Mergers & Acquisitions: Maximise Value on Both Sides of the Deal

Mergers and acquisitions (M&A) are corporate transactions through which two or more companies combine or one acquires control of another, typically with the objectives of achieving strategic growth, capturing synergies, or realising shareholder value. In Spain, these operations are governed by the Structural Modifications Act (Ley 3/2009), the Companies Act (LSC), and competition regulations enforced by the CNMC, while cross-border transactions may require notification under EU Merger Regulation 139/2004 and review by the European Commission. M&A transactions carry significant tax implications — particularly the choice between an asset deal and a share deal under the Corporate Income Tax Act (LIS) and the Transfer Tax and Stamp Duty Act (ITPAJD) — as well as employment consequences under Article 44 of Spain's Workers' Statute, which mandates automatic subrogation of the acquirer in all employment rights and obligations upon transfer of a productive unit.

Our M&A team has participated in more than 200 transactions, representing over EUR 2 billion in aggregate deal value. This depth of experience allows us to anticipate the challenges of each process and design strategies that protect our clients’ value in any scenario.

Why M&A Transactions Destroy Value When Preparation and Process Are Inadequate

M&A transactions destroy value when preparation is inadequate, the counterparty universe is not managed correctly, or key terms are conceded during negotiation due to time pressure or information asymmetry. Sellers who approach the market without a structured process receive lower prices: without competitive tension among multiple qualified buyers, the single interested party dictates terms. Buyers who proceed without rigorous due diligence pay for problems they could have quantified and either excluded from the price or made the subject of contractual protections. And both sides suffer when deal structure — tax, legal, and financial — has not been optimised before term sheets are exchanged. The difference between a structured and an unstructured process is not marginal: it is typically 20-30% of transaction value.

Our M&A Transaction Lifecycle: Sell-Side, Buy-Side, and Integration

For sell-side mandates, preparation begins with crafting a compelling equity story anchored in a rigorous valuation, identifying the right universe of strategic and financial buyers, and designing a structured auction process that creates genuine competitive tension and protects confidentiality. We manage information flow through a controlled data room, lead all negotiations with potential acquirers, and drive the process to a closing that maximises proceeds. For buy-side mandates, we identify and assess targets, manage approaches, conduct or coordinate due diligence, structure the transaction for optimal tax and legal efficiency, and lead negotiations through to signing and closing. Our in-house valuations and due diligence capabilities — operated by the same team — ensure consistency of analysis and eliminate information gaps. Post-acquisition integration is where M&A value is ultimately won or lost: we support the 100-day integration plan, track synergy delivery, and address the operational and cultural challenges that consistently emerge in the first months after closing.

Real Results in M&A: 23% Premium Over Self-Assessed Value and 94% Completion Rate

• 23% average premium over clients’ initial self-assessed value at the start of the sell-side mandate — achieved through competitive tension, not luck.
• 94% completion rate: mandates that we take on close.
• EUR 2B+ in aggregate transaction value advised across 200+ completed transactions.
• Tax structuring integrated from term sheet stage: asset vs share deal analysis, tax neutrality regime elections, and transfer tax optimisation under LIS and ITPAJD.
• Post-acquisition integration support: 100-day plan, synergy tracking, and management alignment through the first year post-closing.

M&A transactions in Spain are governed by the Companies Act (LSC) for corporate approvals, the Spanish Competition Act (LDC) and EU Merger Regulation (139/2004) for transactions above notification thresholds, and the Foreign Investment Act (Law 19/2003) for acquisitions in sensitive sectors by non-EU investors. Tax structuring requires analysis under LIS — Articles 76-89 for the tax neutrality regime applicable to restructurings — ITPAJD transfer taxes, and VAT treatment of real estate-holding targets. Our tax planning specialists integrate into the M&A team from the outset to ensure that deal structure and tax efficiency are optimised together rather than treated sequentially.

The Spanish M&A market: sector dynamics and deal flow

Spain’s M&A market has demonstrated consistent deal volume through economic cycles, driven by structural factors — family business generational transitions, private equity activity (Spain is the fourth-largest private equity market in Europe), international acquirers accessing the Spanish and Latin American markets, and consolidation dynamics in fragmented professional services, healthcare, and technology sectors. Understanding these dynamics is the foundation of effective mergers and acquisitions advisory.

In 2025-2026, the most active M&A sectors in Spain include: renewable energy (driven by Energy Transition investments), digital infrastructure, healthcare and pharma, food and agribusiness, and professional services (consulting, legal, accounting, and engineering firms). Cross-border transactions — both Spanish companies acquiring internationally and international acquirers entering Spain — continue to be a significant component of total deal activity.

Our M&A advisory model

We operate exclusively on a principal advisory basis — meaning we act for either the buyer or the seller in a given transaction, never both, and never as a principal investor or intermediary with a financial interest in completion. This independence is fundamental to the objectivity of our advice.

Our M&A team is structured around industry expertise rather than generalist coverage, which means that advisers on any given transaction have direct sector knowledge and can credibly assess commercial assumptions, management quality, and competitive dynamics — not just financial mechanics.

Sell-side advisory: maximising transaction value

For business owners considering a sale — whether to a strategic buyer, a financial sponsor, or through a management buyout — our sell-side advisory process is designed to maximise value through competitive tension and thorough preparation:

1. Pre-sale optimisation (6-18 months before marketing): addressing the operational, financial, and governance issues that buyers will identify in due diligence and use to negotiate down the price. Audit readiness and corporate governance improvements are frequently necessary.
2. Valuation analysis: establishing a realistic price range based on comparable transactions and trading multiples, providing the seller with a defensible position in negotiations.
3. Preparation of marketing materials: Information Memorandum, management presentation, and financial model — prepared to the standard that institutional buyers expect.
4. Buyer identification and process management: targeted outreach to the right universe of buyers, managed as a structured competitive process to preserve negotiating leverage.
5. Negotiation and documentation: managing the negotiation of the Letter of Intent, the SPA, and all ancillary documents alongside specialist legal counsel.

Buy-side advisory: disciplined acquisition

For companies pursuing growth through acquisition, the risks of overpaying or acquiring the wrong business are significant and well-documented. Our buy-side discipline involves:

• Target screening: systematic identification of acquisition candidates meeting defined strategic, financial, and geographic criteria.
• Preliminary valuation: independent view of value before entering exclusive negotiations.
• Due diligence coordination: managing financial, tax, legal, and commercial due diligence to an integrated conclusion.
• SPA negotiation support: ensuring that identified risks are reflected in appropriate price adjustments, warranties, or indemnities.

Contact our M&A team to discuss your acquisition strategy or exit planning objectives.

Warranty and indemnity insurance in Spanish transactions

Warranty and indemnity (W&I) insurance has become standard practice in mid-market and large Spanish M&A transactions, providing buyers with insurance-backed coverage for warranty claims without recourse to the seller beyond the negotiated retention. For sellers, W&I insurance enables a cleaner exit with a lower escrow requirement. Our M&A team coordinates the W&I underwriting process, preparing the disclosure and due diligence materials that insurers require and negotiating the policy terms alongside the SPA negotiation.

Regulatory framework: Spanish M&A law and competition clearances

M&A transactions in Spain are subject to a layered regulatory framework that must be navigated correctly from the outset to avoid delays, conditions, or prohibition decisions:

Ley 3/2009 on Structural Modifications governs mergers, demergers, global asset transfers, and cross-border corporate transformations involving Spanish entities. Shareholder approval requirements, creditor protection procedures, and director liability during the process are all defined in this act.

Ley de Sociedades de Capital (LSC, RDL 1/2010) sets the corporate governance rules applicable to transactions involving Spanish S.L. or S.A. companies — board approval thresholds, shareholder information rights, and the mechanics of share transfers and capital increases used in M&A structures.

CNMC (Comisión Nacional de Mercados y la Competencia): Spanish merger control is mandatory for transactions where the combined Spanish turnover of the parties exceeds EUR 240 million and at least two parties individually exceed EUR 60 million. Transactions above EUR 1.8 billion in Spanish turnover may alternatively fall under EU Merger Regulation (139/2004) and European Commission jurisdiction. Early assessment of notification thresholds avoids deal-process disruption.

Foreign investment restrictions (Law 19/2003 and RD 571/2023): Acquisitions of Spanish companies by non-EU investors in sensitive sectors — defence, health infrastructure, media, critical infrastructure, and cybersecurity — require prior authorisation from the Council of Ministers under Spain’s foreign direct investment screening regime, introduced via Royal Decree-Law 8/2020 and subsequently extended. Transaction timelines in these sectors must account for a 6-month authorisation review window.

Tax neutrality regime (Articles 76–89 LIS): Corporate restructurings that qualify for the Special Tax Neutrality Regime under Spain’s Corporate Income Tax Act (Ley del Impuesto sobre Sociedades) can be executed without triggering capital gains or transfer taxes at the time of the restructuring, deferring taxation until subsequent disposal. The election requires notifying the AEAT and meeting substance and business-purpose conditions under ATAD anti-abuse provisions.

Sectors and deal dynamics in Spain

Technology and digital infrastructure: software, SaaS platforms, e-commerce, and data centre transactions are Spain’s highest-volume M&A category by deal count. EBITDA multiples for profitable SaaS businesses have ranged between 8x and 14x depending on growth rate and revenue retention metrics. Technology deals frequently involve IP transfer structuring and earn-out arrangements tied to product development milestones.

Renewable energy: photovoltaic and wind generation assets in Spain attract strong demand from European infrastructure funds and strategic utilities. Transactions in this sector involve regulatory risk analysis (CNMC tariff reviews), permitting due diligence, and offtake contract analysis. Ready-to-build (RTB) and operational asset valuations differ substantially.

Healthcare and pharma: clinics, diagnostic networks, dental chains, physiotherapy networks, and pharmaceutical distributors are active consolidation targets for PE-backed roll-up platforms. Regulatory due diligence (sanitary authorisations, prescription protocols, physician employment structures) requires specialist input alongside financial analysis.

Family business transitions: Spain has approximately 1.5 million family businesses, with generational transfer as the most common trigger for M&A activity. Pricing these transactions correctly — accounting for owner-management add-back adjustments, non-arm’s-length supplier relationships, and succession risk — requires advisers with genuine family business experience.

Financial services: insurance broker consolidation, wealth management firm acquisitions, and payment technology M&A all require sector-specific regulatory approvals (CNMV, Banco de España, DGSFP) that extend standard deal timelines.

Company size segmentation: who benefits from M&A advisory

Private companies with revenue EUR 2M–EUR 20M: sell-side advisory for owner-managed businesses seeking an exit to a financial sponsor or strategic acquirer. Focus on EBITDA normalisation, vendor due diligence preparation, and information memorandum quality. Success-fee-weighted mandates align adviser and client incentives.

Mid-market EUR 20M–EUR 200M: the most active segment in Spanish M&A. Transactions typically involve institutional buyers (private equity funds, listed strategics) with professional legal and financial advisers on both sides. Full advisory mandate: valuation, process management, SPA negotiation, and tax structuring coordination.

Large corporates and international groups above EUR 200M: typically involve competition clearance analysis, foreign investment screening risk assessment, and integration of multiple jurisdictions. Our role tends to focus on the Spanish-side advisory function within a larger cross-border team.

Private equity portfolio companies: buy-and-build strategies within PE-backed platforms require rapid due diligence timelines, debt financing coordination (leveraged buyout structuring under LIS and CNMV margin rules), and management incentive scheme design (management carve-outs, ratchets, sweet equity).

Worked example: sell-side advisory for a mid-market industrial distributor

A family-owned industrial components distributor with EUR 28M revenue, EUR 3.2M EBITDA, and 85 employees engaged us for a sell-side mandate following an unsolicited approach from a PE-backed strategic acquirer.

Our process:

1. Pre-sale preparation (2 months): vendor financial due diligence revealing EUR 420K in non-recurring items (COVID-related subsidies and one-off freight costs) to be added back to adjusted EBITDA, lifting the normalised figure to EUR 3.62M. Working capital normalisation analysis establishing a EUR 4.8M peg.
2. Competitive process: we ran a controlled auction approaching 12 strategic and 8 financial buyers in parallel. Four parties signed NDAs and received the Information Memorandum. Three submitted first-round indicative bids.
3. Negotiation: final bids ranged from EUR 14.8M to EUR 21.7M — an EV/EBITDA multiple range of 4.1x to 6.0x. The chosen bidder offered EUR 21.7M, a 19% premium over the unsolicited approach that had triggered the mandate. An earn-out of up to EUR 2.5M was negotiated, tied to 2026 EBITDA targets.
4. Closing: managed due diligence and SPA negotiation over 10 weeks. Tax-neutral demerger of a property asset (the company’s main warehouse) prior to closing, reducing the transaction perimeter and delivering an additional EUR 1.2M net to the sellers in a separately structured real estate transaction.
5. Total outcome: EUR 21.7M closing consideration plus EUR 1.2M property transaction versus a EUR 13.2M initial unsolicited offer — a 67% value increase.

Common mistakes in Spanish M&A transactions

1. Starting a sale process after receiving one approach. Selling to the first interested party — without testing the market — almost always leaves significant value on the table. The buyer who approaches the seller first does so precisely because they believe they can acquire the business at a price below its competitive market value. Controlled auctions create the pressure that maximises proceeds.

2. Inadequate preparation of financial information. Management accounts that cannot be reconciled to statutory filings, inconsistent EBITDA definitions, and missing breakdowns of non-recurring items all create “hair” that buyers exploit to reduce the price in due diligence. Vendor due diligence eliminates these vulnerabilities before the process starts.

3. Treating tax structuring as an afterthought. The choice between a share deal and an asset deal, the availability of the tax neutrality regime, and the treatment of liabilities discovered in due diligence all have major tax consequences that must be analysed and decided at term-sheet stage — not after the SPA has been negotiated.

4. Allowing exclusivity too early. Granting a buyer exclusivity before competition in the process has established a clear price and key terms eliminates the seller’s most important negotiating lever — the threat of a competing bidder.

5. Neglecting post-closing obligations. Earn-out mechanisms, locked-box price adjustments, warranty claims, and non-compete covenants are common post-closing disputes in Spanish M&A. Clear drafting and realistic earn-out mechanics prevent disputes that destroy relationships and consume legal fees.

How we work: M&A mandate structure and timeline

An M&A mandate with our team follows a structured process designed to maximise competitive tension whilst maintaining confidentiality and deal certainty:

Months 1–2: strategy definition, financial preparation, valuation analysis, and preparation of marketing materials (teaser and Information Memorandum).

Months 2–4: outreach to the qualified buyer universe, NDA management, Information Memorandum distribution, and management of first-round indicative bids.

Months 4–6: selection of preferred bidders for management presentations, data room access, and due diligence. Collection and analysis of binding final offers.

Months 6–9: selection of preferred bidder, exclusivity negotiation, SPA drafting, ancillary documentation, regulatory filings, and closing.

Our fees are structured as a monthly advisory retainer (covering preparation, process management, and negotiation) plus a success fee linked to transaction completion — typically 1–3% of enterprise value, depending on deal size and complexity. This structure aligns our interest in a successful closing with the client’s interest in maximising proceeds.