Technology M&A 2025 Comparisons

During the past year, the technology M&A market in Denmark has remained relatively active compared to other sectors. Despite a general slowdown in the M&A market, transactions have continued to show significant interest in areas where Denmark has a strong reputation, such as technology, pharmaceuticals and healthcare, and renewable energy. This indicates that the activity in Denmark is somewhat aligned with the global pace, maintaining a steady volume of transactions. Expectations for 2025 are high, with many transactions in the pipelines across sectors.

During the past year, M&A activity has surged, especially among Danish tech start-ups. Larger tech companies and private equity firms are increasingly acquiring innovative start-ups in fintech, healthtech, and green technology. Denmark’s commitment to sustainability has driven a rise in M&A deals involving green technology and sustainable solutions, such as renewable energy, energy efficiency, and sustainable manufacturing.

The pandemic has accelerated the need for digital solutions, boosting M&A activity in digital transformation and software solutions. Cross-border transactions have increased, with foreign investors attracted to Denmark’s innovative tech ecosystem. Additionally, consolidation in the IT services sector is evident as companies expand their offerings and reach through M&A. The EU’s new regulations on AI and cybersecurity compel companies to adapt to new requirements and enhance their technological capabilities.

Private equity and venture capital funds as well as family offices are actively acquiring companies and providing growth capital in the Danish tech M&A market. This trend is expected to continue with high-growth opportunities. The rise in cybersecurity importance has increased M&A activity involving cybersecurity assets, and the ongoing AI revolution is also driving activity. Valuation multiples for tech companies remain high, driven by demand for innovative solutions in fintech, healthtech, and software as a service (SaaS).

Warranty & Indemnity (W&I) insurance still plays a crucial role in M&A transactions, providing parties with greater security and protection. ESG factors have become central to M&A, as investors increasingly focus on sustainability and responsible business practices.

When Danish founders decide to incorporate their business, they commonly choose a Danish limited liability company. This incorporation process is quick and electronic, often finalised within 24 hours once the formation documents have been prepared.

There are two types of limited liability companies:

• a public limited liability company (aktieselskab, or “A/S”), which requires a minimum capital of DKK400,000 (approximately EUR5,370); and
• a private limited liability company (anpartselskab, or “ApS”), which requires a minimum capital of DKK40,000 (approximately EUR53,690).

A bill to amend the Danish Companies Act was introduced on 5 November 2024 (the “Bill on the Danish Companies Act”) (FT 2024–25, tillæg A, L 71 som fremsat). The Bill on the Danish Companies Act proposes to amend Section 1, Subsection 3, and Section 4, Subsection 2 of the Danish Companies Act (Selskabsloven), resulting in the following changes for ApS:

• access to equity crowdfunding; and
• capital requirement reduced to DKK20,000 (approximately EUR 2,680).

The Bill on the Danish Companies Act needs to pass through three stages of review before the Danish Parliament (Folketinget) determines whether it will be enacted.

The Danish Business Authority (DBA) requires a formation fee of DKK670 (approximately EUR90) to be paid for the incorporation of ApS and A/S, respectively.

Forming a private limited liability company (an ApS) is often suggested to entrepreneurs because it ensures no personal liability, has the lowest initial capital requirement and the most flexible corporate governance structure, while also having a more lenient regulatory framework compared to other Danish limited liability entities.

Early-stage financing in Denmark is provided by a diverse range of sources, including family offices, angel investors, venture funds, and government-sponsored institutions such as the Export and Investment Fund of Denmark.

The Bill on the Danish Companies Act mentioned in 2.1 Establishing a New Company will allow private limited companies to use crowdfunding when the total value of the offering is below EUR5 million calculated over a 12-month period or provided that it concerns:

• offerings exclusively directed at qualified investors;
• offerings directed at fewer than 150 natural or legal persons per country within the EU/European Economic Area (EEA) countries, who are not qualified investors;
• offerings where the nominal value per unit amounts to at least EUR100,000; or
• offerings directed at investors who acquire shares for a total of at least EUR100,000 per investor for each separate offer.

If the offering exceeds EUR5 million, one of the above-mentioned conditions must be met – for example, that the offering of shares is directed at qualified investors. Private limited companies will continue to be unable to have their shares admitted to trading on a regulated market or a multilateral trading facility and thus become listed.

The documentation for these forms of investments is generally flexible, with no mandatory form. However, convertible instruments often need to be adopted in the company’s articles of association.

Venture capital from Danish and foreign venture capital funds as well as business angels is accessible to start-ups in Denmark, with a particular emphasis on the technology industry.

Additionally, capital can be accessed through the Export and Investment Fund of Denmark (Eksport- og Investeringsfond, or “EIFO”), which is a government-sponsored financial institution. This broad and active landscape of early-stage finance providers also includes family offices and angel investors. Therefore, both home country venture capital and foreign venture capital firms are actively providing financing in Denmark. If the proposed bill on crowdfunding for ApS is passed as expected, crowdfunding is – knock on wood – likely to become an increasingly popular financing option for these companies.

In Denmark, the creation and agreement of venture capital documentation is typically left to the discretion of the involved parties, as there are no mandatory or centralised standards in place. Despite this lack of formal regulation, the industry has seen the development of certain standards, particularly among experienced participants. Furthermore, there is a noticeable trend towards adopting international standards, particularly when international investors hold a significant amount of shares.

Danish start-ups generally retain their original corporate form and jurisdiction as they progress in their development. Most start-ups are established as ApS, owing to the flexibility in corporate governance and the relatively less stringent regulatory requirements. They typically remain under Danish jurisdiction and maintain this corporate structure until certain events necessitate a change. Such events might include initiating an IPO, engaging in a crowdfunding campaign, or other specific circumstances that require a transition to a different corporate form or jurisdiction. Consequently, although start-ups usually stick to their initial corporate form and jurisdiction, they may alter these aspects when they reach significant milestones or make strategic decisions.

The Danish IPO market has been relatively difficult and is not typically seen as a realistic exit route for immature companies. Investors are more likely to run a sales process when pursuing a liquidity/exit event rather than an IPO. Thus, most exit processes are primarily structured as a sale process from the outset.

Although an IPO may also be pursued in a classic exit scenario, IPOs and listings are generally considered more viable options for companies, with expected future funding requirements being better served through access to the equity capital markets rather than by private equity or debt capital. However, even for better-suited IPO candidates, it is customary to arrange for a dual-track process at the outset where a sale to a long-term investor is sought in parallel with an IPO.

Accordingly, save for certain IPO candidates owing to their ownership structure (eg, foundation ownership requiring the foundation to maintain a degree of influence), the general trend for IPO candidates – albeit not in all liquidity/exit events involving any type of company – is to have a dual-track process.

IPOs and listings of Danish companies are most likely to be made in Denmark, with listing on the regulated market of Nasdaq Copenhagen as the sole initial exchange. The familiarity of the regulatory regime and only having to deal with one set of stock exchange rules is generally preferable for an initial listing to reduce complexity and administrative burdens. The Danish equity capital market has generally been sufficient to meet company demands for capital both in IPOs and secondary issuances, as well as in high-volume transactions.

Historically, some Danish companies have pursued their initial listing on the Swedish Nasdaq Stockholm exchange. Growth companies, in particular, have pursued listing on the First North Stockholm multilateral trading facility (non-regulated market) maintained by Nasdaq Stockholm, which is generally perceived as being more liquid than the corresponding First North Copenhagen exchange. However, this trend has been reversed somewhat in recent years, with some Danish companies originally listed on another Nordic exchange pursuing a dual-listing on Nasdaq Copenhagen to better connect with Danish investors.

IPOs and initial listings are rarely pursued in two jurisdictions at once, owing to the complex nature of running a dual initial listing process as well as the additional compliance/disclosure regime. Larger already-listed companies may, and do sometimes, pursue a secondary listing of shares or depositary receipts (ie, American Depositary Receipts or similar) on a foreign exchange.

Whether a company's choice to list on a foreign exchange would affect feasibility of a future sale depends on the rules regulating the relevant foreign stock exchange and whether the foreign stock exchange is located within or outside the EU. A Danish company solely listed on a foreign exchange (ie, no domestic listing) would generally be subject to the takeover regulation applicable in the relevant foreign jurisdiction. However, if the foreign exchange is located within the EU, the takeover regulation in the jurisdiction of the exchange is likely derived from the EU Takeover Directive, which also forms the basis of the Danish takeover regulation.

In the event of an initial dual-listing domestically and in another jurisdiction within the EU, the company must on the first day of trading announce whether it has opted to be subject to the Danish takeover regulations or the applicable regulations in the other jurisdiction. The Danish takeover regime does not apply to takeovers of companies listed on a non-regulated market (eg, multilateral trading facilities such as First North Copenhagen), nor does it apply to companies solely listed on a stock exchange outside the EU.

Accordingly, feasibility of a future sale of a company listed on a foreign exchange is subject to an analysis of the specific applicable rules. Generally, the Danish takeover rules are not considered prohibitive to a future sale/takeover.

Notwithstanding any applicable stock exchange laws, minority squeeze-outs (available to shareholders holding more than 90% of the share capital and voting rights) in Danish companies are regulated by the Danish Companies Act. This applies to all Danish companies, regardless of a company being listed on a foreign stock exchange.

In Denmark, the approach to sales processes varies, encompassing auction methods as well as direct negotiations with a chosen buyer. Lately, there has been a noticeable shift towards direct negotiations or auctions that swiftly evolve into one-on-one discussions – a shift indicative of a market that favours buyers. Nonetheless, technology firms with considerable valuations or promising potential still predominantly undergo auction processes to ensure competitive offers and achieve the highest possible sale price.

The transaction structure for the sale of a privately held technology company with venture capital investors can vary, but there are some common trends and structures typically observed. One common structure is the full sale of the company, where 100% of the shares are sold to the buyer, allowing founders and venture capital investors to fully exit and realise their returns. This is often preferred by strategic acquirers or private equity firms seeking complete control.

Another structure is the sale of a controlling interest, where the buyer acquires a majority stake while some existing shareholders (including venture capital investors) retain a minority interest. This allows venture capital investors to stay involved and benefit from future growth, and buyers may prefer this to leverage the expertise and network of existing investors and management. Venture capital investors may seek secondary sales or liquidity options, allowing them to sell their shares to the buyer or other investors, providing an exit opportunity while the company continues with new ownership. In some cases, the management team may partner with a financial sponsor to buy out the company from existing shareholders (including venture capital investors), providing continuity and stability while allowing the management team to take a more significant ownership stake.

The current trend in Denmark favours flexibility in transaction structures so as to accommodate the interests both of buyers and sellers. While full sales are common, there is also growing interest in structures that allow venture capital investors to retain a stake, especially if they believe in the company’s long-term growth potential. The choice of transaction structure depends on the specific circumstances, the goals of the shareholders, and the strategic objectives of the buyers.

The standard approach for transactions involving privately held technology companies has been to complete the sale entirely for cash. However, there is a growing trend towards structuring deals that include stock-for-stock exchanges or a combination of stock and cash. This flexible transaction structure allows the involved parties to consider various strategic options, such as enabling venture capital investors to remain shareholders if they believe in the company’s future growth potential.

Founders and venture capital investors are generally expected to stand behind representations and warranties and certain liabilities (eg, tax, employee benefits, and environmental issues) after closing. This is typically done through indemnification or other mechanisms. The use of representations and warranties is customary in the Danish market, particularly for both large-cap and mid-market transactions.

Holdback and escrow arrangements are not customary in Denmark but are becoming more common lately. These arrangements are often seen in terms of purchase price adjustments. In some transactions, the management of the target company may provide business representations and warranties backed by W&I, while the sellers only provide fundamental warranties. This trend towards W&I insurance-backed management warranties is expected to continue.

Spin-offs are not widely used in technology transactions. Generally, spin-offs are considered a taxable event, resulting in taxation. However, they can be executed as a tax-free event (such as a tax-exempt demerger), provided certain requirements are met.

Spin-offs in Denmark can be structured as a tax-free transaction at both the corporate level and the shareholders’ level, provided certain requirements are met. These tax-free spin-offs are typically executed as tax-exempt demergers.

The key requirements for a tax-exempt spin-off in Denmark are as follows.

• The remuneration must be in the form of shares in the receiving company, with a possible tax compensation amount.
• The spin-off date should be set as the first day of the receiving company’s financial year to ensure it has a retrospective effect. However, special rules apply for companies comprised by the mandatory Danish joint taxation and in the case of cross-border demergers.
• The assets and liabilities transferred to the new company must constitute a separate business unit if the company subject to the spin-off is to continue to exist for tax and legal purposes.
• The company contributing the assets as well as the company receiving the assets must be a Danish A/S or ApS. Alternatively, it must be a “company from a[n EU] member state” as described in Article 3 of Council Directive 90/434/EEC and not be considered transparent for Danish tax purposes.
• The spin-off must be registered in the Danish Tax Agency (DTA)’s e-filing system no later than one month after the decision to proceed with the spin-off has been made.

As a main rule, the implementation of a tax-exempt demerger is conditioned upon a pre-clearance from the Danish Tax Authorities. However, subject to certain conditions, a tax-exempt demerger may also be implemented without a pre-clearance. Hence, certainty of the Danish tax consequences should be available prior to the transaction. The additional specific requirements include the following.

• A holding period of three years applies, during which shares in the receiving company cannot be sold following the tax-exempt demerger. This rule applies to companies that own 10 % or more of the share capital in one of the participating companies following the demerger and does not apply to shares owned by individuals.
• The demerger must be executed at fair market value.
• The ratio of debt to assets in the receiving company must match the ratio of debt to assets in the transferring company (“balance adjustment rule”). This often necessitates obtaining a binding ruling on the valuation.

In certain cases, a tax-exempt demerger may not be possible without obtaining permission. There are four specific exceptions to this rule, as follows:

• exception 1 – if the transferring company has multiple shareholders, and one or several of these shareholders have been participants for less than three years without having held the majority of the votes, and these shareholders collectively hold the majority of the votes in the receiving company after the transaction;
• exception 2 – where a demerger is carried out as a partial demerger, and a shareholder who carries on business of buying and selling shares in the transferring company is entitled to receive tax-free dividends on the shares in the transferring company and is remunerated with something other than shares in the receiving company;
• exception 3 – if a shareholder with controlling interest in the receiving company is not based in the EU or in a country that has a double-tax treaty with Denmark; and
• exception 4 – if a corporate shareholder who, at the time of the demerger, owns at least 10% of the shares or owns group shares in the transferring company receives cash as part of the spin-off (this rule applies only if the shareholder is eligible for tax-exempt dividends from these shares).

The specific requirements for a tax-exempt demerger with permission are as follows.

• The spin-off should be motivated by valid business objectives rather than tax evasion. The DTA conducts a detailed assessment of each transaction to verify its legitimacy.
• The shareholders must be remunerated in the receiving company in the same proportions as they were in the transferring company.

A spin-off immediately followed by a business combination is technically possible in Denmark. However, it is not very common.

The timing for a spin-off in Denmark depends on whether it is executed as a tax-exempt demerger with or without permission from the DTA. The time needed to obtain a ruling from the DTA varies based on the transaction’s complexity and specifics. The DTA assesses each case individually, leading to different processing times.

Without DTA Permission

If the spin-off meets certain conditions (eg, a three-year holding requirement and balance adjustment rule), it can proceed without DTA permission. This process is generally quicker, influenced by legal registrations, audit valuations, and other preparatory steps.

With DTA Permission

If the spin-off does not meet the conditions for a tax-exempt demerger or involves complexities, a ruling from the DTA is required. This includes cases where tax evasion might be a concern, or shareholders are remunerated in cash.

Stakebuilding

In a mandatory offer, prior stakebuilding is a prerequisite – given that mandatory offers are triggered by the buyer having acquired a controlling stake. In voluntary offers, prior stakebuilding is somewhat deal-specific and neither common nor uncommon.

Reporting Threshold

A buyer must notify the listed company and the Danish Financial Supervisory Authority (FSA) if the buyer’s direct or indirect stake in the listed company crosses any of the following thresholds: 5%, 10%, 20%, 25%, 33%, 50%, 66% or 90% of the voting rights or share capital of the company. Notification must generally be made no later than four business days after the buyer becomes aware that it has crossed a threshold. A buyer is normally presumed to have become aware of crossing a threshold no later than two business days after the transaction. The company must announce the information provided to it in a major shareholder notification.

Purpose of Acquisition and Plans

A buyer is not required to disclose its intentions or the purpose of the stakebuilding in its notification of major shareholdings.

“Put Up or Shut Up” Requirement

There is no “put up or shut up” requirement in Danish law.

The obligation to make a mandatory offer is triggered by the offeror having acquired “control” over the target listed company. A stake representing at least a third of the voting rights in the company is generally presumed to constitute control unless special circumstances apply (eg, another shareholder already holds a larger stake than the offeror). The shareholdings/stakes of persons acting in concert will be aggregated for the purpose of determining whether they together are able to exercise control over the company.

The most common structure is a voluntary offer. Mandatory offers are typically not the preferred route for offerors looking to obtain 100% ownership, as mandatory offers cannot be made conditional (ie, cannot be conditioned on at least 90% of the shares being tendered into the offer).

In recent years, there have been some statutory mergers involving listed companies, as well as reverse acquisitions of listed companies. Nevertheless, these are still somewhat unusual on the Danish market.

Alternative structures are asset deals/spin-offs of parts of the public company’s business, statutory mergers (including cross-border mergers), and private acquisitions of shares, which may be both subject to conditions as well as combined with a non-regulated public offer. Such alternative structures may be viable options depending on the specific facts and circumstances.

Whereas recent Danish public takeovers of companies in the technology industry have been structured as cash offers, the consideration structure is not necessarily prompted by the specific industry of the target company. Cash may also be used as consideration in mergers; however, in the few mergers involving listed companies that have taken place in recent years, the merger consideration has in each case been in the form of shares.

There is generally no statutory minimum price requirement in either takeover offers or business combinations/mergers. For both structures, however, various price regulation/control mechanisms do apply.

In mergers involving listed companies, an independent appraiser is required to provide a statement on the merger consideration and the basis/method for determining the merger consideration. Moreover, shareholders – having reserved the right to do so at a general meeting – may demand compensation by commencement of legal proceedings if they claim that the merger consideration was unfair or unreasonable.

For takeover offers, various price regulation mechanisms apply, as follows.

• If the offeror during the offer period enters into an agreement to acquire shares on terms more favourable (to the seller) than those set out in the offer document, the offeror must correspondingly improve the terms of the offer to all shareholders.
• If the offeror for a period of six months after completion of a takeover enters into an agreement to acquire shares on terms more favourable (to the seller) than those set out in the offer document, the buyer must correspondingly compensate all shareholders who accepted the takeover offer.
• Mandatory offers are subject to a “highest price rule” entailing that the offer price must at least correspond to the highest price that the buyer has paid for shares in the six months preceding the approval of the offer document.
• In mandatory offers, the offer price is subject to general Danish FSA supervision and scrutiny and, in extraordinary circumstances, control/regulation.

Contingent value rights or other similar mechanisms are generally not used in takeover offers or statutory mergers involving listed companies.

Conditions are permitted in voluntary offers, provided that the satisfaction of such conditions are not within the control of the offeror. Customary conditions include (without limitation):

• minimum acceptance condition (typically set at 90% to enable subsequent squeeze-out);
• regulatory approvals;
• no material adverse change;
• no material disposals or acquisitions;
• no changes to capital structure and articles of association;
• no changes to management employment contracts; and
• no adverse legislative changes or court judgments.

A takeover offer cannot be made conditional on financing. A buyer must have certainty of funds when launching a takeover offer (see 6.9 Requirement to Have Certain Funds/Financing to Launch a Takeover Offer).

Conditions are not permitted in mandatory offers.

It is customary to enter into a transaction agreement in connection with a takeover offer or a business combination/merger.

In addition to recommending the offer, the target company may generally undertake to:

• reasonably assist the offeror in soliciting acceptances of the takeover offer;
• facilitate the publication and distribution of the offer document and other announcements from the offeror in connection with the takeover offer (in addition to the announcements that the target company is obligated to assist with publishing pursuant to the Danish Takeover Order);
• not act in a manner that would render any offer condition impossible to satisfy;
• assist with necessary steps to prepare for a refinancing of the target company post-completion;
• expedite delisting application and convening an extraordinary general meeting (subject to the offeror acquiring sufficient shareholdings);
• not dispose treasury shares (except for settlement of employee share incentive programmes, which may be an undertaking by itself);
• assist the buyer in obtaining merger clearance/regulatory approvals; and
• other undertakings of a more administrative nature to assist with a smooth completion/takeover, if the takeover offer is successful.

A target company may represent that it is not in possession of undisclosed inside information and that it is in compliance with its disclosure obligations. Otherwise, the target companies does typically not provide representations or warranties.

The minimum acceptance condition is typically set at 90%, as this provides the offeror with the opportunity to initiate a squeeze-out of the remaining shareholders and pursue a fast-track delisting from Nasdaq Copenhagen.

Depending on the specific deal, an offeror may settle for a lower acceptance rate (eg, two-thirds of voting rights, which enables the offeror to amend the company’s articles of association, whereas 50% enables the offeror to control the election of the board of directors).

A statutory squeeze-out can be initiated by a majority shareholder holding more than 90% of the shares and voting rights in a company. The majority shareholder must provide the minority shareholder(s) with a four-week notice/disposal period – during which, the minority shareholder(s) can voluntarily accept an offer to dispose shares (or sell them on the market). Upon expiry of the four-week notice/disposal period, the voluntarily transferred shares are settled, followed by redemption of the the remaining shares. The redemption price in the squeeze-out is (and should be) the same price as in the preceding takeover offer.

Minority shareholders are entitled to demand an independent appraisal of the redemption price. The conclusion of the appraiser may be challenged by either party through legal proceedings. The minority shareholder(s) demanding an appraisal will, as a starting point, be liable for the appraisal costs. However, the court may decide that costs should be held by the majority shareholder if it is determined that the redemption price should have been higher.

Certain funds are required when a takeover offer is launched (ie, at the time the intention to launch a takeover offer is announced or, in the case of mandatory offers, at the time it is announced that the buyer is obligated to make a mandatory offer).

If a takeover offer is debt-financed, the debt financing must be committed prior to launch, which generally means having a signed and committed loan facility agreement in place. The Danish FSA accepts that the financing may still be conditional on customary conditions precedent; however, it is the buyer’s responsibility that any conditions for the financing will not hinder the completion of the takeover offer. The Danish FSA may demand evidence for a committed financing.

The buyer must describe how the takeover is financed in the offer document. Funds must be available for settlement of the takeover offer, which typically takes place four or five days after expiry of the offer period.

Financing banks are not deemed to be making an offer.

In the event of share exchange offers, the buyer must have taken all reasonable measures to ensure its ability to deliver the shares before launching the offer. The Danish FSA interprets this as meaning that the buyer must have obtained the necessary corporate authorisations to issue the consideration shares prior to launch. However, whether all reasonable measures have been taken is a specific assessment made on a case-by-case basis.

It is unusual for target companies to grant break fees or make other arrangements that effectively deter any potential competing offers and prevent the target board from pursuing other offers that may generate higher shareholder value.

The transaction agreement or a separate exclusivity/non-solicitation agreement may include provisions preventing the target company from soliciting competing offers, but it will typically not prevent the target company from entertaining or negotiating unsolicited (potential) competing offers. The target board will normally also reserve the right to withdraw the offer recommendation in the event of a competing offer (with a higher price) – although the buyer may have matching rights to prevent a withdrawal or change of the board recommendation, provided that the buyer matches the competing offer within a limited/reasonable timeframe.

If a buyer cannot obtain 100% ownership following a takeover offer, it is still possible to obtain governance rights with regard to the target company that effectively enable the bidder to exercise varying degrees of control over a target company. Among such rights are the following.

• Board representation – members of a board of directors are elected with a simple majority of votes.
• Voting rights – most decisions are passed by simple majority at the company’s general meetings. Generally, however, decisions involving an update of the company’s articles of association (including changes to the share capital of the company) do require a qualified majority of two-thirds of the share capital represented and the votes cast at the general meeting. Furthermore, certain intrusive decisions require a qualified majority of 90% of the share capital represented and the votes cast at the general meeting or even unanimity between all shareholders.

It is not possible to enter into domination and profit-sharing agreements in Denmark. Similar rights can be obtained through establishing share classes (regulated in the articles of association).

It is common to obtain irrevocable commitments from key shareholders. They are typically provided as conditional, unilateral declarations stipulating that the shareholder will accept an offer, provided that the offer price is equivalent to (or higher than) an amount agreed between the shareholder and the buyer. Irrevocable undertakings may be “hard” (no revocation in the event of a competing offer, irrespective of the offer price of such offer) or “soft” (may be revoked in the event of a competing offer with a higher price that is not matched by the original offeror). The terms of the irrevocable undertakings are subject to negotiations.

Irrevocable undertakings may also include waivers of certain protection rights otherwise afforded to shareholders under the Danish Takeover Order, including the equal treatment principle (meaning that a key shareholder may, on an informed basis, irrevocably commit to accept a lower offer price than the offer price offered to other shareholders of the target company).

The offer document must be approved by the Danish FSA prior to publication. A timetable for review and approval is typically agreed prior to the launch of the takeover offer (and the review process may be commenced in advance as well). The offer document must be published no later than four weeks after the launch announcement; however, in practice, it is typically published between one and two weeks after the launch.

In voluntary offers, the Danish FSA’s primary focus is the offer conditions, so as to ensure that the conditions are not within the buyer’s control and that the level of disclosure is otherwise acceptable. Offer documents for mandatory offers are subject to enhanced scrutiny and price review (and potential regulation).

The Danish FSA does not decide the individual timeline for the takeover offer. Pursuant to the Danish Takeover Order, the offer period must be at least four weeks and no more than ten weeks, unless regulatory approvals are still outstanding – in which case, the offer period may be extended for up to a maximum of nine months.

Competing offers may impact the timeline, given that the offer period relating to a competing offer will necessitate a corresponding extension of the offer period relating to the original offer (if the original offer is not withdrawn in connection with the announcement of the competing offer). The ten-week limit applicable to the offer period is calculated on the basis of the most recently published offer document (entailing that the offer period expiry is aligned for all offers). However, if the offer period in a competing offer is extended beyond ten weeks for the purpose of obtaining regulatory approvals, and another offer does not need regulatory approvals (or has already obtained them), such offer does not need to extend the offer period beyond ten weeks.

The initial offer period in a takeover offer must be between four to ten weeks. The offer period may be extended beyond ten weeks if regulatory/antitrust approvals are not obtained prior to the expiry of the offer period and the takeover offer has been made conditional on such approvals. In any case, the offer period cannot exceed nine months (however, see below regarding dispensation).

Merger filings are typically made immediately after the takeover offer has been launched (ie, the time when the buyer has made public its intention to launch the offer).

The timeframe for obtaining regulatory approvals differs from case to case. In complex transactions necessitating merger filings in several jurisdictions and/or to the EC, the maximum offer period of nine months may be inadequate – in which case, the buyer may consider seeking a dispensation from the Danish FSA.

Setting up and starting to operate a new company in certain sectors of the technology industry in Denmark can be subject to specific regulations, depending on the sector and the nature of the business activities. By way of example, companies in the telecommunications sector must comply with regulations set by the DBA, including obtaining necessary licences and adhering to rules regarding network security, data protection, and consumer rights.

With the implementation of the Directive on measures for a high common level of cybersecurity across the Union (“NIS2”) and the Digital Operational Resilience Act regulations, the authors anticipate increased supervision from a cybersecurity perspective. It has not yet been specified which Danish public authority will be responsible for overseeing and ensuring companies’ compliance with the NIS2 regulation.

Incorporating an ApS or A/S can be completed within 24 hours after preparing the necessary documents. However, obtaining permits and approvals varies by sector. By way of example, foreign investments approvals in sensitive sectors (eg, IT security and critical technology) take five to six weeks in straightforward cases.

The primary securities market regulator for M&A transactions in Denmark is the FSA. The FSA is responsible for overseeing the compliance of M&A transactions with securities regulations, including the review and approval of offer documents for public takeovers. Furthermore, the DBA is tasked with overseeing dual-use items and technologies.

The Danish foreign direct investment (FDI) framework is governed by EU Regulation 209/J452 and the Danish Investment Screening Act (Investeringsscreeningsloven), effective from 1 July 2021 and amended on 1 July 2023. Administered by the DBA, the Investment Screening Act imposes specific restrictions on technology M&A transactions involving Danish companies in sectors sensitive to national security or public order.

The Danish FDI regime requires mandatory pre-approval for direct and indirect investments, regardless of deal structure, including ownership, control over shares, voting rights, asset transfers, and long-term loans. For M&A transactions, foreign investors must file if they acquire or increase a “qualified holding” in a Danish company (defined as at least 10% of shares or voting rights) or if they exceed thresholds of 20%, 33%, 50%, 66%, or 100%. This also applies to certain greenfield investments and internal restructurings.

The Danish FDI regime broadly defines sectors and activities requiring approval for some seemingly irrelevant technology M&A transactions. The sectors include:

• defence sector businesses;
• IT security and classified information processing businesses;
• dual-use product manufacturers;
• critical technology businesses; and
• critical infrastructure businesses

The Danish investment screening process has two phases. Phase I involves submitting an application and ownership chart, with approval granted in 45 days if no risks are found. Phase II, for further review, gives the DBA 125 days to decide – although complex cases may take longer.

The regime offers pre-screening for foreign investors to confirm if an investment avoids critical technology or infrastructure, excluding defence, IT security, and dual-use products. Pre-screening takes between two and three weeks, with less information required.

Foreign investors must file with the DBA, detailing the investment, target and investor. Investment cannot proceed without approval if required. No fees or formalities apply if a qualified Danish lawyer handles the filing. Decisions in simple cases are usually made within five to six weeks.

In Denmark, there is no comprehensive national security review mechanism specifically for acquisitions, unlike in some other countries. However, certain sectors – such as defence, critical infrastructure, and telecommunications – may have regulatory requirements that could indirectly affect foreign investments. These sectors might require approval from relevant authorities, such as the DBA or the Ministry of Defence (Erhvervsministeriet), particularly if the investment could impact national security or public order.

There are no specific restrictions or considerations for investors or buyers based in a particular part of the world. However, investments from countries outside the EU/EEA may be subject to closer scrutiny, especially in sensitive sectors.

Denmark does have export control regulations, which are primarily governed by the EU’s dual-use regulation and national legislation. These regulations control the export of certain goods, technologies and software that can be used for both civilian and military purposes. Companies involved in the export of such items must comply with these regulations and may need to obtain export licences from the DBA.

The basic antitrust filing requirements for takeover offers and business combinations are governed by the Danish Competition Act (Konkurrenceloven), which is aligned with the principles of the EU Merger Regulation.

A merger or business combination must be notified to the Danish Competition and Consumer Authority (DCCA) if it meets one of these thresholds:

• combined turnover in Denmark of at least DKK900 million, with each of at least two undertakings having a turnover of at least DKK100 million; or
• at least one undertaking has a turnover of DKK3.8 billion in Denmark and another has a worldwide turnover of DKK3.8 billion.

A standstill obligation applies once the thresholds are met, meaning the merger cannot proceed before DCCA approval in order to avoid penalties for “gun-jumping”.

“Clean team” procedures must be used to prevent anti-competitive practices during negotiations and due diligence. The DCCA will assess the merger’s impact on competition and may block or impose conditions if it significantly harms competition.

Acquirers should be primarily concerned about the following labour law regulations:

The Act on Transfer of Undertakings (“TUPE”) (Lov om virksomhedsoverdragelse) is relevant in asset sales, where employment relationships automatically transfer with the business and the acquirer assumes the rights and obligations towards the transferring employees. Reductions in force and changes in employment terms are permitted under TUPE on economic, technical or organisational grounds.

In employee transfers, information and consultation requirements apply, with special procedures for la-yoffs or dismissals affecting at least ten employees. If an asset sale involves collective bargaining agreements, the acquirer can opt out by following specific procedures. Non-competition and non-solicitation restrictions are allowed within employee protection rules, including limited duration and compensation, with non-poaching enforceable for six months post-closing.

Denmark does not have a mandatory works council system, but companies with more than 35 employees must establish a co-operation committee if requested. Although the committee’s opinion is non-binding, the company must inform and consult on significant employee changes.

Denmark does not have currency control regulations or require central bank approval for M&A transactions.

Litigation in Danish M&A transactions is rare – although claims under W&I in private deals are rising. Many private M&A agreements include arbitration clauses to maintain confidentiality. Recent changes in technology M&A are driven by stricter FDI regulations, enhanced ESG standards for gender diversity, and tighter General Data Protection Regulation (GDPR) and privacy regulations affecting data-driven businesses.

Publicly listed companies are allowed to provide bidders with the information necessary to conduct their due diligence. However, bidders who are competitors of the target must limit access to sensitive information through “clean team” procedures. They must also comply with the rules on disclosure of inside information and prohibition of insider dealing, which may restrict share acquisitions outside the bidding process, and generally ensure compliance with the EU Market Abuse Regulation.

Target companies are not specifically required to provide the same information to all bidders but often do so in practice to facilitate the best possible offer being made to the shareholders. The board may allow detailed technology due diligence, balancing access to sensitive information with the need for protection, especially when bidders are competitors. The board and management may make themselves available for Q&A sessions with bidders.

Data privacy restrictions in Denmark can result in limitations in the due diligence of a technology company. The primary regulation governing data privacy is the EU’s GDPR, which applies to the processing of personal data. When conducting due diligence, the following considerations must be taken into account.

• Compliance with GDPR – any disclosure of personal data during due diligence must comply with GDPR requirements. This includes ensuring that the data processing is lawful, transparent, and limited to what is necessary for the purposes of the transaction.
• Anonymisation and minimisation – personal data should be anonymised or pseudonymised where possible to protect the privacy of individuals. Only the minimum amount of personal data necessary for the due diligence process should be disclosed.
• Justification for disclosure – the disclosure of personal data must be justified as necessary for the purposes of the transaction. This means that the data shared should be relevant and limited to what is required for the due diligence process.
• Confidentiality agreements – parties involved in the due diligence process should enter into confidentiality agreements to ensure that any personal data disclosed is protected and not used for any purposes other than the transaction.
• Data security – appropriate technical and organisational measures must be in place to protect personal data from unauthorised access, disclosure, alteration or destruction during the due diligence process.

Private M&A transactions involving non-listed parties/targets are typically not required to be publicly disclosed, but parties often issue press releases at signing or closing. Change of ownership of any Danish limited liability company must, however, be registered in the DBA’s Central Business Register (Det Centrale Virksomhedsregister).

If a listed company is involved in a transaction with a non-listed target, the (potential) transaction may qualify as inside information normally requiring disclosure by the time of signing (assuming delayed disclosure of inside information is permitted), regardless of any outstanding regulatory approvals/other conditions.

Disclosure of takeover offers for listed companies is specifically regulated in the Danish Takeover Order (in addition to provisions on disclosure set out in the Market Abuse Regulation). Pursuant to the Danish Takeover Order, a bidder must announce a voluntary offer as soon as possible following the decision to make an offer. A mandatory offer (triggered by the bidder having acquired a controlling stake of the target company) must be announced as soon as possible once the obligation to make a mandatory offer has been triggered.

A takeover offer with a stock consideration component (an “exchange offer”) or a business combination (eg, a merger with merger consideration being made in shares in the continuing company) prima facie constitutes an offer of securities to the public, which triggers an obligation to prepare a prospectus pursuant to the EU Prospectus Regulation.

Generally, however, such offerings will qualify for an exemption from the prospectus obligation, provided that the buyer instead publishes an exemption document (together with the offer document in case of a takeover). The disclosure regime for exemption documents is somewhat lighter compared to prospectuses, albeit still somewhat labour-intensive to prepare. In an exchange offer, it is not uncommon for a buyer to pursue a Danish listing of the shares (following the offer) for commercial and settlement purposes. Such listing is typically contingent on the publication of a separate listing prospectus.

Shares offered in a voluntary exchange offer may be unlisted shares or shares listed on another regulated market. However, if the shares are not fungible with securities already listed on a regulated market, the Danish FSA must review and approve the exemption document prior to publication (otherwise an exemption document is generally not subject to regulatory scrutiny/approval). For those and various other reasons, it is rare for unlisted shares to be offered in regulated voluntary exchange offers.

If unlisted or illiquid shares that are not admitted to trading on a regulated market are offered in a mandatory exchange offer, shareholders must be given the option to choose full cash consideration instead of shares. This also applies if the buyer in the six-month period prior to publication of an offer document against cash consideration has acquired shares that represent at least 5% of the voting rights in the company. Otherwise, a buyer is permitted to only offer shares as consideration in a mandatory exchange offer.

In a cash takeover offer for a listed company, the bidder does not need to produce or disclose financial statements. The disclosure requirements concerning a bidder in a cash offer document are very limited.

In a stock-for-stock (exchange) offer, the bidder will typically need to prepare an exemption document, which must include the bidder’s (annual and semi-annual) financial statements that have been published in the 12 months prior to publication of the exemption document. If the exchange offer constitutes a significant financial commitment of the bidder or a significant financial gross change (considering the size of the transaction relative to the size of the bidder’s business), the bidder must prepare pro forma financial statements for disclosure in the exemption document (prepared on the assumption that the transaction had been completed) by the beginning of the relevant financial period for which the pro forma financial statements are prepared.

Financial statements must be prepared in accordance with the International Financial Reporting Standards. Pro forma financial statements must be prepared in accordance with the applicable rules for the bidder’s financial statements and the accounting principles applied by the bidder in its most recent financial statements (or its next financial statements).

Financial statements must also be included in a listing prospectus, if required.

In Denmark, the requirements for filing transaction documents depend on whether the transaction involves a private or public company.

Private M&A Transactions

For private companies, transaction documents generally do not need to be disclosed to or filed with the authorities. Certain information included in the transaction documents, such as revised articles of association and the minutes of general meetings that approve changes to the articles, must be submitted to the DBA’s Central Business Register.

Public M&A Transactions

In a public takeover offer, the offer document must be approved by the Danish FSA prior to publication and will be filed and published through the Danish FSA’s system. Filing and approval requirements for exemption documents for share exchange offers depend in part on whether the offered shares are fungible with securities already listed on a regulated market – if they are, no FSA filing or approval should be necessary.

The principal duties of directors in a business combination are primarily owed to the shareholders of the company as a whole. These duties include the following.

• Directors must act in good faith in what they consider to be the best interests of the company and its shareholders. This includes avoiding conflicts of interest and not using their position to gain personal benefits.
• Directors must act in accordance with the company’s constitution and only exercise their powers for the purposes for which they were conferred.

The directors must consider the interests of other stakeholders, such as employees, creditors and the community, especially in situations where the company is facing financial difficulties. However, the overarching duty remains to act in the best interests of the company and its shareholders to ensure the overall success and sustainability of the company.

It is uncommon for boards of directors to establish special or ad hoc committees specifically for business combinations. However, in certain situations – such as mergers between one or more listed companies – it may be common to establish a special committee. These committees are typically formed to negotiate the deal, plan for integration, assess separation issues and synergies, and handle conflicts of interest.

In takeover offers, the board’s primary role is to ensure that the shareholders are presented with the best possible offer. A board cannot prevent or impede a potential offer – although the board may (and commonly does) engage in negotiations with a bidder for the purpose of evaluating an offer and ensuring that the potential transaction when presented to the shareholder is aligned with the best interests of the company and its shareholders.

In takeover offers, the board of the target company is required to publish a statement on the offer, which may be neutral or in the form of a recommendation to shareholders to accept the offer or to reject the offer. In a friendly process, it is customary to obtain a positive recommendation from the target company’s board. A target company’s board commonly obtains a fairness opinion from an independent financial adviser to support the board’s statement/recommendation of the offer.

Shareholder litigation challenging an M&A board decision is less common in Denmark. However, it can occur if shareholders claim that the board acted against their interests or overlooked alternatives (ie, the board did not perform its duty to ensure that the best possible transaction was made or, in the case of a takeover offer, was presented to the shareholders).

External legal counsel is typically required both for private and public M&A transactions, with financial advisers and accountants also playing key roles. In takeover offers or statutory mergers/business combinations involving publicly listed companies, it is customary for the target company’s board to hire independent financial advisers to provide fairness opinions and assist with valuation matters.