Maltese gaming M&A
as is the consideration of the geographical location of those players. This will avoid the unwanted regulatory risk of accepting players from risky jurisdictions or geographical markets which could seek the enforcement of legal impediments or other remedies seeking to prohibit or restrict the offering of gambling services in that market. 3. Consider the risks involved in the geographical markets handled by the target company The transaction due diligence exercise conducted by the prospective purchaser would invariably involve a detailed profiling of the target company’s existing license portfolio and its current regulatory standing with each of the regulators concerned. A key consideration for the prospective purchaser of a B2C Operator is to engage professionals not only in the jurisdiction/s where the target is licensed, but also in each of the markets in which the target company is active at the time of the proposed acquisition or which are being considered as potential growth markets post-acquisition. The main objective of the legal advisors in these jurisdictions would essentially be to provide an accurate and up-to-date assessment of any opportunities, risks and pitfalls that may exist in each of those jurisdictions, provided that the purchaser intends to build on the target’s existing market strategy. As the regulatory landscape for online gaming operators is rapidly evolving across the EU, Australia and the Americas and across the entire globe, accurate and timely information for proper decision-making is imperative, empowering the acquisition team to carefully assess the commercial opportunities and threats in the context of the proposed transaction and the purchaser’s wider strategy. 4. Make a careful assessment of the target’s regulatory standing Given the reality that acquisitions predominantly take the form of an outright acquisition of some or all of the share capital of that target company, the purchaser should
be cautious about “stepping into the target’s regulatory shoes”. For this reason, getting a full understanding of the target company’s regulatory standing and of any legal issues that may have arisen is of fundamental importance for the stability of the target’s business post-acquisition. It is highly recommended that the prospective purchaser seeks the appropriate comfort through (i) the review of all past correspondence between the target company and its regulator/s, and (ii) by obtaining written authority from the target to discuss the target’s outstanding regulatory obligations (if any) with the relevant regulator, intended at understanding the expected remedial action, possible threats to the continuity of the licence and any financial penalties involved, if any. Based on this information, the purchaser would have an up-to-date understanding of the target’s regulatory health status, a clear assessment of the materiality of any outstanding issues, and specific recommendations as to how those issues can be resolved post-acquisition. 5. Take a full 360-degree view of the transaction Get the required guidance and advice from seasoned professionals to ensure that the management of the deal is managed within realistic and achievable timeframes. The regulatory approvals set out in this article are only one angle for a buyer to consider. Additional angles to be considered and covered could include competition (anti-trust) clearances, legal mechanisms driven by the Transfer of Undertakings (Protection of Employment) Regulations (TUPE), operational and tax optimisation post-acquisition and the proper management of key roles and responsibilities within the operation to ensure a smooth transition. Working with professionals that are regularly involved in the industry provides the insight and guidance necessary to separate critical from less material issues, coupled with experience-based recommendations to solve any issues in the course of the transaction.
Andrew J. Zammit is Managing Partner at GVZH Advocates For additional information, please contact: +356 2122 8888 andrew.zammit@gvzh.mt
IMGL Magazine • July 2022 • 13
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