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Introduction

The mergers and acquisitions (M&A) market and legal framework in Spain are comparable to those in other jurisdictions of continental Europe. Spain offers abundant opportunities to dealmakers across a wide range of sectors and industries and remains an attractive investment destination for foreign investors. The Spanish M&A market is diversified in terms of sectors, deal value and investors, although private equity firms (both international and domestic) have been progressively increasing their market share.

The basic Spanish legal framework for corporate acquisitions, mergers and other types of corporate restructuring includes elements of both contract law (mainly contained in the Civil and Commercial Codes) and corporate law (primarily based on the Companies Law and the recently enacted Royal Decree-Law 5/2023,2 governing corporate reorganisations).3

In addition to the regulations on specific markets, the antitrust and foreign direct investment screening mechanisms (governed by Law 15/2007 of 3 July and Royal Decree 571/2023, respectively) have the most relevant impact on M&A transactions from a regulatory viewpoint. These mechanisms are further described below in 'Legal framework' and 'Competition law'.

Spanish laws are heavily influenced by European regulations, and most of the recent legal developments affecting M&A activity are aimed at incorporating European directives.

Other than the legal framework outlined above and tax laws and regulations, Spanish law has no specific regulation governing M&A transactions and the judicial decisions on this matter are limited (for various reasons, only a few M&A transactions end up in litigation). In addition, those decisions may be indicative of the possible outcome of a potential conflict, but case law in Spain (a civil law jurisdiction) does not constitute a source of law as it does in Anglo-American law jurisdictions.

Year in review

Overview of M&A activity

During 2023, deal activity in Spain continued the slowdown that started in 2022. As investors kept waiting for a clearer picture of global economic conditions and a stabilisation of interest rates and inflation, they approached the market with extra caution and took additional time to analyse and execute transactions. As a result, the first half of the year registered the worst six-month period since the covid-19 pandemic.

Despite the political situation in Spain (where political leaders were unable to form a government until mid-November 2023 following the July 2023 national elections), the M&A market started to pick up during the second half of 2023 and the final picture at the end of the year was not as dramatic as expected: the total value of M&A transactions in Spain (including M&A, private equity, venture capital and asset acquisitions) amounted to €91,121 million (representing a 0.51 per cent decrease compared with 2022) and the number of M&A transactions was 3,032 (a decrease of 6.97 per cent compared with 2022).4

As in 2022, the undisputed leading sectors of 2023 were real estate and internet, software and IT services, both in terms of number of transactions and deal value. Other active M&A sectors included business and professional support (which increased significantly compared with 2022) and renewable energies (with a focus on not only solar but also wind power).

Although the slow pace of M&A activity has remained during the first half of 2024, it has shown the first signs of recovery: the number of deals at the end of the first semester (1,532) was down by 2.85 per cent compared with 2022, but the aggregate deal value (€54,632 million) significantly increased (by 48 per cent compared with the first half of 2023), which shows that a large number of important deals in terms of size have already been executed since the beginning of the year.

As the macroeconomic uncertainties begin to clear up (with a notable decrease of interest rates and a stabilisation of inflation and energy prices), we are now seeing the M&A market gain some dynamism with the reactivation of stalled deals and acceleration of existing ones. Despite ongoing geopolitical tensions, this turnaround points to a significant pick-up in activity in the second half of 2024.

In terms of key sectors, the most remarkable change compared with 2023 is that the travel, hospitality and leisure industries are now positioned in the top four sectors, preceded by real estate and internet, software and IT services and followed by business and professional support.

Developments in corporate and takeover law and their impact

In 2023 and 2024, there was moderate activity in terms of legal developments. The main amendments may be summarised as follows.

Corporate law and ESG

One of the most impactful legal developments anticipated in 2024 is the implementation of the Corporate Sustainability Reporting Directive 2022/2464 (CSRD). This directive marks a significant shift in how companies disclose their environmental, social and governance (ESG) practices and performance. The CSRD aims to elevate sustainability reporting to the same level of importance as financial reporting, ensuring that decision-makers have access to comprehensive information on how environmental and social factors may influence a company's viability and profitability. Additionally, it mandates transparency regarding the social and environmental impact of businesses, following the 'dual materiality' approach. While the transposition of the CSRD into national law is still pending, a preliminary draft has already been released for public consultation.

Another key development in the ESG field is the adoption of the Corporate Sustainability Due Diligence Directive 2024/1760 (CSDD) on 25 July 2024. This directive imposes obligations on companies to incorporate due diligence into their corporate policies and requires them to identify, assess, prevent, mitigate and address any adverse impacts on human rights and the environment. These due diligence responsibilities extend beyond the company and its subsidiaries, applying also to entities within its value chain with which the company maintains an established business relationship. The CSDD thus broadens the scope of corporate accountability to include the entire supply chain. Following the entry into force of the CSDD, Member States have been given a two-year period to transpose the directive into their national legislation.

Law 2/2024, of 1 August, on Equal Representation and Balanced Presence of Women and Men transposes Directive 2022/2381/EU of the European Parliament and the Council of 23 November 2022 on improving gender balance among directors of listed companies and related measures. This law introduces amendments to both the Companies Law and Law 6/2023 on Securities Markets and Investment Services. The primary objective is to ensure that listed companies meet minimum thresholds for the representation of the under-represented gender on their boards of directors. To comply, companies that fall short of these thresholds must adjust their director appointment processes. Specifically, Article 529 bis of the Spanish Companies Act has been revised to mandate that at least 40 per cent of the board members belong to the under-represented gender. Additionally, Article 292 of Law 6/2023 has been amended to introduce sanctions for listed companies that fail to meet these gender equality requirements.

Corporate reorganisations

Royal Decree-Law 5/2023 significantly modifies the legal framework governing structural changes of corporations (including both domestic and cross-border mergers, spin-offs, en bloc transfers of assets and liabilities and international corporate migrations) and replaces the former Law 3/2009 on corporate reorganisations. The law incorporates, inter alia, important amendments on the protections for creditors, shareholders and employees.

Securities law

Law 6/2023, of 17 March, on Securities Markets and Investment Services, which replaces the former Consolidated Text of the Securities Market Law, introduces crucial amendments to the current regulations for issuers, intermediaries and other participants in the securities markets aimed at reorganising the Spanish securities market regulations and implementing certain recent EU directives. Some of these amendments include:

  1. the simplification of requirements for the issuing and admission to trading of securities;
  2. the introduction of new provisions governing tender offers, investment services firms and collective investment vehicles;
  3. incorporation of EU legislation on crypto-assets and distributed ledger technology; and
  4. the regulation, for the first time in Spain, of special purpose acquisition companies.

In addition, the following regulations developing Law 6/2023, of 17 March, on Securities Markets and Investment Services were passed in 2023:

  1. Royal Decree 814/2023, of November 8, on financial instruments, admission to trading, registration of marketable securities and market infrastructures, which simplifies the supervision of issues and admissions to trading in regulated securities markets. Specifically for fixed income securities, the regulatory framework has been further refined by Circular 1/2023, which governs the admission and exclusion of securities in the AIAF fixed income market.
  2. Royal Decree 815/2023, of 8 November, which focuses on matters related to the official registries of the Spanish National Stock Exchange Commission (CNMV), cooperation with other regulatory authorities and the supervision of investment services firms. The core of this Royal Decree is the development of the CNMV's administrative supervisory powers and responsibilities, further detailing the authority and functions assigned to the commission.

The CNMV also launched in 2023 the CNMV Code of Good Investor Practices (or Stewardship Code), applicable as of February 2026, aimed at institutional investors, asset managers and proxy adviser providers.

Legal framework

As mentioned in 'Introduction', the basic Spanish legal framework for corporate acquisitions, mergers and other types of corporate restructuring includes elements of both contract and corporate law.

Spanish contract law is mainly contained in the Civil and Commercial Codes of the nineteenth century. Spanish corporate law, conversely, is primarily based on the Companies Law (the governing framework for the most common corporate forms in Spain) and the Law on Corporate Reorganisations, as already discussed in Section II.

The rules that must be taken into account in connection with the main regulated markets include Law 6/2023, of 17 March, on Securities Markets and Investment Services5 (framework for the securities market), the Law on Discipline and Intervention of Credit Institutions6 (framework for the credit market) and the Private Insurance Supervisory Law7 (framework for the insurance market).

A regulation that has been gaining relevance in recent years in the M&A field is the foreign direct investment screening mechanism (recently amended and developed by Royal Decree 571/2023). Pursuant to this screening mechanism, prior authorisation from the Spanish Council of Ministers is required for any 'foreign direct investment' (as defined below):

  1. made in critical sectors (i.e., critical infrastructure, critical technologies and dual use items, supply of critical inputs (including energy or raw materials) and food security, sectors with access to sensitive information and media); or
  2. carried out by specific foreign investors regardless of the sector (i.e., who are directly or indirectly controlled by a foreign government, or have already made an investment affecting national security, public order or public health in another EU Member State, including an investment in any of the above-mentioned sectors, or are subject to judicial or administrative procedures for engaging in illegal or criminal activities).

Foreign direct investments that are subject to these regulations are those that result in a foreign investor reaching a stake of at least 10 per cent of the share capital of a Spanish company (which is lowered to 5 per cent if the Spanish company conducts activities related to the national defence) and any corporate transaction, business action or legal transaction that enables effective participation in the management or control of a Spanish company. Gun-jumping the mechanism would result in the unauthorised investor not being entitled to exercise economic and voting rights until – and if – the mandatory authorisation is obtained. Foreign direct investment, along with antitrust (further described below in 'Competition law'), is the most frequent regulatory authorisation to be obtained prior to closing an M&A transaction.

Foreign involvement in M&A transactions

Cross-border M&A transactions continued to rise during 2023. In fact, 2023 was a particularly active year in terms of international transactions, with 466 cross-border deals having an aggregate deal value of €50,824.5 million, which represents 64.5 per cent of the total investment figure recorded throughout 2023 and implies a significant increase compared with 2022, both in terms of deal value and deal count.

Spain is well positioned as one of the most attractive investment destinations for both industrial buyers and private equity sponsors (further discussed in 'Significant transactions, key trends and hot industries'), which seek to take advantage of the opportunities offered by an increasingly mature market. The United States has consolidated its leading position in the ranking of foreign investments in Spain with a number of high-profile transactions, such as the acquisition of the Upstream Division of Repsol (E&P Exploration and Production) by EIG for €4,850 million and the sale of a 35 per cent stake in Hotel Investment Partners (HIP) by Blackstone to the Singapore sovereign wealth fund GIC.

Thanks to their proximity, European countries continue to play a significant role in foreign investment. In particular, France was the most active country investing in Spain, with 49 deals executed during 2023, among which is the acquisition of Lyntia Networks by Axa (in consortium with Swiss Life and Morrison & Co) for €2,500 million. Germany is also an important source of foreign investment deals, the largest being the takeover by Siemens Energy of its subsidiary Siemens Gamesa for approximately €4,000 million.

IT or renewable energy continue to be the preferred segments for foreign investors, although other traditional sectors such as logistics, real estate and infrastructure keep increasing their foreign exposure.

Although foreign investment in Spain exceeded Spanish investment abroad in 2023, Spanish corporations are progressively increasing their presence in global markets, which reflects a tendency to use geographical diversification and expansion as a key growth strategy. For reasons of proximity and familiarity, the first option for Spanish companies for inorganic growth remains nearby countries. In particular, Portugal is the main target of investments by Spanish companies: consolidating their presence in the Iberian peninsula before venturing into more distant regions is a clear driver for national players. However, the most important deals in terms of value were carried out in Germany (e.g., the acquisition of STEAG by Asterion Industrial Partners for €2,600 million) and the US (e.g., the acquisition of Blueridge Transportation Group, the North American concessionaire of highway SH-288, by Abertis for €1,477 million).

Significant transactions, key trends and hot industries

Public M&A

Although public M&A activity has slowed since 2021 (when domestic and international investors focused on public mega-deals in the banking and telecoms sectors), Spanish listed companies have continued to attract the interest of domestic and international investors.

The low market capitalisation of some firms (due to the high volatility faced by capital markets since 2022), coupled with the abundance of dry powder and the uncertainty over large transactions, creates an ideal environment for corporates to launch takeover bids for both Spanish companies and their foreign subsidiaries, with the aim of acquiring controlling stakes. Some examples include Siemens Energy's takeover bid over Siemens Gamesa, which ended with the delisting of Siemens Gamesa in February 2023, and the FCC's self-tender offer over 7 per cent of its share capital.

Other than takeover bids, there was the acquisition of a 9.9 per cent stake of Telefónica by Saudi Telecom (STC) for €2,100 million. After this transaction, STC became the largest shareholder of the Spanish telecom company, but this situation lasted only two months, until Spanish public entity Sociedad Estatal de Participaciones Industriales acquired a 10 per cent stake of Telefónica for approximately €2,285 million.

Public M&A has remained active during the first semester of 2024 with the completion of certain mega-deals initiated in the preceding years, such as:

  1. the merger of Orange and MásMóvil, valued at €18.6 billion;
  2. the end of the takeover war for Applus between the US private equity fund Apollo and I Squared and TDR (finally won by the latter through their Spanish joint vehicle (Amber Equity)); and
  3. the tender offer by Antin Infrastructure Partners for the Spanish company OPDenergy.

In addition, a number of deals are currently in the spotlight, such as the BBVA's takeover bid over 100 per cent of Banco Sabadell (already approved by the European Central Bank) or the takeover bid by the Canadian fund Brookfield over Grifols, Spanish leader in essential plasma-derived medicines, which is still at a preliminary stage.

Real estate

As mentioned in previous editions, real estate has established itself as a prominent field for M&A activity after years of market corrections. To foster the resurgence of real estate transactions in the Spanish market, the government has not amended the tax framework applicable to the Spanish SOCIMIs, which are similar to real estate investment trusts and are more attractive to investors.

Despite the slowdown in M&A activity, real estate was consolidated again as the leading sector in 2023, reaching 663 deals. The hotel segment continues to strengthen its position as a focus of investment within the real estate sector. The positive tourism figures and the good performance of the industry's operating results drive the dynamism of this sector in Spain, which is one of the most prominent markets in Europe. In this regard, the most remarkable deal is the acquisition of a 35 per cent stake in HIP by the Singapore sovereign wealth fund GIC from Blackstone for approximately €1,400 million.

In addition, we have seen the consolidation of living, co-living or build-to-rent segments, with transactions such as the sale of 55 per cent of Vía Célere's rental portfolio to Greystar for approximately €700 million or the acquisition by Intrum of the Spanish real estate servicer Haya Real Estate from the fund Cerberus for €136 million.

In 2024, the real estate market has been witnessing high levels of activity (although figures as of the second semester of 2024 show an 18 per cent decrease compared with the same period of 2023). Worth noting is the transaction completed in August 2024 by BlackRock and Grupo Lar consisting of the purchase, through a complex award process, of the building owned by the Spanish Treasury located at María de Molina 50 for €204.7 million for the purposes of developing a €400 million project of luxury apartments and a student residence.

Initial public offerings

During 2023, geopolitical uncertainty led to a shrinking of initial public offerings (IPOs), with no new listings on the traditional continuous market. However, BME Growth and Euronext Access remain as the main stock markets to be taken into account by domestic corporations. In 2023, 10 debuts took place in BME Growth, three of which were SOCIMIs (Natac Natural Ingredients, resulting from the integration of the biotech companies IFFE Futura and Natac, being the main debut of the year on BME Growth) and 10 debuts took place in Euronext Access (such as Ferrovial SE and QEV Technologies) three of which were also SOCIMIs. The increasing exposure to foreign investors and the more relaxed regulations are clearly leading Spanish companies to opt for alternative rather than traditional capital markets.

2023 also saw the launch of a new fully digital stock exchange market: Portfolio Stock Exchange, which started in February 2023 with the stock market debut of the SOCIMIs Round Rovin and RAV EN7. Shortly afterwards, it was the turn of H Socimi, a non-profit real estate company. In addition, the new stock market has incorporated two important SOCIMIs coming from the BME Growth (where they were delisted): Elix Vintage Residencia l (controlled by Allianz) and P3 Spain Logistic Parks (owned by GIC).

In May 2024, the Catalan cosmetics group Puig, valued at €14,000 million, ended the IPO drought with the biggest stock market debut in Europe this year and the most important in Spain since 2015. However, although everything pointed to 2024 as the year of stock market recovery, many of the IPOs announced for this year (e.g., Astara or Hotelbeds) have not been completed to date, probably due to the fact that the interest rate cut has taken longer than expected.

Private equity

The investment volume of private equity and venture capital funds in 2023 fell to €6,855 million, 25.4 per cent less than in 2022 (which ended as the second best year for private equity, only beaten by 2019). The strong momentum of the middle market, especially in the first half of the year, and the completion of a large number of leveraged transactions by international funds, allowed the sector to maintain a significant level of investment despite the complicated macroeconomic context and the emergence of new geopolitical conflicts.

The decline in the number of mega-deals (only 20 transactions in excess of €100 million were closed during the year) and the reduction in the size of mid-market deals explains the fall in investment in 2023. The most important deal of the year (in terms of size) was the acquisition of IVI-RMA Global by KKR for €3,000 million, followed by the acquisition of co-control of Palex Medical by Apax and Fremman (about €1,000 million in value, including debt), the purchase of Amara NZero by Cinven from ProA Capital for around €750 million, the acquisition of Windar Renovables by Bridgepoint (deal value of around €700 million), and the purchase of Garnica Plywood, until then in the hands of ICG, by Carlyle (around €500 million).

International funds still hold a predominant position in the Spanish market and the transactions that they pursue tend to be of higher value (in particular, 70.9 per cent of the investment volume comes from foreign funds). However, domestic private equity funds such as Magnum, Portobello, Miura, GED and Aurica were very relevant players during 2023. In this regard, we have seen a consolidation of the buy and build strategy of domestic funds with the aim of increasing the value of portfolio companies (with a view to future divestments) and reducing risk exposure by investing through existing portfolio companies.

Analysis of the private equity market by sectors reflects the challenging year we have faced. In less favourable environments, private equity funds refocus on more traditional and strategic markets such as healthcare, the industrial pharmaceutical industry, biotechnology or energy, all of which account for a significant number of transactions.

One of the clearest consequences of the complicated situation experienced by the M&A market is the reduction of the number of divestments and their volume. In 2023 there were almost 40 fewer exits than in 2022, a year already hampered by the slowdown in exit processes and the mismatch between supply and demand. Unless the seller is in a forced situation, private equities do not usually accept a discount for the urgency of getting back the money.

Looking at 2024, we have already seen a significant increase in deal activity during the second quarter of the year, which suggests that we will witness a final recovery as the months go by and we will end 2024 with better figures than 2023. As an example, the following relevant deals have already taken place during the year or are currently in the pipeline:

  1. Liberty Media, a US company, has agreed to acquire the Spanish entity Dorna from Bridgepoint Capital and the Canada Pension Plan Investment Board. The total amount of the transaction is € 4,200 million;
  2. British private equity firm Cinven has acquired 70 per cent of Idealista from EQT, Apax Partners and Oakley Capital. The total amount of the transaction is €2,900 million; and
  3. EQT Infrastructure IV, an investment vehicle of EQT, has agreed to acquire a majority stake in Universidad Europea from British private equity fund Permira for €2,200 million.

Financing of m&a: main sources and developments

The levels of acquisition finance activity in 2022 and 2023 significantly slowed down compared with 2021. After years of historically low interest rates, the sharp rise of interest rates has made financing much more expensive. The increasing funding costs complicate profitability of LBOs (especially in long-term transactions), which have led to the cancellation or postponement of certain leveraged deals.

Faced with this scenario, investors have increasingly looked at alternative financiers, such as debt funds, direct lenders and other non-banking lenders, as they offer fewer restrictions and more flexibility to borrowers.

The recent de-escalation in interest rates remains the main hope for a pick-up in acquisition finance activity over the remainder of 2024.

Employment law

The Statute of Workers is the main law regulating employment matters in Spain. This statute deals with the rights and obligations of companies and their employees (e.g., employment contracts, working time, remuneration and terminations) and the collective implications of employment relationships (e.g., employee representatives, information and consultation rights, and collective bargaining).

In 2023 and 2024 there were no relevant changes in employment matters that could impact M&A activity. Most amendments to the Spanish employment landscape deal with social matters (such as an increase in social security contributions, holidays, disability situations and digital disconnection) and have little to no relevance for transactions.

The 2023 Law on Corporate Reorganisations introduced the following significant changes in the employment implications of mergers, spin-offs, conversions and en bloc transfers of assets and liabilities:

  1. employees' information and consultation rights have been strengthened. Employees are now entitled to receive a specific report on the consequences of the reorganisation on the workforce and any measures aimed at guaranteeing employment levels. Moreover, employees are entitled to issue an opinion on the reorganisation, which must be annexed to the directors' report after informing the shareholders. However, employees are not entitled to veto corporate reorganisations;
  2. the companies involved in the reorganisation must evidence to the Commercial Register that they are up to date with social security obligations; and
  3. in European cross-border reorganisations where the resulting company is domiciled in Spain, the bar to trigger the process to define employee participation rights has been lowered.

Finally, two key and recurring employment topics for M&A transactions remained unchanged in 2023/2024: transfers of undertakings and the fact that board members, including executive and managing directors, are not considered employees under Spanish law.

Similar in most European jurisdictions, the Spanish transfer of undertakings regime kicks in when a business is transferred by means of an asset deal (including mergers and spin-offs). Under these regulations, the transferee replaces the transferor as the employer of the transferred business' employees. The latter are entitled to keep the terms and conditions that existed prior to the transfer, including any pension undertakings.

The purpose of these regulations is to guarantee the continuation of employment relationships in the context of the transfer of a business. However, the application of the transfer of undertakings regime does not limit nor preclude the acquirer's ability to restructure the workforce as a consequence of the transaction (e.g., redundancies after a merger or a business combination).

As anticipated above, the legal relationship of directors continues to be deemed of a commercial nature. Therefore, board members are not considered employees and their services are ruled by corporate law and their services agreements.

Director's services agreements must be approved by the board and expressly regulate the directors' compensation scheme (including fixed and variable items, as well as any golden parachutes). Moreover, these agreements must be in line with the companies' by-laws and directors' remuneration cannot exceed the compensation limit set by the shareholders' meeting for the board as a whole.

Tax law

Over recent months, Spain has introduced new tax laws with the potential to influence M&A transactions. Among these tax measures, it is worth highlighting the conversion of the temporary wealth tax for individuals into a permanent tax and the bill published to implement the Minimum Taxation Directive (Pillar II).

In addition, the Constitutional Court has also issued a judgment on unconstitutionality of certain corporate income tax (CIT) measures.

Solidarity tax on large fortunes and net wealth tax

In December 2022, Spain enacted a new temporary (for fiscal years 2022 and 2023) solidarity tax targeting individuals whose net assets exceed €3 million. The main features of the tax (taxpayers, taxable income and exemptions) follow the net wealth tax regulations. In order to avoid double taxation, taxpayers are only taxed on the part of their wealth that is not taxed by their regional administration.

In 2023, the government made the solidarity tax on large fortunes a permanent tax.

Bill implementing Minimum Taxation Directive (Pillar II)

The Spanish Congress published a bill establishing a complementary tax to ensure a global minimum level of taxation for multinational enterprises (MNE) and large domestic groups, Bill No. 121/000023 (the Bill), to implement the Minimum Taxation Directive 2022/2523/EU, which follows the OECD GLoBE Model Rules, proposing a 15 per cent minimum tax under Pillar II applicable to MNEs that have consolidated revenues of €750 million or more in at least two out of the last four years, initiating a parliamentary urgent procedure for its approval.

The published text of the Bill does not introduce substantial changes compared with the draft Bill and proposes a complementary tax based on three forms, the first two forms responding to the income inclusion rule and the third to the undertaxed profits rule: the domestic complementary tax, the primary complementary tax and the secondary complementary tax.

Constitutional Court judgment on unconstitutionality of certain CIT measures

The Constitutional Court has declared that the stricter limits applicable to large companies on the offsetting of tax losses and the application of double taxation deductions, as well as the obligation to reverse impairment losses on shareholdings that had previously been deducted, are unconstitutional.

The Court declared that the measures introduced by Royal Decree-Law 3/2016 of 2 December 2016 are unconstitutional and, therefore, null and void. Specifically, these amendments affected:

  1. the establishment of stricter percentage limits (of 50 and 25 per cent) for the offset of negative tax bases for large companies;
  2. the introduction of an additional limit on the application of deductions for double taxation (domestic and international) for large companies; and
  3. the obligation to automatically integrate in the tax base a minimum annual reversal for the years 2016–2020 of previously deducted impairments of shareholdings.

Competition law

Under Law 15/2007 of 3 July on competition, transactions leading to a concentration that fulfil any of the following alternative thresholds are subject to mandatory notification to Spain's National Markets and Competition Commission (NMCC):

  1. as a consequence of a transaction, the undertakings obtain a market share of at least 30 per cent in a national market or a substantial part of it regarding a certain product or service (however, even if the market share threshold is met, a transaction does not need to be notified provided:
    • the target's turnover in Spain was less than €10 million in the previous financial year; and
    • the parties do not have a market share of 50 per cent or more in the affected market); or
  2. the combined turnover of the undertakings in Spain in the previous financial year was more than €240 million, provided that at least two of the undertakings concerned had a minimum turnover of more than €60 million in Spain during the same period.

Law 15/2007 includes a suspension obligation, requiring that the completion of a transaction meeting any of the above thresholds be suspended until clearance is granted.

On 29 June 2023, Law 15/2007 was amended by Royal-Decree 5/2023, as a consequence of previous legislative work performed by the Spanish Congress. This reform extended the review period for in-depth reviews from to two to three months, while it reduced the review period for notifications filed using the fast-track procedure from one month to 15 business days, provided that the notifying parties previously engage in pre-notification contacts with the NMCC. Last, the deadline for the NMCC to respond to formal consultations on merger control is reduced from three months to one month, so as to boost the use of this consultation mechanism.

In 2023, 70 concentrations were notified, the same as in 2020. This was the lowest number since 2014 and a sharp decrease compared with 2021 and 2022. Most of the notifications were cleared in the first phase without commitments, and five of them were approved with commitments of the parties. Out of these five transactions, three were approved in the first phase and two required an in-depth review. Additionally, 90 per cent of the notifications have been preceded by pre-notification contacts.

In terms of antitrust enforcement policy, the NMCC issued its Action Plan 202–2026, which stated that the authority will pay particular attention to digital markets and to sectors affected by the covid-19 pandemic, such as pharma, insurance, funeral services and financial sectors. The NMCC continued to closely monitor companies' compliance with merger control rules and with its decisions in cases in which commitments were imposed. Within these proceedings, information requests are usually submitted to third parties enquiring about companies' compliance with the conditions imposed.

Outlook and conclusions

The global macroeconomic and political headwinds, especially the escalation of inflation and interest rates, had a serious impact on company valuations during 2023. In addition to this, M&A financing became more expensive, with a subsequent drop in profitability. In this regard, the tightening of financing conditions for LBOs complicated the closing of deals in the large market and reduced the size of transactions in the mid-market segment.

In view of the above, we have seen a significant gap between buyers' and sellers' expectations, leading to aborted transactions, delayed auctions, longer due diligence processes and tougher negotiations. Investors have become more selective (except in the middle market, which has concentrated most of recent M&A activity) and market instability has shifted a great deal of bargaining power from sellers to buyers, who frequently forced the breakdown of competitive processes by demanding exclusivity. To cope with these complications, advisers have found instruments or mechanisms that help to overcome the above-mentioned gap, such as vendor loans or earn-out price structures.

Despite the manifest decline in deals throughout 2023, 2024 is witnessing a significant increase of deal activity. As the macroeconomic uncertainties (hopefully) begin to fade, there is confidence that the final recovery of the M&A market could happen during the second half of 2024. In fact, the recent upturn in the stock market could be interpreted as a positive sign of market stabilisation.

Private equity remains a hope for recovery in the final quarter of 2024, with significant accumulated dry powder and a number of key processes on the market. At the same time, funds on the sell-side are faced with the urgency to sell in order to facilitate fundraising (although a number of them are choosing to transfer investments to secondary funds). Rather than focusing on specific sectors, funds are showing especial interest on counter-cyclical companies, which are able to grow without the need for heavy capital expenditure and have moderate leverage levels (and, a at the same time, are leaders in the relevant sector).

At the end of the day, dealmakers need visibility on global economic conditions in order to price risk, and thus the rebound of the M&A market will be highly dependent on how financing costs, inflation, energy costs, GDP growth (or downturn) and geopolitical headwinds (including the conflict in Israel) evolve in the following months.