Technology M&A 2025 Comparisons

Over the past year, the Slovak M&A market has demonstrated a healthy level of activity, characterised by steady deal flow and a diverse range of sectors engaging in transactions.

Despite broader economic challenges in Europe, Slovakia remains a compelling market for investors due to its skilled labour force and strategic Central European location. Rising inflation and increased interest rates have prompted a cautious approach from some investors; however, strategic and private equity buyers continue to pursue transactions that offer resilience or potential for growth. Industrial players, manufacturing businesses, and consumer goods sectors have been particularly active, with transactions often focused on achieving greater operational efficiencies and expanding market reach.

In the real estate sector, transaction activity has been robust, with demand from both local and international investors in the logistics, office, and residential spaces. Slovakia’s strong industrial base has given rise to interest in logistics and warehousing assets as investors seek to capitalise on supply chain localisation and regional manufacturing hubs. There has also been a rise in interest for energy-efficient assets, reflecting a wider trend among European investors and the change in the trend in energy prices seen over the past couple of years.

The technology sector has proven to be one of the most dynamic areas for transactional activity, with a particular emphasis on acquisitions and venture capital investments in high-growth companies. Slovak technology firms in sectors such as fintech, cybersecurity, and software development have become attractive acquisition targets due to their innovative solutions and the presence of a highly skilled workforce. The surge in demand for digital transformation across industries has heightened interest in Slovak tech firms, resulting in competitive bidding processes and high valuations in certain tech segments. Both domestic and international buyers are capitalising on the location of Bratislava and Kosice (the two largest cities in Slovakia) as national tech hubs, where the combination of quality talent and cost advantages continues to draw significant attention. As was the case a year ago, in terms of technology transactions and the trend in the market for technology companies, the inflow of skilled labour from Ukraine, as well as interest in the creation of technology companies in an area that combines tech and defence, appears positive.

Looking forward, the Slovak M&A market is expected to maintain a moderate yet resilient pace, with investors actively seeking opportunities in sectors that offer sustainable growth and align with emerging economic trends. With geopolitical considerations and evolving EU regulations on the horizon, transactional parties may encounter additional complexities in structuring and executing deals. However, Slovakia’s attractive investment environment will likely continue to draw interest from strategic and private equity investors alike, keeping transaction pipelines healthy across both traditional and high-growth sectors.

Beyond the trends described in the section above, we see two more interesting developments.

Over the past 12 months, Slovakia has seen several high-profile entrepreneurs choosing to exit or restructure their businesses, largely due to political developments surrounding the last election. With a shift in the political climate, some prominent business leaders made decisions to relocate their primary operations or divest assets. This has resulted in a series of significant transactions, as these entrepreneurs either sold their stakes or reorganised ownership structures to accommodate their moves abroad. While these high-profile exits have captured attention, they have also opened up opportunities for both domestic and foreign buyers to acquire established businesses with solid market positioning in Slovakia.

At the same time, the Slovak market is beginning to anticipate the end of the conflict in Ukraine, with businesses and investors positioning themselves for a post-war environment that could bring substantial new opportunities. Slovakia, as a neighbouring country, is strategically placed to play a pivotal role in the reconstruction of Ukraine, a prospect that has already stirred interest from international investors. Expectations of capital inflow for rebuilding efforts have triggered increased preparatory activity, with some Slovak companies exploring potential partnerships and market growth that could align with the future redevelopment of Ukraine. This evolving dynamic holds the promise of an expanded market and potential for robust cross-border cooperation, positioning Slovakia as a gateway for investments and supply chains that will support Ukraine’s recovery.

The establishment of start-ups within the Slovak jurisdiction is relatively common. There are various reasons for this. The Slovak Republic has a relatively good-quality higher-education system and, specifically, the Slovak University of Technology in Bratislava has a very good reputation in the region, and its graduates have a very high rate of employment in high-quality international technology companies. Start-ups in Slovakia are often founded by graduates of this technical university. Also, a large number of young people from Slovakia study at prestigious foreign universities. They then often return to Slovakia and set up various innovative companies, or work for innovative companies as employees.

Most often, a start-up is founded in the form of a limited liability company because these are easy to set up relatively quick and cheap to incorporate.

The incorporation process of a new limited liability company can take one to three weeks, depending how fast it takes to include them in the commercial register. The minimum registered capital requirement is EUR5,000.

Start-ups can also be set up in the form of joint-stock companies, but this is much less common on account of their higher administrative and legal complexity, more complex internal structure and the higher costs involved. The minimum registered capital requirements for a joint stock company in Slovakia are EUR25,000.

The legal form of a company most commonly used in Slovakia to establish a start-up is the limited liability company, which generally has the following advantages.

• Fast incorporation process – it takes approximately one to three weeks to incorporate a company, depending on the speed of its inclusion in the commercial register.
• Low initial costs – setting up a limited company is the least expensive of all company set-up options. The minimum legally required registered capital of a company is EUR5,000.
• Simple corporate governance – internal relations are relatively easy to establish and, in many areas, it is possible to have the regulation of relationships governed by statutory provisions generally set up under the Commercial Code, although it is also possible to have the internal processes of a limited liability company prepared quite flexibly.
• Transparency – a limited liability company is a very transparent type of entity, with publicly available information on its shareholders’ structure.

If a joint-stock company is used to set up a start-up, although used much less frequently, its specific characteristics include the following.

• Higher capital requirements – the minimum amount of registered capital in a joint-stock company is EUR25,000.
• The possibility of a more complex adjustment of the internal structure – eg, the internal bodies and their functioning (board of directors, supervisory board, general meeting, and facultative committees); the internal control systems (via the supervisory board); and the possibility of issuing different types of shares for the shareholders.
• Lack of disclosure of information on the shareholders – a joint-stock company does not have a publicly accessible list of shareholders (unless there is just one sole shareholder).

The source of early-stage financing differs from case to case. In many instances, the initial funding of start-ups comes primarily from the private resources of the founders. In addition, there are several venture capital (VC) funds in Slovakia that contribute certain amounts of money, although these resources are fairly limited, and a share of these amounts comes from public resources (eg, EU funds). Local VC funds have been fairly active in the Central European ecosystem in recent years. Wealthy entrepreneurs (mostly) from the technology sector also operate in Slovakia and diversify their portfolios by investing in start-ups. In addition to financially assisting start-ups through investments, these investors also often help founders with guidance and mentoring. Occasionally, family offices, wealthy individuals or even some established Slovak companies also invest in start-ups. 

Financing documentation has not been sufficiently standardised yet, and it could be dependent upon the subjects involved – ie, whether financing is provided by a private investor or a VC fund, etc). For smaller investments, where the investor is also often an individual investor (an angel investor), documentation is not always standardised. For larger investments, where a significant number of investors contribute to the investment round, or when the investors are larger and more sophisticated, experienced service providers and advisors are often also involved. In these cases, it is standard to use investment documentation that is based on that used in jurisdictions with a more developed start-up ecosystem, and this is then localised to the Slovak legal environment.

Several initiatives in Slovakia have aimed to standardise transaction documentation for the purpose of investing in start-ups. One of these was to prepare a unified term sheet, and was backed by the Slovak Venture Capital & Private Equity Association, the most prestigious association on the Slovak PE and VC market. It was supported by several renowned attorneys at law and tax advisors and resulted in the first standardised term sheet now used for many start-up investments in the Slovak ecosystem.

There are several VC funds active in Slovakia that focus on potential investments in start-ups. Some of the sources of VC funds are private investors and some are public funds (eg, EU funds).

There are a number of smaller VC funds in Slovakia. There are also several active VC funds from neighbouring countries for which Slovakia is attractive and whose presence on the market proves that the Slovak start-up environment is expanding, improving, and moving in the right direction.

There are a few very active state- or semi-state-owned investment companies in Slovakia. The most significant share of public money flowing into the Slovak start-up ecosystem is from Slovak Investment Holding, a subsidiary of a Slovak state-owned bank, which has a highly stimulating effect in the start-up ecosystem, providing founders with more money and allowing public resources to be used in an innovative and modern way.

There are several initiatives in Slovakia that aim to standardise transaction documentation for the purposes of investing in start-ups. Although the Slovak start-up environment is young, a number of initiatives have emerged to standardise the documentation and processes for investing in start-ups. The great advantage of these initiatives is that they involve top-tier advisors from the fields of finance, law and tax who have great experience and whose can make a vital contribution.

One important initiative that targeted preparation of a unified term sheet for start-ups was backed by the Slovak Venture Capital & Private Equity Association (see 2.3 Early-Stage Financing).

In the initial phases of a business, founders most often choose the form of a limited liability company for their start-up for its quick and straightforward incorporation, simple corporate governance processes and low initial capital requirements. Over time, however, with the gradual expansion and growth of the company, there may be a need for more structure, particularly in terms of setting up internal processes, control mechanisms, and opening the entity up to investors. For this reason, the founders may decide to change the legal form of their company from a limited liability company to a joint-stock company.

A joint-stock company is a more suitable legal form for larger companies. Compared to a limited liability company, it is slightly more complex to set up and operate, and also has higher capital requirements. It also has many advantages, which start-up founders often evaluate as suitable for their business and company growth. One advantage is the possibility of setting up enhanced internal processes and internal corporate bodies. A significant advantage is the mandatory establishment of a supervisory board, which controls the functioning of the company for the shareholders. Another advantage is the possibility of an enhanced shareholding structure for the company and distribution of the individual types of shares and rights associated with these. An advantage may also be that the list of shareholders of a joint-stock company is not publicly available.

Several types of liquidity events are used in the of the Slovak Republic and in the start-up environment, the most common, traditional and conservative being the entry of investors into a company. Types of investors are varied and include the following:

• private equity funds, such as local PE funds, as well as funds from neighbouring countries, particularly the Czech Republic and Poland);
• local business groups, such as large local business conglomerates encompassing dozens of companies;
• competitors of the target company (ie, investment on horizontal axis); and
• silent partners, who have access to a share of the economic benefit of the target company in exchange for a certain level investment.

In the case of technology companies or, for example, engineering companies, it is also possible to structure a liquidity event as the sale of part of the know-how or the granting of a licence for a certain product provided by the company. In return, the company receives money from investors, which is then used for further business development. This type of liquidity event is then often combined with the creation of a joint-venture partnership, which takes the form of a stand-alone company. The investor contributes money to the JV and the company/start-up contributes the know-how/product/technology to the JV company.

Initial public offerings (IPOs) are infrequent in Slovakia due to the somewhat conservative behaviour of Slovak entrepreneurs and because market liquidity is weak. That said, several interesting companies in Slovakia have opted to carry out IPOs on neighbouring stock exchanges where liquidity is much stronger.

Although several dozen companies are listed on the Slovak stock exchange in Bratislava, the Slovak stock exchange has relatively low trading volumes, which makes it unpopular among investors and companies pursuing a liquidity event. However, the competitiveness of the Slovak stock exchange is gradually improving, and a number of measures are being taken to make it more attractive.

The most popular stock exchange among Slovak companies seeking a listing tends to be the Prague Stock Exchange in the Czech Republic. The most notable example would be Slovak company Gevorkyan a.s.that deals in powder metallurgy, one of the most innovative and competitive companies in the Republic, which was the first Slovak company to be listed on the START market on the Prague Stock Exchange. In so doing, it achieved a record issue. Recently, this company became the first company to jump from the START market straight to the Prague Stock Exchange’s main regulated PRIME market.

This company has also recently entered the Bratislava Stock Exchange in Slovakia as part of a dual listing. This shows that, even from Slovakia, it is possible to do business based on a strong presence on the local capital market.

In Slovak law, there is no restriction that would limit the feasibility of a future sale due to the listing of shares for trading on a foreign stock exchange. Overall, the capital markets within the EU member states are very well harmonised, which should minimise any restrictions on the applicability of a future sale in the event of a listing of the company’s shares on a stock exchange in a foreign jurisdiction. However, this only applies to companies whose shares are traded within an EU member state.

Specifically, it should also be noted that there is even greater proximity and similarity between the Slovak and Czech legal systems, which is often a destination for Slovak companies to listing for shares on the stock exchange.

Both the auction and the direct bilateral negotiation with a chosen buyer are viable options in the Slovak jurisdiction. However, direct bilateral negotiation tends to prevail. In this case, market research, intermediaries (eg, financial or legal advisors) or various investment platforms represent a method to connect potential buyers with the potential sellers.

The most typical transaction structure in Slovakia is the direct sale of a privately held technology company, even if it has a number of VC investors. Generally, the owners of a technology company would enter into shareholders’ agreements outlining liquidity events, together with various tag-along, drag-along, and call/put option rights which would often be triggered when a sale is initiated.

Should there be a large number of smaller VC investors, it is customary that an investment vehicle is formed one layer above the technology company to make the direct sale a little less complicated. Such VC investors then have limited rights in blocking the sale through the investment vehicle.

In some cases, VC investors have the option to continue to remain shareholders, but this is less frequent, and well-structured investment rounds usually aim to achieve complete sale.

In the Slovak jurisdiction, the sale of a company (or part of it) for a consideration in the form of cash is still common. However, in recent times, several sales of start-ups have taken place in which large foreign technology companies have been on the buyers’ side. In such cases, the instigators of the sale must have information that part of the consideration was paid in the form of shares of the buyer.

In Slovak law, there are no restrictions that would limit a possible stock-for-stock transaction. It is therefore to be expected that, as in foreign jurisdictions, this form of consideration will become more common and more acceptable by sellers.

It is not uncommon for the position of founders and VC investors to differ when it comes to indemnification in respect of representations and warranties. VC investors are naturally keen to limit indemnification to a greater extent than founders, and are able to do so to a certain degree.

Within the Slovak legal environment and in Slovak transactional practice, transactional representations and warranties are a standard part of transaction documentation. The traditional mechanism is indemnification combined with purchase-price discount, due to the technicality of Slovak laws.

Escrow or holdback are not really customary in Slovakia to the extent that can be seen in other bigger jurisdictions. W&I insurance is used in the Slovak market, but usually for only the bigger-ticket deals, which are not that frequent.

As of March 2024, the new Act on the Transformation of Business Companies and Cooperatives came into force, clarifying the various forms of company transformations. Until its adoption, there was no specific legislative basis in Slovakia for spin-offs, but there were other ways that were practically possible for spin-offs to take place. However, according to the new Act, it is possible to use, in practice, the following forms of company division, in particular.

• Splitting by merger – a procedure in which the company being split is dissolved and its assets are transferred to other existing companies, which thereby become the legal successors of the disappearing company.
• Splitting by fusion – a procedure in which the company being split is dissolved and its assets are transferred to newly established companies which, by their formation, become the legal successors of the dissolving company.
• Spin-off by merger – a procedure whereby the company being divided is not dissolved, and part of the assets of the company specified in the conversion project are transferred to one or more existing companies.
• Spin-off by fusion – a procedure whereby the company being divided is not dissolved, and the part of the company’s assets specified in the conversion project are transferred to one or more newly created companies.

In addition to making the legislation more precise and increasing legal certainty, one of the aims of this new legislation is to make these company transformations more attractive. It will be interesting to see from a longer-term perspective whether this legislation has led to an increase in the number of company transformations.

Along with the new Act on the Transformation of Business Companies and Cooperatives, additional provisions were also adopted into Slovak tax legislation, according to which the following applies in relation to company transformations, in particular:

• income derived from the acquisition of new and stocks and shares, as well as income derived from their exchange in the case of the transformation of companies or cooperatives pursuant to a special regulation, is not subject to tax, even if the transformation also includes the assets of a company with its registered office in the member states of the European Union;
• where a taxpayer who has started to claim an exemption has ceased to exist as a result of a conversion or cross-border conversion, their successor in title may not continue to claim the exemption; and
• income from sources within the territory of the Slovak Republic of a taxpayer with limited tax liability is income from the payment of valuation differences on revaluation on the conversion of companies or cooperatives in the amount determined by the statutory conditions.

Under Slovak law, a business combination cannot follow immediately after a spin-off, as specific business combination deadlines must be met.

Under the relevant provisions of the law, one of the formal steps that must take place prior to a business combination is the obligation to notify the tax administrator. Notifications must be delivered by each of the dissolving companies no later than 60 days before the general meeting at which the draft business combination agreement is to be approved.

In light of the above, it follows that a business combination cannot take place immediately after the spin-off as Slovak law makes it conditional upon certain other formal steps for which the law sets certain time limits. In addition to the 60-day deadline, the whole process between a spin-off and business combination is prolonged by several formal steps (eg, the filing of an application for registration of the business combination in the commercial register).

The process of company spin-off generally takes several months in the Slovak Republic. In practice, for smaller companies, it can take up to three months, and for larger companies it can take up to six months. The procedure is fairly complicated and, in addition to formal documentation obligations, it involves, for example, the obligation to settle matters between the dissolving entities and their creditors.

The process in relation to the tax authorities in most cases only involves notification obligations, with no need to seek the tax authority’s consent. However, partly related to this issue is the obligation for the companies involved in the spin-off to ensure the preparation of an auditor’s report.

The reporting threshold for the acquisition of an interest in a public company is 5%, 10%, 15%, 20%, 25%, 30%, 50% and 75% in the case of an acquisition of shares to which voting rights are attached. The obligation to notify the issuer is no later than four trading days.

However, it should be noted that there is currently no trading in high volumes of company shares on the local stock exchange in Slovakia. The situation is continuously improving, however, and investors and companies are gradually recognising the local stock exchange’s advantages.

Under Slovak legislation, a person who, alone or together with persons acting in concert with them, reaches or exceeds the threshold shareholding of 33% in a publicly traded target company, is obliged to make a takeover bid for all the shares of that company. Threshold shareholding means a holding of at least 33% of the voting rights attached to the shares.

Despite the low volume of shares traded on the Slovak stock exchange and also the small number of titles traded, the typical transaction structure for the acquisition of a public company in Slovakia would look something like the following.

• Initially, the acquirer would aim to secure a sufficiently large position in the target company in order to be able to place its nominees in the company’s bodies.
• The acquirer (either alone or together with other shareholders) would make an offer to take over the shares of the company.
• If the acquirer (or persons acting in concert with it) had a stake of at least 33%, it would have to make a mandatory takeover bid.
• Subsequently, if the acquirer succeeded in acquiring at least 95% of the target company, the whole takeover process could be concluded by a squeeze-out in order to take control of the entire company.

In the Slovak jurisdiction, the acquisition of a company (or part of it) in the technology industry for a consideration in the form of cash is still common. Sales of companies with stock-for-stock consideration are not common in Slovakia, although their popularity among entrepreneurs is gradually growing.

On the other hand, in the case of a business combination, the situation is reversed. Generally, in business combinations (eg, in the form of a merger) it is assumed that all shareholders of the ceasing company become shareholders of the remaining company – carrying out a stock-for-stock deal.

However, Slovak law allows either the shareholders of the closing company or the shareholders of the enduring company to decide that they are not interested in remaining shareholders of the company remaining after the merger has been carried out. In this case, the law provides for specific procedures which determine the value of consideration to be paid to shareholders who opt out.

Under the procedure, firstly, shareholders who do not agree to the business combination and who are interested in a cash payment of their shareholding must make clear their intention not to remain in the surviving company. Such shareholders then have the right to require the surviving company purchase their shares from them for an appropriate cash consideration.

The value of the appropriate cash consideration must not be less than:

• the highest consideration given to individual eligible shareholders for the same share;
• the value of the net assets per share determined according to the last annual accounts before the preparation of the business combination agreement, increased by the value of the intangible assets not shown in the balance sheet as valued by an independent expert; and
• the average share price of the companies involved in the merger, whose shares are traded on a stock exchange during the 12 months preceding the filing of the business combination agreement in the register of deeds.

The Slovak Securities Act precisely sets out the conditions and formalities of an offer to take over the shares of a publicly traded company, but they are quite formal. As the stock market (and thus takeover offers) is not very active, there is no satisfactory precedent for regulatory restrictions.

In the Slovak jurisdiction it is common that a specific transaction agreement be concluded in connection with a takeover offer. The Slovak Securities Act expressly provides that a takeover bid is formally, from the point of view of the law, considered to be a public proposal for the conclusion of an agreement. However, due to low Slovak stock exchange activity, there is no established precedent that would standardise the terms and conditions of such an agreement.

Several factors and conditions play a role in the acceptance of a takeover offer. In the case of a takeover bid that was conditional upon the acquisition of a certain minimum number of shares, whether this condition was met and the necessary number of shares was acquired therefore needs to be established.

Compliance with time limits laid down must also be adhered to. Offer-validity times to be respected are a minimum of 30 days and a maximum of 70 days, and any announcement of the conclusion of a share-purchase agreement/agreement on exchange of shares for other securities may be made only after the expiry of these periods.

A shareholder may exercise a squeeze-out if it is the holder of shares whose aggregate nominal value represents at least 95% of the target company’s registered capital to which voting rights are attached and to which at least 95% of the voting rights in the target company are also attached.

If the above threshold is met, the subsequent squeeze-out procedures and conditions are as follows.

• The offerer/acquirer must inform the National Bank of Slovakia and the company’s BoD of its intention to exercise a squeeze-out.
• The acquirer must obtain the consent of the National Bank of Slovakia for the squeeze-out.
• The acquirer must request that the target company’s BoD convene a general meeting which must be held within 30 days.
• If at least 95% of the target company’s votes are in favour of the squeeze-out, approval is granted.
• The company’s BoD will then submit a proposal for inclusion of the approval of the transaction in the commercial register no later than 30 days after the adoption of the decision of the general meeting.
• The offeror is obliged to notify all remaining shareholders of the company and all creditors no later than ten days after the adoption of the decision of the general meeting.
• The shares of the target company will be transferred to the offeror after 30 days from the entry of the decision to approve the squeeze-out in the commercial register. This legal fact is subsequently registered in the Central Securities Depository.

Consideration for shares acquired by way of squeeze-out may take the form of cash, shares, or a combination of both. The law provides for several methods of determining the price of shares, but value is generally assessed by an expert. It is also important to note that, during the squeeze-out process, the funds intended for repayment of minority shareholders are deposited in a bank, central depository or securities dealer.

In the case of a standard takeover bid, the offeror is obliged to include directly in the offer details the sources and methods of financing of the bid and the details of any anticipated indebtedness on its part. In the case of a squeeze-out, legal regulations are even stricter. During the squeeze-out process, the funds intended for repayment of minority shareholders must be deposited in a bank, central depository or with a securities dealer.

Within the Slovak market there are no standard protective measures. The most common measure is the right to withdraw from the takeover offer after its acceptance. However, withdrawal can only be made during the offer period. There are no other standard provisions. It is possible to come to agreements on certain measures, though uncommon.

Slovak law does not explicitly cover any special governance rights which, in the event of the impossibility to acquire 100% of the company, belong to the bidder. Relationships then therefore come under traditional corporate governance rules and the establishment of the content of internal corporate documents of the target company on the responsibilities of the supervisory board and the BoD by nominees put forth by the bidder.

It is relatively common for principal and other shareholders to enter into certain agreements and obligations, each of which are considered standard contractual relationships. However, the Slovak Securities Act provides that, if the principal shareholder, acting alone or in concert, acquires more than 33% of the shares of the target, it is expressly obliged to make an offer to take over the entire company.

In the event of a rival offer which may propose better terms, the target’s shareholders can decide which offer they will accept. Shareholders who have accepted the original offer may, until the expiry of the validity period of the original offer, revoke their acceptance of the original offer and withdraw from the contract concluded on the basis of the offer without penalty.

The regulator – the National Bank of Slovakia – is significantly involved in the takeover bid process. It accepts takeover offers submitted, evaluates these and checks that they meet legal requirements (they can be returned within five business days for further completion if any errors have occurred, with the deadline for correcting an offer being a maximum of 15 business days). It approves the offer before their delivery to the target companies, and then selects the expert who will determine the value of appropriate consideration.

The National Bank of Slovakia is the securities market regulator, and assesses the takeover bid from the point of view of compliance with the conditions laid down in the Securities Act, as well as with respect to the adequacy of the consideration for the shares.

The Slovak Antimonopoly Office acts as regulator and assesses the takeover from the point of view of the protection of competition on the market. This is a condition of Slovak law and EU law. It is a completely stand-alone administrative procedure. (For larger transactions with an impact on the entire EU market, the European Commission acts as regulator.)

The Antimonopoly Office must decide on the possible approval of the transaction within 25 business days. In the case of more complex transactions, the deadline may be extended by an additional 90 business days.

In general, the launch of a new start-up does not require any special permits, with just the traditional formal processes applied, such as inclusion in the commercial register, obtaining the appropriate business licences, and various tax administration and insurance procedures.

However, differences may arise in cases where the start-up is to be active in regulated sectors such as fintech (provision of banking services, securities trading), pharmaceuticals and medical devices or energy. In each of these cases, the regulator is a different authority (the National Bank of Slovakia, the State Institute for Drug Control and the Regulatory Office for Network Industries, respectively).

The duration of the licensing processes varies greatly depending on the type of licence or permit, the responsible authority, and so on. For illustration, however, the duration of the procedure for obtaining a licence for a start-up to provide investment services, for example, can take anywhere from six to 18 months under current legislation.

The regulator for the primary securities market is the National Bank of Slovakia.

For foreign investments from non-EU member states, approval must be obtained from the Ministry of the Economy of the Slovak Republic for certain critical investments such as in the defence industry, major infrastructure (airports, gas pipelines, and power plants) or publishers of periodical press. The investments can only take place after approval has been received.

There is also a standard obligation to obtain the approval from the Antimonopoly Office for competition law purposes if the transaction if to be carried out and fulfil legal requirements. The main conditions are meeting turnover criteria, which are set as a combination of turnover achieved by the parties to the transaction (eg, the participants have generated a cumulative turnover in Slovakia of at least EUR46 million and at least two participants have, at the same time, achieved turnover of at least EUR14 million each).

Also, in certain matters relating to the financial markets, it is necessary to obtain the consent of the National Bank of Slovakia. Investments related to a company doing business in one of the regulated markets (eg, investments in banks, insurance companies, and securities traders) are assessed by the bank. In such cases, the regulator also examines the source of funds used in the transaction.

Apart from the screening of investments under FDI rules, there is no regime in Slovakia under which investments would be screened from a national security perspective.

A specific exception might be the screening of investments that would, for example, relate to the acquisition of a shareholding in a technology company that supplies sensitive IT systems to the state. In this case, the acquirer in question would have to be cleared by the National Security Agency and to have security clearance.

Under the Slovak Act on Protection of Competition, an obligation to notify the Antimonopoly Office of the Slovak Republic arises if:

• for any type of transaction, the combined aggregate turnover of the undertakings amounts to at least EUR46 million in Slovakia and the aggregate turnover of each of at least two undertakings amount to at least EUR14 million in Slovakia;
• for a merger, the aggregate turnover of at least one of the undertakings concerned amounts to at least EUR14 million in Slovakia, and the worldwide aggregate turnover of another undertaking concerned amounts to at least EUR46 million; or
• for an acquisition of control, the aggregate turnover of the undertaking over which control is to be acquired amounts to at least EUR14 million in Slovakia, and the worldwide aggregate turnover of another undertaking concerned amounts to at least EUR46 million.

Under the Labour Code, the employer is obliged to consult and inform employees about any significant organisational changes and other important information that concerning it.

The new Act on the Transformation of Business Companies and Cooperatives also provides for an obligation to involve employees in the process of cross-border company transformations. Moreover, under Slovak law, if the company has more than 50 employees, its employees must be represented on the supervisory board and are entitled to one-third of its seats.

Depending on how internal employee relations have been set up within the workplace on the basis of a collective agreement, employees may have additional rights and the employer may have additional obligations towards them beyond the scope of applicable legislation. There may also be certain obligations on the part of the employer based on collective bargaining agreements with employee representatives. Typically, in larger companies, agreements are made between employee representatives and the employer that employees will directly participate in certain decisions, and there is an obligation to maintain employment levels for a certain period or periodic salary increases of a certain amount.

Some of these commitments take the form of non-binding advisory opinions (eg, consultations with employees according to the first paragraph). Others are binding (eg, relations agreed in a collective agreement).

Approval by the National Bank of Slovakia may be required in the case of transactions concerning regulated subjects – banks and insurance companies – or, partly, in transactions involving companies which have a certain type of licence issued by the regulator.

The most significant legislative changes in recent times concerning transactions (of a general nature, and not just technological transactions) is the entry into force of the new Act on Transformations of Commercial Companies and Cooperatives effective from March 2024. The legal regulation of transformations has been removed from the Commercial Code, where it was originally located, and has been moved to a become separate Act. It contains a unified and comprehensive legal regulation of the various ways in which legal entities with a legal successor are dissolved (ie, mergers, splits) for all legal forms of companies and co-operatives; the legal regulation of spin-offs; and changes in legal form, including cross-border variants.

With regards to court decisions in M&A matters, only a minimum of M&A disputes reach the court, as they are usually resolved by agreement of the parties. Consequently, the decision-making practice is not yet well established and stable.

The depth of due diligence depends on a number of factors. For example, the time aspect (how long the due diligence can take), the sophistication of the company that is the subject of the transaction, and also the sector in which the target operates. Companies in the due diligence process usually provide a certain package of information to all interested parties, and additional information is provided only on the basis of specific requests from individual bidders.

In addition, for major transactions, it is standard practice to create a small clean team on the bidders’ side that will have access to the most sensitive documents and information, which are stored in a separate clean room. The reason for this practice is to restrict the access of as many people as possible to business sensitive information about the target company which could then be used unfairly when making business decisions.

Standard data protection rules (eg, GDPR rules) also apply to the due diligence process. There are no special rules for the process.

The offeror is obliged to notify the decision to make a takeover bid to the board of directors of the target company and the National Bank of Slovakia in writing without delay. The offeror must publish the announcement of the takeover bid in a daily newspaper of national circulation.

The obligation to publish a prospectus does not apply to public offers of securities if the total value of each such offer in the European Union, calculated over a 12-month period, is less than EUR1 million. As this is a harmonised legal regulation within the capital markets of the European Union, it is not decisive within the EU member countries on which stock exchange in which country the shares are listed.

In Slovakia, there is generally a legal obligation for every company to publish its official financial results every year on an official public website. In addition, for example in stock-for-stock transactions or for the purposes of determining the purchase price of a target company, interim financial statements are also commonly prepared.

Regarding accounting standards, financial statements are usually prepared according to Slovak norms, but it is common that, in addition to this, the financial statements of the company are also processed on the basis of GAAP or IFRS methodology (the latter being more common). The processing of financial results according to these international standards is used for internal purposes, for reporting purposes within business structures/groups, or for reporting purposes to financing banks and entities.

In general, there is no obligation to disclose transaction documents.

However, transaction documents must be submitted in case of registration of certain changes (eg, for transfer of ownership interest in a limited liability company, the agreement on transfer of ownership interest is a mandatory attachment to the application for registration of the change) to the commercial register.

It is also the case that if a state-owned company were to acquire a certain company, there would be an obligation to publish this contract in the Central Register of Contracts.

In the case of a business combination, the duties of the board of directors are not only to the shareholders, but also to all stakeholders. They also have duties towards, for example, employees, trade unions, creditors, and so on.

The duties can be divided into several categories, as follows.

• General duties – as in any matter related to the management of a company, the directors are obliged to act in an informed manner, with due professional care, and they have an obligation to refrain from competitive behaviour.
• Formal duties – directors are obliged to prepare documents for the business combination, prepare the business combination agreement, internal corporate documents, etc. They are also obliged to convene a general meeting to approve the business combination.
• Information obligations – the directors are obliged to inform employees about upcoming organisational changes.
• Notification obligations – the directors are obliged to notify creditors, authorities and other entities of upcoming changes.
• Registration obligations – the directors are obliged to register changes in the commercial register.

Regarding the liability for damages, the directors are jointly and severally liable for the damage they have caused to the shareholders of the company involved in the business combination. It is possible for the company itself, shareholders or creditors to claim damages from the directors (depending on the application of the relevant legal requirements).

The market standard is not currently developing in such a way that the establishment of ad hoc committees would be a common practice. This is not often seen on the Slovak market.

The board of directors is usually actively involved in negotiations. However, since publicly traded companies are not very common in Slovakia, the common practice is that the board of directors acts on the basis of a strategy that has previously been approved by shareholders or the supervisory board. In the case of publicly traded companies in the local market, it is the case that the company has one majority shareholder who actually owns and controls the company but, for certain reasons, it is listed on the stock exchange. In such cases, the managers usually have a close relationship with the shareholder and, therefore, they directly conduct negotiations and actively cover the whole project.

Most projects and companies have consultants of various types. In addition to legal advice, many companies also have tax and financial advisors who help with setting up the structure of the project and ensure its optimisation. Recently, the practice of complex transaction advisory is growing, on the basis of which the company receives a comprehensive service and the service provider will cover the entire transaction.

In relation to management consultants, which are common in western companies, this practice has so far penetrated most of the major companies only slightly. The largest management consulting firms in Slovakia do not even have a presence, and their role in consulting is often substituted by smaller firms or other advisors.