The six steps of acquiring a Spanishlicensed online gambling operator
Spanish online gambling regulation is built around a closed licensing system. Remote gambling licenses may only be acquiredduringso-called“licensingwindows.”Thelastlicensing windowopenedin2017-2018;anditisunclearwhen(orwhether) anewlicensingwindowwillbeannounced.Webelievethat–due to the large number of operators in the market – there will be some operators who will not be able to profitably operate their business
Identifying a suitable target company
The target company will be among the ca. 80 firms holding a Spanishonlinegamblinglicense.Onlyafewofthosecompanies, however, would be interested in selling or accepting an investment. Consequently, research must be undertaken to drawupasuitableshortlist.
Valuation of the target company
Oncethedesiredtargetcompanyhasbeenidentified,theseller willhavetoexecuteabusinessvaluationprocesswhichwillhave to take into consideration issues regarding the business operations, productive assets, historical performance, evolution ofitsGrossGamingRevenue(GGR),
Due diligence process
The investigation and verification process to ensure that the transaction meets all desired goals and fulfills all agreed conditionswillhavetotakeintoaccountissuesthatarespecific tothegamblingsector.Thecommissionoftwoseriousbreaches within a period of two years entails what is considered a very seriousbreachunderSpanishlaw.
Date of issuance and renewal of the licenses, as well as any potentialregulatoryriskrelatedtosaidlicenses.
Software agreements with the suppliers of the gambling platform,thegames,theCPD,andanyothernecessaryelement.
Corporate compliance level of the company. Online gambling operators are subject to a high level of corporate compliance obligations (i.e. specific AML obligations, need for DPO in personaldataprotection.
Signing and closing of the Sale and Purchase Agreement (“SPA”)
Limitations of responsibility. Taking into account that the buyer will be assuming any contingency or liability that may arise in the future, the limitations of the liability for the R&W made by the seller will play a key issue in the negotiation of theSPA.:
Representations and warranties of the seller. The findings of the due diligence process will have to be duly analyzed and includedintherepresentationsandwarrantiesoftheSPA.
Priceandpaymentstructure.Theoperationmaybestructuredin awidevarietyofways.Theacquisitionmaybetotal(100%ofthe shares of the company) or partial (51% of the shares of the company). Additionally, the parties may be interested in deferring or conditioning the payment of the price to the obtainmentofspecificresults
The payment of the agreed price to the maintaining or increasingofthecompany’sresultsortotheperformanceofkey personnel). Likewise, the potential granting of stock options or vesting plans for key employees, the establishment of call options for the investor to buy the shares not acquired in the initial equity investment and any other mechanisms shall be dulyestablishedintheSPA.
