually used to cover costs and damages resulting from the possibility that one party is untruthful or inaccurate in the representations and warranties it makes to the other party.
    • Litigation risk insurance: Covers the costs associated with litigation that may arise from the transaction. This is the type of insurance that we will discuss in depth in this article.
    • Environmental contingency insurance: Covers costs arising from environmental risks that may materialise in the transaction, such as soil or water contamination.
    • Fraud and embezzlement insurance: Covers the risks of fraud or embezzlement by the management or employees of the acquired company.

    Types of M&A litigation insurance

    There are three types of litigation risk insurance:

    • Adverse Judgment Insurance. In exchange for a premium, it guarantees that, if there is a conviction, the insurance pays out. In this way, the provision can be removed from the balance sheet.
    • After The Event Insurance or Costs Compensation Insurance. It may even cover the costs of the lawyer.
    • Judgment Preservation Insurance, Judgment Preservation Insurance or Contingency Insurance. When a judgement has already been passed, if this judgement is overturned in the second instance or by the Supreme Court, the insurance pays 80-90% of the amount of the sentence. A typical example would be a provincial court sentence that condemns a party to pay 10 million euros. With a Judgment Preservation Insurance policy the plaintiff can insure a large part of that 10 million euros. In other words, if the Supreme Court overturns the judgement and annuls the judgment, the insurance would pay, for example, 8 or 9 million euros to the plaintiff. If the Supreme Court judgement reduces the sentence to 5 million, the plaintiff would receive 5 million from the opposing party and 3 or 4 million from the insurer. However, this insurance does not cover the possible insolvency of the debtor.

    Conclusion

    Litigation insurance premiums often have a very high cost that is usually not affordable. It is also important to bear in mind that the insurance will not cover all risks, and there may be exclusions and limitations in the policy. Highly complex clauses need to be negotiated. For these reasons, it is advisable to seek advice from M&A lawyers.

  • M&A forecasts: exit pressure grows

    The first half of the year has not been as good as forecasts expected, but macroeconomic factors augur a recovery of the M&A market by the end of 2024, despite the current uncertainty.

    Exit pressure is growing because the more time passes with a reduced number of M&A deals, the more the need for these deals grows. There is pent-up demand, especially from private equity funds. In addition, companies are turning to deals to accelerate growth and reinvent themselves in a time of change and dynamic environment: artificial intelligence is revolutionising business models across the board. CEOs’ desire to drive growth for their companies in a low-growth economy where organic growth is not easy also creates M&A opportunities.

    Private equity funds have their sales portfolios full

    According to PitchBook data, private equity firms had more than 27,000 portfolio companies worldwide at the beginning of 2024. Many private equity firms are in the process of raising funds and have some urgency to sell.

    Uncertain environment forces continous adaptation

    Today’s macroeconomic, geopolitical and technological factors create a disruptive and complex environment that forces companies to continuously innovate and reinvent themselves. In this situation, M&A is the ideal strategy to acquire new capabilities, talent and technology or to divest non-core assets.

    AI is here and it will change almost everything

    The impact of generative AI is already beginning to be significant in business and society. And in the near future, it will generate huge cost efficiencies, create new sources of revenue, improve the value proposition… Forecasts suggest that this is another factor that will require companies to re-evaluate their business models, their strategies, their markets…

    Organic growth forecast to stagnate

    The macroeconomic environment makes it increasingly difficult for companies to grow organically. Many will have to resort to M&A to achieve inorganic revenue growth.

    M&A forecasts: sectors that will be most active in the market 

    • The move towards electromobility will generate M&A deals between automotive manufacturers and the technology sector or the mining of materials essential for battery production.
    • Some of the pharmaceutical industry‘s most important patents will expire in the coming years. Companies in the sector will use M&A to acquire biotech companies.
    • Energy companies in renewables and also in fossil fuel production, seeking to gain efficiency gains through size and access to new oil and gas reserves.
    • Again, the technology sector will see major deals between companies in AI, cybersecurity, cloud storage…

    Conclusion

    None of the macroeconomic factors mentioned in this article will disappear in the short term. So the big question is not whether M&A will pick up again, the question is when. And we have reason to believe that it will be in the coming months.

    Because at Confianz we are already detecting an upturn in activity among sellers. Many are preparing for sale, developing business plans and conducting sales due diligence. Our forecast is that more quality assets and businesses will come to market in the coming months.

  • Integration: how to successfully complete an M&A transaction

    After the closing of the transaction, the last phase of any M&A process is the integration of the acquired company into the acquiring company. This is in fact the ultimate goal of any merger or acquisition, and its success depends to a large extent on its prior preparation.

    Post-acquisition integration (also known as PMI or post merger integration) is the assimilation and sometimes restructuring of the acquired company. In this process, the processes, organisations and business areas of the entities involved are harmonised. The objective is that at the end of the process there is a single organisation in operation and not two separate organisations with incompatibilities or redundancies in their structure and operation.

    We will review the best way to plan this key process for the success of any M&A transaction.

    Post-acquisition integration steps

    Although no two M&A projects are the same, in general we can distinguish five phases in the PMI process.

    Planning

    The duration and effort involved in the PMI process should never be underestimated. Integration planning should start as early as possible, at the same time as the definition and planning of the acquisition strategy. Otherwise, if left to the end, you risk creating an unnecessary level of complexity in the integration.

    The first general plan should contain the main steps and objectives, but it is not possible to draw up a detailed project at this stage. For this reason, throughout the M&A process, it is necessary to gradually incorporate all new information that becomes available. For example in the course of due diligence. The integration process must be dynamic, in order to achieve a PMI that is increasingly accurate as the M&A process progresses.

    Creation of a new management chart

    It is imperative to carefully create a new management organisation that not only matches the structures of the acquirer and the acquired company, but also creates a single optimal structure for the new company resulting from the M&A process. This involves defining precisely which competencies will be assumed by the general management of the company and which will reside in the different business units acquired, distinguishing by functions, sectors and regions if necessary.

    Appointment of senior staff

    Once the distribution of competencies has been made, the people who will fill each of the positions need to be appointed. To do this, it is important to design a fair selection process and criteria. The most common is to start with the appointment of senior management. These, in turn, are responsible for appointing the managers under their hierarchy.

    Harmonisation of operational processes

    This is a key point for the success of the integration. It has to be decided which processes of the acquiring and acquired company can or should be taken over and which should be redesigned.

    Creating a common corporate culture

    No PMI process is successful if it does not take into account the cohesion and satisfaction of the employees. Because the very announcement of an M&A process is a source of uncertainty for employees. It is therefore important to develop a common corporate culture with which employees can identify, to use training measures, to adapt incentive schemes, etc.

    Conclusion

    Companies are not normally undergoing M&A processes all the time. That is why it is essential to have specialised advice throughout the whole process. If you would like legal and tax advice on post-acquisition integration, Confianz can help you.

  • Treasury faces millions in refunds for making merger taxation more difficult

    The Treasury could have to refund millions of euros to many companies for making taxation difficult in the special regime for mergers, acquisitions and spin-offs, better known as the FEAC regime. The possibility is very real, because both the Court of Justice of the European Union (CJEU) and the Supreme Court (SC) are currently analysing whether the Spanish regulations are in line with the European Directive.

    The current FEAC regime

    The irregularity would be found specifically in the special regime for spin-offs, which would make tax deferral difficult. According to Spanish law, when a company is extinguished and split into two new companies in which the partners do not participate in the same proportion, it is obligatory to pay tax at the time of the creation of the new companies. The tax authorities do not allow in such cases to defer taxation to a later point in time, when the shares are sold. The only exception to this rule is when the assets acquired are separate branches of activity.

    This is a very damaging rule for spin-off companies, which normally do not plan to sell. Because many of these restructurings are aimed precisely at promoting generational change.

    The position of the European Comission and the Supreme Court

    The European Commission considers that the Spanish rule goes against the European Directive because it establishes restrictive conditions instead of facilitating these operations. For this reason, following a letter of formal notice issued in 2019 and a reasoned opinion in 2023, it has referred Spain to the CJEU.

    Meanwhile, the Supreme Court has also upheld in an order of 10 April an appeal to determine whether it is in accordance with European law that in spin-offs where the partners do not hold the same proportion of shares, tax is only deferred if the assets acquired represent a distinct branch of activity.

    We are therefore at an impasse. It is most likely that the Supreme Court will not make its decision until the Court of Justice of the European Union has ruled.

    What to do now

    Confianz’s recommendation for companies that find themselves in this circumstance is to pay the tax authorities and immediately appeal the tax assessment. We will then await the pronouncement of the CJEU and the Supreme Court. If the courts conclude that the Spanish rule is not in line with the European rule, all those companies that have asked for a refund and still have the case open will be able to receive what they have paid. To this figure will have to be added interest for late payment of 4%.

    Spin-off companies that have paid less than four years ago are also in time to claim.

    The Treasury already has to pay back more than 11.2 billion euros

    The more than likely rulings against the FEAC scheme would add to the string of judicial setbacks that the Tax Agency has accumulated in recent times. According to the Ministry’s own estimates, the Treasury is already facing the return of more than 11.2 billion euros as a result of the latest adverse rulings. Most of them affect companies. The two most important are:

    • In January, the Constitutional Court overturned the 2016 Royal Decree-Law that tightened corporate income tax.
    • In May, the CJEU declared illegal the supplement to the Hydrocarbon Tax applied by the autonomous communities between 2013 and 2018.

    If your company is in any of these situations, Confianz will advise you so that you can recover the amount paid plus the corresponding interest for late payment.