Market trends in Spanish private equity transactions

Spain The study analyzes 38 private equity deals signed in 2022 and 2023
Market trends in Spanish private equity transactions
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February 5, 2024

This study, an overview of market trends in private equity transactions in Spain, analyzes the most significant deals on which Cuatrecasas advised. It analyzes 38 private equity deals signed in Spain in 2022 and 2023 with transaction values over €10 million.

2023 Market trends at a glance

  • A narrower gap between parties on the valuation of the targets and the stabilization of interest rates indicates a possible reactivation of private equity transactions in 2024.
  • Secondary buyouts sharply decreased, and investments gained traction.
  • Private equity funds focused on the energy and TMT sectors.
  • Taking a majority stake through a roll-over formula increased considerably.
  • A moderate increase was seen in transactions run as auctions, focused mainly on deals over €100 million.
  • A wave of economic protectionism of strategic interests often requires regulatory authorization for deals with investors from third countries.
  • Hell or high water clauses are increasing when regulatory authorization is needed.
  • Energy, technology, and infrastructure sectors are of particular concern for the FDI authorities.
  • The use of break-up fees rebounded in transactions with deferred closing.
  • Conditions subsequent—usually rare—were agreed in 16% of the deals.
  • Locked-box mechanism was consolidated again as the most used pricing mechanism.
  • In locked-box mechanisms, the use of equity tickers and adding an interest to the leakage amount continued to grow.
  • Earn-outs continued to rise, as they help parties overcome their differing expectations about a company’s future performance, crucial in times of uncertainty.
  • Joint and several liability was agreed in more than 40% of the deals.
  • A 24-month limitation period was the most used for business warranties.
  • Excluding clean exits, the most used liability cap for business and tax warranties was again between 20% and 30% of the purchase price.
  • The latest trend of granting business and tax warranties through a management warranty deed continued.
  • Anti-sandbagging clauses became exceedingly more common than pro-sandbagging clauses.
  • W&I insurance continued to be the most used buyer’s remedy but less pronouncedly so than in 2022.
  • Madrid was consolidated as the seat of arbitration in all deals where arbitration is the dispute resolution mechanism.
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February 5, 2024