Private Equity Switzerland 2022: Law And Practice - Shareholders - Switzerland (2022)

To print this article, all you need is to be registered or login on


1.1 M&A Transactions and Deals

In 2021, M&A activity across all industries in Switzerlandincreased significantly, reaching a new high compared to the lastfew years. With almost 290 transactions in in the first half of2021, compared to just 140 at the same time in 2020, Swiss M&Aactivity got off to a good start. The second half of 2021 was evenstronger than the first, with almost 300 deals finalised incontrast to the 200 deals in the second half of 2020. It is safe tosay that 2021 was a successful year for M&A activity inSwitzerland with a total of over 600 transactions completed. Lowinterest rates, appealing lending terms, and economic stimulusmeasures played an important role in a record-breaking 2021 despitelingering concerns over the COVID-19 pandemic.

The first half of 2022 saw a continuation of the growth of 2021.However, the stock market's downward trend, the possibility ofunchecked inflation, and Russia's invasion of Ukraineundoubtedly reduced M&A investors' appetite for risk. Alower total number of M&A transactions is anticipated for theyear 2022 compared to the year 2021.

Private equity investors are, however, expected to remain veryactive in Switzerland in the second half of 2022 with a focus onSwiss small to medium-sized enterprises (SMEs) in the industrial,telecommunications (TMT), and pharmaceuticals, healthcare and lifesciences sectors. Swiss SMEs continued to be attractive targets forinvestors in the first half 2022, especially for European buyers(61%, with the remainder being primarily North American and Asianbuyers).

The year 2021 was already marked by a high degree of privateequity investor activity in Switzerland, with financial investorsactively engaged as either buyers or sellers. The coming dealactivity in private equity will most likely increasingly focus onsustainability topics. With private equity buyers currently sittingon a large amount of dry powder and COVID-19 concerns easing, apositive trend for private equity transactions in 2022 is likely.However, the above-mentioned factors (in particular the lendingterms for debt finance) might impact this positive trend.

(Video) Credit Suisse: what next for the crisis-hit bank? | FT Film

1.2 Market Activity

While the COVID-19 pandemic had an adverse effect on someeconomic sectors and citizens' social lives, M&A activityin Switzerland unexpectedly recovered quickly after the firstlockdown in 2020 and M&A deal activity developed favourably in2021 as market participants quickly adapted to the new environment(eg, fewer physical and more virtual meetings, and remote signingsand closings).

The TMT, industrial markets, pharmaceuticals, healthcare, andlife sciences sectors had notably strong deal flow and volume inM&A transactions. In terms of outbound transactions, continuedpopularity for these sectors is anticipated in 2022. Incomingtransactions are likely to see similar popularity with the additionof the industrial sectors. Increased M&A activity in thefinancial industry, particularly in the asset and wealth managementsector, may result from the gradual implementation of the lawsunder the Financial Institutions Act (FinIA).

Private equity firms active in Switzerland follow a wide rangeof strategies, including control and non-control deals, club dealsand joint ventures with corporates. The market continues to witnessa lot of transactions where a seller wishes to keep/re-invest acertain minority stake in the target company. This may be a resultof the (still) low interest rates and the overall positive marketenvironment but certainly also helps to ensure managementcontinuity.


2.1 Impact on Funds and Transactions

In general, private transactions are not extensively regulatedin Switzerland and the parties have great flexibility to determinethe transaction structure as well as the contractual framework.Compared to public M&A transactions, which are highlyregulated, private M&A transactions are less densely governedand many provisions of the Swiss Code of Obligations of 30 March1911 that would apply to share or asset transfers can be excludedin favour of a contractual framework.

However, in recent years financial and corporate regulationshave increased. In this respect, it should also be noted that evenif Switzerland is not a member of the European Union, EU Directivesand Regulations still have an important impact on Swisspolicy-making.

(Video) Switzerland: So Many Guns, No Mass Shootings | The Daily Show

Data Protection and Privacy

An example of EU regulations affecting the regulatory landscapein Switzerland is the General Data Protection Regulation (GDPR).Even though Switzerland is not a member of the EU, the guidelinesare directly applicable to all Swiss-based companies doing businessin the EU, as the scope includes all businesses processing personaldata of EU data subjects (eg, employees), or organisations thatmonitor the (online) behaviour of EU data subjects (eg, customers).In addition, EU companies are asking its Swiss business partners tobe GDPR-compliant. Therefore, the GDPR has a major impact onnumerous Swiss-based companies.

The Federal Act on Data Protection of 19 June 1992 (FADP) andthe supporting Ordinance to the Federal Act on Data Protection of14 June 1993 (DPO) are now undergoing a complete overhaul inSwitzerland, partially in reaction to the GDPR and itsramifications. The FADP will be updated to reflect technicaladvancements and to comply with the GDPR. To ensure that data flowbetween Switzerland and the EU may continue without furtherrestrictions, the FADP must be revised. On 1 September 2023, thenew FADP and the related law are expected to come into effect,although the necessary decision by the Federal Council is stilloutstanding.


Special purpose acquisition companies (SPACs) had record yearsin the USA in 2020 and 2021. In Switzerland the Directive on theListing of SPACs was put into effect in Switzerland in December2021, allowing SPACs to be listed on the SIX Swiss Exchange. As aresult, these "blank-cheque firms" have entered the Swiss"investor" market. This directive requires that thede-SPAC be finished three years after the initial trading day. Thefirst and sole SPAC in Switzerland was listed on 15 December 2021and to the authors' knowledge has not found an ultimatetake-over target yet.


The Swiss Financial Market Authority (FINMA) approved the newSIX Swiss Exchange equity section "Sparks" in 2021. SinceOctober 2021, SMEs are now eligible to list on the SIX understreamlined, SME-specific regulations to get access to Swiss andforeign investors with sufficient financial means and experience.The benefits of Sparks also include enhanced liquidity due to theshares' tradability and visibility by the company needing toadhere to more stringent regulatory standards (such as ad hocadvertising, disclosure of large shareholdings, and financialreporting). Businesses and investors have additional chances toexpand by enabling SMEs to take advantage of SIX'sbenefits.

Corporate Law Reform

On 19 June 2020, after some 13 years of preparatory work, theSwiss Parliament has finally approved a general corporate lawreform amending the Swiss Code of Obligations (Corporate LawReform). The Corporate Law Reform inter alia seeks to modernisecorporate governance by strengthening shareholders' andminority shareholders' rights and promoting gender equality inboards of directors and in senior management. As of 1 January 2021,the Corporate Law Reform has partially entered into force(transparency and gender-representation requirements) and willenter into force in full by 1 January 2023.

(Video) The New Swiss DLT Trade System


3.1 Primary Regulators and Regulatory Issues

Regulatory Reform

As mentioned in 2.1 Impact on Funds and Transactions, privateM&A transactions are not extensively regulated in Switzerlandas there is no specific act regulating the acquisition of privatelyheld companies. The main legal source is the Swiss Code ofObligations, which provides quite a liberal framework fortransactions. Currently, Swiss law provides for only very limitedforeign-investment restrictions: Foreign investors and financialsponsors are, broadly speaking, in most cases not restricted ortreated differently from domestic investors.

However, following international developments, this may changein Switzerland. An initiative to establish an approval authorityfor transactions subject to investment control was presented withthe goal of providing a legal foundation for the evaluation offoreign direct investments. However, the conclusion of thediscussions and the establishment of an investment control regimeare still unclear. It is anticipated that the parliamentarydeliberation process will last until 2023.

Real Estate

One exception to the liberal legal framework in Switzerland isthe acquisition of real estate. Swiss law restricts the acquisitionof real estate that is not permanently used for commercial purposes(non-commercial property), such as residential or state-ownedproperty, undeveloped land or permanently vacant property (the LexKoller). Legal entities with their corporate seat outsideSwitzerland are deemed as foreign under the regulations, regardlessof who controls them. Further, legal entities with their corporateseat in Switzerland are deemed as foreign if they are controlled byforeign investors. The law takes a very economic view to determinewhether a Swiss entity is foreign controlled; namely, it looksthrough the entire holding and financing structure, but is strictlyformal as soon as an entity with its corporate seat outsideSwitzerland is involved.


The topics of sustainability and environmental protection, aswell as social and responsible corporate governance, have gainedincreased attention and importance in Europe (and throughout theworld) over the past few years (criteria of environmental socialgovernance, ESG). With the introduction of ESG reportingrequirements, Switzerland has followed the trend and has introducedstricter ESG requirements for Swiss companies.

Depending on their size and significance, certain companies willbe subject to the new ESG reporting requirements.

(Video) Podcast S3E3: Swiss Trust Law

Swiss businesses that are of public interest must create anannual, public ESG report that addresses non-financial issues. Therequirement to create such a report primarily pertains to listedcompanies and banks that, together with the domestic or foreignbusinesses they control, have an average of at least 500 full-timepositions annually over the course of two years and have salesrevenue exceeding CHF40 million or a balance sheet total of atleast CHF20 million. The report discusses non-financial issues suchthe business strategy, newly developing threats to the environment,employees, and human rights, as well as the due diligence steps thefirm has made to address ESG issues.

Compared to companies of public interest, SMEs are not yetcompelled to issue such an ESG report. However, additional duediligence obligations apply if companies (including SMEs) withtheir registered office, head office, or primary place of businessin Switzerland process or import specific minerals or metalsoriginating from conflict or high-risk regions. Similar duediligence obligations apply to Swiss companies that provide goodsor services for which there is a plausible suspicion that childlabour was used in their manufacturing. SMEs are exempt from thedue diligence obligations regarding child labour if their balancesheet totals, sales revenue and full-time employees fall belowcertain statutory thresholds.

It is anticipated that the due diligence obligations regardingchild labour will be the most relevant obligation for privateequity firms intending to invest in certain businesses. Movingforward, it is highly recommended that private equity buyers alsofocus on the new reporting requirements when conducting a duediligence analysis of an acquisition target.

Click here to continue reading . . .

Originally published by Chambers 'Private Equity2022' Global Practice Guide.

(Video) Swiss Arbitration Launch Event - June 2021

The content of this article is intended to provide a generalguide to the subject matter. Specialist advice should be soughtabout your specific circumstances.


1. Bosco Online Workshop “Company Set-up, Payment systems and Crypto”, August 30th
(Bosco Conference EN)
2. Starting a Cannabis Investment Fund - Jordan Youkilis - The Matt Balaker Podcast
(The Matt Balaker Podcast)
3. PwC's career webcast series - Deals | Transaction Services
(PwC Switzerland)
4. Are Swiss banks in trouble? | CNBC Explains
(CNBC International)
5. Switzerland: So Many Guns, No Mass Shootings | The Daily Show Throwback
(The Daily Show with Trevor Noah)
6. Dateline Philippines | ANC (18 October 2022)
(ABS-CBN News)

Top Articles

Latest Posts

Article information

Author: Madonna Wisozk

Last Updated: 11/11/2022

Views: 5594

Rating: 4.8 / 5 (48 voted)

Reviews: 95% of readers found this page helpful

Author information

Name: Madonna Wisozk

Birthday: 2001-02-23

Address: 656 Gerhold Summit, Sidneyberg, FL 78179-2512

Phone: +6742282696652

Job: Customer Banking Liaison

Hobby: Flower arranging, Yo-yoing, Tai chi, Rowing, Macrame, Urban exploration, Knife making

Introduction: My name is Madonna Wisozk, I am a attractive, healthy, thoughtful, faithful, open, vivacious, zany person who loves writing and wants to share my knowledge and understanding with you.