M&A IN SPAIN
is executed within four months of the issuance of authorization, and, in any case, in accordance with the applicable corporate and civil regulations. Once the transaction has been executed, normally signed in front of a Spanish Notary, all documentation has to be submitted to the DGOJ for final approval. The DGOJ will require that the beneficiary company of the corporate operation undertakes all possible responsibilities that the operator may have incurred during the exploitation of the licenses subject to transfer. It will also request a commitment to be compliant from the beneficiary company with the obligations pending compliance or accredited by the transferor company. This must be done in such a way that, in addition to compliance with applicable tax or commercial regulations, compliance with specific regulations on gambling matters or others (e.g. GDPR, AML, Safe gambling) is ensured. The DGOJ will also require the beneficiary company/ies to submit appropriate declarations or warrants that accredit these aspects. Similarly, the beneficiary company/ies must provide new financial guarantees linked to the qualifying titles that are being acquired within three days of the final authorization by the DGOJ. Finally, subsequent changes to the technical systems of gambling operators (player account and games software) that derive from the corporate transaction must be notified to the DGOJ. Those have to be officially approved and certified as the case may be. If all the software has been previously certified the process should be relatively straightforward. ACQUISITION OF A GAMBLING OPERATOR The acquisition process for a Spanish online gambling operator has to take into account specific regulatory and market issues and will normally follow the steps below:
• requirement for a General License for Casino Games as well as Betting • requirement for local operations with a team and a client base • attractiveness of existing platforms/technology. Likewise, potential sellers should highlight these aspects to make their company more attractive to potential buyers.
2.
Valuation of the target company
Once the target company has been identified, buyer and seller must sign an NDA as a prerequisite to a review and discussion of a valuation. Such valuation will take into consideration issues such as business operations, KPI’s, evolution of GGR, number of active players accounts, potential fines, market regulatory framework and any anticipated changes.
3. Signing of a letter of intent
The previous step should allow the parties to draw up heads of terms or a letter of intent. Such a letter should cover the key elements of the agreement such us the total price, the initial payment, the earn-out part of the price, any part of the price to be placed into escrow, the team staying with the company, the due diligence process and closing schedule and an exclusive negotiation period. Most of these arrangements will be non- binding, however, the exclusivity period and other aspects such as confidentiality and non- solicitation should be binding at this stage. Negotiating a good letter of intent is important in order to have a strong position in the future negotiation of the Sale and Purchase Agreement.
4. Due Diligence process
The investigation and verification process to make sure that the transaction fulfills all the necessary conditions will take into account all the usual issues (i.e. business, financials, tax, employment, corporate) and also issues specific to an online gambling operator. Such issues shall include, but are not be limited to a review of: • Any foreign direct investment regulations which apply in the particular case. • The date of issuance and renewal of the licenses and any potential risk related to the licenses. • Availability of bank guarantees.
1. The search for a target company
Only a few of the existing gambling operators will be interested in selling or be open to external investment so research will be required to draw up a short list. The buyer should define criteria for the ideal target, particularly as regards the following:
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IMGL MAGAZINE | JULY 2023
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