Practical approach to mergers and acquisitions in Finland

1. Practical approach to mergers and acquisitions in Finland Seppo Toivainen Helsingin Liikejuridiikka Oy

2. Helsingin Liikejuridiikka Oy • Assists russian companies to operate in Finland and EU • Russian and Finnish personnel, understanding of both cultures • Finnish legal environment, business culture, M&A, finance and administration • Even though Russia and Finland are neighbours, the differencies in business culture are huge. 31.1.2012

3. Buying a company from Finland MAIN RULE: Anybody can establish a company in Finland (Oy, ”LLC”, ”Ltd”) Anybody can buy, sell and own shares of a Finnish company Anybody=anybody from anywhere 31.1.2012

4. Buying a company from Finland Everything is possible… however, with two exceptions: 1. Act on Protecting Competition on the Market (948/2011) • Protects free competition against price fixing, market dominance and monopolies • Acquisitions are seldom denied, they are re-negotiated (=re-structured). Maybe 1-2 cases per year. 31.1.2012

5. Buying a company from Finland 2. Act on Monitoring Foreign Corporate Acquisitions (1612/1992) • Protects important national interests, practically: the defence sector • Strategic acquisitions have to be confirmed by the Council of State • The law will be updated during this year (EU harmonized) • Acquisitions denied during the last 10 years: 0 (none) 31.1.2012

6. Buying a company from Finland • In practise the Finnish legislation is not an obstacle for foreigners’ corporate acquisition • So, we can focus our efforts on real-life challenges. There are many of those, because… 31.1.2012

7. Challenges ”Over 60% of corporate acquisitions fail” Why? • Unrealistic expectations • Inadequate background information • Weak agreements • Insufficient planning • Unsuccessful take-over phase 31.1.2012

8. A short acquisition check-list • Search possible candidates for acquisition (first contacts, in Finnish!) • Non-disclosure-agreement (NDA), Letter-of-intent (LOI) • Financial analysis and calculations (local financial specialist) • Agreement negotiations, special T & C, milestones (recommended) • Plan your ownership structure (many possible variants) • Tax consequences (depends on the form of acquisition) • Price estimates based on calculations • Due Diligence • Contacts to banks and financial institutions (sometimes a deal breaker!) • Contacts to key employees, personnel issues, EU regulations • A shareholders’ agreement (a must!) • Payments always via bank transfer (”money laundering” regulations) • Plan the take-over phase carefully (respect local culture) 31.1.2012

9. Acquisition, please remember: • Take your time, do not rush • Choose a local advisor to quide you through the process • Do your ”homework” well, calculations, scenarios • Due Diligence – to avoid unpleasant surprises • Be careful with the agreement, special terms and conditions • Plan the take-over process well 31.1.2012

10. Acquisition in Finland • Finland is a stable and secure environment for a company • Foreign ownership is not restricted • Corporate taxes are among the lowest in OECD countries • Corporate legislation is modern and very streamlined • Добро пожаловать! 31.1.2012

11. THANK YOU FOR YOUR ATTENTION! Helsingin Liikejuridiikka Oy Seppo Toivainen +358 40 5011266 +358 44 2232322(по-русски) 31.1.2012