are takeovers of private companies. In Luxembourg, the private acquisition law
offers guidelines and legal provisions for those investors interested in purchasing a private company in Luxembourg
can take place through share or asset purchase. Our attorneys in Luxembourg
can help you understand the basic differences between the two processes and conclude the private acquisition through relevant agreements.
The types of companies in Luxembourg
that can be involved in private takeovers by another company are private limited liability companies and public limited liability companies. Other types of legal entities, like partnerships, are less common in private acquisitions.
The two ways in which a private company can be acquired in Luxembourg are through share or asset purchase. According to law, when opting for an asset purchase, companies can choose the division regime, a way to transfer all the company’s assets and liabilities to the purchaser.
A share purchase in Luxembourg is often preferred because it usually offers different tax costs because the shares are generally exempt from taxes, it has a lower grade of complexity and there is no need for third-party consents and notifications (unless otherwise provided in other agreements).
An asset purchase will be more complex, but the purchaser can benefit from choosing the desired assets and thus controlling to some extent the liabilities. As a comparison, the share purchase does not have this option, the purchaser will acquire the target company with all its liabilities and obligations, even those that are not immediately revealed. In order to avoid such unforeseen liabilities when acquiring a private company, our Luxembourg law firm
offers company due diligence
Private acquisitions in Luxembourg are concluded with the help of a series of agreements between the parties. The buyer and the seller usually sign preliminary agreements and final agreements to secure the purchase. A letter of intent will outline the terms upon which the parties have agreed upon.
Exclusivity agreements can also be signed between the parties and this type of agreement is used to offer exclusivity to the buyer, but is generally limited in time. Non-disclosure agreements can be signed between the seller and the buyer and there are several legal restrictions in Luxembourg regarding the disclosure of certain information.