How to Conduct Mergers & Acquisitions in Finland: A Comprehensive Guide

How to Conduct Mergers & Acquisitions (M&A) in Finland

Mergers and acquisitions (M&A) are strategic transactions that can transform a business. In Finland, the M&A landscape is defined by robust legal frameworks, regulatory obligations, and well-established transaction practices. Whether you are pursuing a share purchase, business acquisition, merger, or joint venture, understanding the Finnish M&A process is essential for a successful outcome.

Structuring an M&A Deal in Finland

The structure of an M&A deal in Finland depends on commercial objectives, legal considerations, tax treatment, and risk allocation. Common deal structures include:

Share Sales

A share sale is often the simplest method for acquiring a company. Buyers obtain ownership of the entire entity, including its assets and liabilities. Key benefits include:

• Automatic transfer of contracts and intellectual property (unless restricted by change-of-control clauses)
• Minimal formal steps for asset and rights transfer

The primary downside is that buyers may inherit unknown liabilities linked to the target company.

Business (Asset) Sales

Business acquisitions allow buyers to acquire only selected assets and liabilities, reducing exposure to unwanted risks. However, they require:

• Third-party consents to transfer key contracts
• Precise identification and transfer of each asset and obligation

Mergers and Demergers

Mergers and demergers streamline legal structures but involve longer timelines due to creditor notifications and required approvals.

Joint Ventures and Strategic Alliances

Joint ventures are flexible arrangements governed primarily by Finnish contract and company law and are suitable for long-term strategic cooperation.

Takeovers

For listed companies, takeovers are tightly regulated under securities laws and provide a controlled framework for acquiring public companies.

Private Share Purchases: The Finnish Approach

Private share purchases remain the dominant form of M&A in Finland due to their efficiency and flexibility.

Key Steps in a Private Share Purchase

Preliminary Agreements

• Letter of Intent (LOI): Outlines preliminary terms and intentions, typically non-binding.
• Confidentiality Agreement (NDA): Protects sensitive information during due diligence.

Share Purchase Agreement (SPA)

Common elements of a Finnish SPA include:

• Purchase Price Adjustments: Based on locked-box or closing accounts mechanisms.
• Conditions Precedent: Regulatory approvals, required consents, and MAC clauses.
• Warranties and Indemnities: Seller protections on liabilities and asset ownership.
• Escrows and Remedies: Tools to manage post-closing risks.
• Warranty & Indemnity Insurance: Increasingly used to allocate risks efficiently.

Regulatory Compliance

Finnish Articles of Association may restrict share transfers, requiring approval from the board or shareholders.

Business Acquisitions in Finland: Tailoring Risk

Asset deals offer risk-tailored solutions by allowing buyers to select specific business operations. Comprehensive due diligence is crucial to ensure operational continuity and validate asset ownership.

Labor Considerations in Business Transfers

Under Finnish labor law, employees automatically transfer to the buyer in a business transfer. Key statutes include:

• Employment Contracts Act: Prohibits dismissals solely due to the transfer.
• Cooperation Act: Requires employer–employee negotiations and timely communications.

Non-compliance may lead to financial penalties and legal disputes.

Mergers in Finland: Navigating Complexity

Mergers are less common for initial market entry but are effective for restructuring after acquisitions. Finnish merger processes are governed by the Limited Liability Companies Act and typically require a minimum of six months.

Types of Mergers

• Absorption Merger: One company absorbs another.
• Combination Merger: Two or more companies form a new entity.
• Subsidiary Merger: Parent and subsidiary merge seamlessly.

Merger Process Overview

• Draft and sign a merger plan
• Notify creditors and obtain required approvals
• Secure shareholder resolutions (two-thirds majority)
• Register the merger with the Finnish Trade Register

Once completed, all assets and liabilities transfer to the receiving company, and the merging entity dissolves.

Joint Ventures and Strategic Alliances

Finnish law enables flexible JV structures tailored through shareholder agreements and corporate governance mechanisms. Key considerations include:

• Minority protection under the Limited Liability Companies Act
• Clear governance and decision-making procedures

Merger Control and Competition Regulation

Under the Finnish Competition Act, merger notification is required when:

• Combined Finnish turnover exceeds €100 million, and
• At least two parties generate over €10 million each in Finland.

The Finnish Competition and Consumer Authority (FCCA) assesses whether a transaction significantly reduces competition or creates a dominant position. These rules also apply to foreign-to-foreign acquisitions affecting the Finnish market.

Sector-Specific Considerations

Certain industries—financial institutions, insurance entities, and regulated sectors—have specific rules for turnover calculation and requiring approvals. Labor-related arrangements typically fall outside competition law scrutiny.

Conclusion

Conducting M&A in Finland requires strategic planning, legal precision, and an understanding of regulatory obligations. By selecting the right transaction model, undertaking thorough due diligence, and complying with merger control and labor laws, companies can navigate M&A successfully and achieve long-term business goals.

Ready to Navigate Mergers & Acquisitions in Finland?

At LKOS Law Office, we specialize in M&A transactions in Finland. Our team combines legal expertise with strategic business insight to support clients throughout the entire transaction lifecycle—from structuring and negotiations to closing and post-deal integration.

Contact us today to discuss how we can support your next merger or acquisition.

Disclaimer: This article is intended for general information only and does not constitute legal advice.