Mergers & Acquisitions (M&A)

M&A in Spain: An Overview

Mergers and Acquisitions (M&A) is the broad category of corporate transactions through which companies combine, transfer ownership, or restructure. Spain is an active M&A market: it is the fourth-largest economy in the EU, with strong deal flow in real estate, infrastructure, technology, healthcare, financial services, and renewable energy.

For foreign investors, Spain’s legal and regulatory framework is broadly aligned with EU standards, but several Spanish-specific features require careful navigation.

Deal Structure: Share Deal vs Asset Deal

The first strategic decision in any Spanish M&A transaction is how to structure the acquisition:

Share Deal (Compraventa de Participaciones o Acciones)

The buyer acquires the shares of the target company. The target company — with all its assets, contracts, employees, and liabilities — passes to the new owner unchanged. This is the most common structure.

Advantages: Contractual relationships continue uninterrupted; no transfer of individual assets required. Disadvantages: The buyer inherits all historical liabilities (including contingent tax and labour liabilities); no step-up in asset tax basis.

Asset Deal (Compraventa de Activos y Pasivos)

The buyer selects and acquires specific assets (and possibly assumes specific liabilities) rather than the company itself.

Advantages: Buyer chooses which liabilities to assume; potential for a tax step-up in asset values. Disadvantages: Complex — each asset must be transferred individually; employees transfer under Article 44 of the Workers’ Statute (a specific succession-of-business rule with significant implications); contracts may require third-party consent to assignment.

The Spanish M&A Process

1. Origination and NDA — Initial contact between parties, signing of a Non-Disclosure Agreement (acuerdo de confidencialidad).
2. Letter of Intent / Term Sheet (LOI/TS) — Non-binding summary of key commercial terms.
3. Due Diligence — Legal, tax, financial, and labour investigation of the target (see Due Diligence glossary entry).
4. Valuation and Negotiation — Agree the purchase price and price adjustment mechanisms (completion accounts or locked-box).
5. Sale and Purchase Agreement (SPA) — The binding contract, including representations and warranties, indemnities, and post-closing covenants.
6. Regulatory Approvals — Competition clearance (CNMC in Spain, European Commission for larger deals); sector-specific approvals for banking, insurance, media, defence.
7. Signing and Closing (Firma y Cierre) — Execution of the SPA, payment of the price, and transfer of shares or assets.
8. Post-Closing Integration — Commercial Registry registration of ownership change, commercial and administrative notifications, integration planning.

Competition Clearance: CNMC

The Comisión Nacional de los Mercados y la Competencia (CNMC) reviews M&A transactions that meet Spanish concentration notification thresholds (broadly: combined Spanish turnover of the parties exceeds EUR 240 million, and at least two parties each have Spanish turnover above EUR 60 million). Transactions above EU thresholds are reviewed by the European Commission instead.

Tax Considerations in Spanish M&A

• Share deal: Capital gains on the sale of shares may be exempt for the seller under the participation exemption (95% of the gain exempt for qualifying holdings). The buyer receives no tax step-up.
• Asset deal: The seller pays Corporate Tax on the difference between sale price and book value of each asset. The buyer can depreciate assets at their acquisition cost.
• Transfer taxes: Share deals are generally exempt from transfer tax (ITP); asset deals that include real estate attract ITP or IVA on the property component.
• Restructuring relief: Mergers, demergers, and share-for-share exchanges can qualify for tax neutrality under the special mergers regime (Chapter VII, Title VII of the Corporate Tax Act).

How BMC Can Help

We advise buyers and sellers throughout the M&A process: from initial structuring and valuation through due diligence, SPA negotiation, regulatory filings, and post-closing integration. Our integrated legal and tax teams provide a single advisory relationship covering all dimensions of the transaction.