Mergers and Acquisitions

DUE DILIGENCE

When planning a company acquisition or disposal, going through a due diligence process is a fundamental step. The due diligence is intended to identify the strengths and weaknesses of your company or those of your target as well as all the financial and tax risks it might be subject to. It allows parties to take their decision after having considered all aspects of the acquisition or disposal. It also gives the parties the opportunity to assess their respective targeted price for the transaction.

Gaapex can provide its expertise and take over the financial and accounting part of the due diligence. This includes but is not limited to the following:

  • Review of accounting records, reconciliations and financial statements
  • Review of tax positions
  • Review of budgets and financial projections
  • Review of the capital structure
  • Review of accounting policies
  • Review of the internal control system

Gaapex can also assist you in other areas of consideration such as marketing, production, R&D, management, environment or IT and hire appropriate subcontractors on your behalf.

The merger process depends of the type of operation (absorption or consolidation). Other parameters to consider are the existing relation between the merging entities as well as their respective size. Depending of these circumstances, the Merger Act provides a certin number of simplifications.
A merger of Swiss entities usually follows the below steps:

  • Preparation for the merger (share capital increases, subordinations, etc.)
  • Preparation of interim financial statements if the merger agreement is signed more than 6 months after year-end (Art. 11 Mergers Act)
  • Merger agreement (Art. 12 Mergers Act)
  • Merger report (Art. 14 Mergers Act)
  • Audit of the merger agreement and of the merger report (Art. 15 Mergers Act)
  • Consultation process (Art. 16 Mergers Act)
  • Merger decision and update of commercial register entry (Art. 18 – 22 Mergers Act)

Simplifications apply for mergers between a parent company and its subsidiary or between two sister entities. A merger of small and medium companies (i.e. whose total assets do not exceed CHF 20 million, whose turnover does not exceed CHF 40 million and whose headcount does not exceed 250 employees) does not require the preparation of a merger report nor the audit of the merger agreement provided all shareholders approve it. The consultation process can also be forfeited.

A spin-off of Swiss entities usually follows the below steps:

  • Preparation for the spin-off (share capital increase)
  • Preparation of interim financial statements if the spin-off agreement is signed more than 6 months after year-end (Art. 35 Mergers Act)
  • Spin-off agreement (Art. 36 Mergers Act)
  • Spin-off report (Art. 39 Mergers Act)
  • Audit of the spin-off agreement and of the spin-off report (Art. 40 Mergers Act)
  • Consultation process (Art. 41 Mergers Act)
  • Spin-off decision and update of commercial register entry (Art. 43 – 44 Mergers Act)

A spin-off of small and medium companies (i.e. whose total assets do not exceed CHF 20 million, whose turnover does not exceed CHF 40 million and whose headcount does not exceed 250 employees) does not require the preparation of a spin-off report nor the audit of the spin-off agreement provided all shareholders approve it. The consultation process can also be forfeited.

A transformation is intended to change type of business entity. It can be a change from a limited liability company (LLC) to an incorporation (Inc.) or from a partnership to a limited liability company or incorporation.

A standard transformation procedure follows the below steps:

  • Preparation of interim financial statements if the transformation report is completed more than 6 months after year-end (Art. 58 Mergers Act)
  • Preparation of a transformation project (Art. 59 Mergers Act)
  • Transformation report (Art. 61 Mergers Act)
  • Audit of the transformation project and of the transformation report (Art. 62 Mergers Act)
  • Consultation process (Art. 63 Mergers Act)
  • Transformation decision and update of commercial register entry (Art. 64 – 66 Mergers Act)

A transformation of small and medium companies (i.e. whose total assets do not exceed CHF 20 million, whose turnover does not exceed CHF 40 million and whose headcount does not exceed 250 employees) does not require the preparation of a transformation report nor the audit of the transformation project provided all shareholders approve it. The consultation process can also be forfeited.

RESTRUCTURING PROCESS

The Mergers Act is the applicable law regarding the restructuring (i.e. merger, spin-off or transformation) of a business.

In this section, we are summarizing the steps required by the Mergers Act in order to complete the planed transaction. Gaapex can assist you with these steps and prepare the appropriate paperwork as well as the related financial statements.

Please feel free to contact us in order to discuss your needs.