Under Italian law, a concentration of two or more businesses into one company may be achieved mainly via the purchase of shares or purchase of assets. Italian sellers generally tend to prefer share transactions because the share purchases can usually be finalized more quickly with the completion of certain corporate formalities without the need for prior consultation with trade unions. Moreover, Italian sellers may prefer share deals because, in asset deals, they usually remain jointly and severally liable with buyers for liabilities existing on the closing date.

Mergers, demergers and consolidations are less common methods of acquisitions in M&A deals in Italy; however, they are frequently implemented in intra-group reorganizations. A merger occurs where the assets and liabilities of one or more companies, including its or their corporate name and identity, become part of the assets and liabilities of another. The latter will be treated as the successor of the former. At the end of the process, only the surviving company will remain. A consolidation is a variant of a merger and occurs when two or more companies pool their assets and liabilities by forming a new company. At the end of the process, only the new company will be in existence and will be treated as the successor of the consolidated companies. Auction processes are often seen in Italy, particularly for major deals and/or when seller(s) is(are) private equity player(s). The tendency is increasingly toward managing auctions through bid process letters having a binding nature rather than through indicative nonbinding letters. In the first round of the process, bidders are usually invited to submit their offers based on limited and preliminary information received by seller(s) (usually by means of a vendor due diligence report). Then, the selected bidders who are admitted to the second round are allowed to conduct full due diligence investigations, and are requested to submit their binding offers by providing comments on a draft acquisition agreement commonly prepared by the seller(s).

In Italy, there are two forms of corporations assuring limited liability to all shareholders: the S.p.A. and the S.r.l..

S.r.l.s are normally used for closely held companies with limited equity. The minimum capital is EUR 10,000 divided into "quota" (rather than shares), which are not represented by certificates. Each shareholder is granted with just one quota, with a nominal value corresponding to the portion of the corporate capital subscribed by it. The governance of this type of company is more flexible than that of S.p.A.s. It is well suited not only for smaller operations, but also as a fully owned subsidiary vehicle in Italy of a multinational parent corporation or, in certain circumstances, as a joint venture company.

S.r.l.s may also be incorporated with a capital lower than EUR 10,000 (equal to at least EUR 1). However, in such cases the S.r.l.s must allocate at least 20% of the yearly profits to the mandatory reserve until the aggregate value of the corporate capital and the mandatory reserve jointly hit the threshold of EUR 10,000.

In S.p.A.s, the minimum required corporate capital at incorporation is EUR 50,000. The capital is divided into shares, and the liability of the shareholders is limited by shares. Shares can be issued as certificates (and recorded in the shareholders' ledger — libro soci) or they can be dematerialized — where no certificates exist and they can be issued in book-entry form. Each shareholder is granted with a number of shares that is proportional to the portion of the corporate capital subscribed, for a value that cannot be higher than the value of the contribution made. The aggregate value of the contributions cannot be lower than the total amount of the corporate capital. Shareholders of an S.p.A. usually have equal rights (Civil Code, Art. 2348). However, besides ordinary shares, an S.p.A. may also issue special categories of shares.

There are no restrictions imposed by law. The minimum/maximum number of shareholders is generally regulated in the relevant company's bylaws.

In an acquisition of shares, the buyer steps into the position of the seller in respect of the acquired company. The acquired company will be transferred subject to all existing liabilities, although these can be addressed by means of warranties and indemnities (between the parties).

The shares in an S.p.A. and participation in an S.r.l. are freely transferable, unless otherwise provided for by the company's articles of association/bylaws. The bylaws of an S.p.A. may provide for absolute non-transferability of the shares for a maximum period of five years from the date of incorporation of the company or from the date of the special shareholders' meeting that resolved to include such restriction in the company's bylaws. Restrictions may also be included in the shareholders' agreements. Restrictions in the bylaws are binding on, and enforceable against, the shareholders and the company as well as third parties. Restrictions in shareholders' agreements are only binding on, and enforceable against, the shareholders. The bylaws may subject the transfer of the shares in the S.p.A. to the discretionary approval of the company's corporate bodies or the shareholders. If they state that and if such approval is not granted, either of the following will apply:

• The company or the other shareholders must purchase the shares.
• The selling shareholder can exercise its right of withdrawal from the company.

If the bylaws of an S.r.l. provide for the absolute non-transferability of the quota or require that the transfer be subject to the prior approval of the company's corporate bodies, quota holders or third parties, without conditions or limitations, or provide for conditions and/or limitations that do not practically allow the transfer, the quota holder may withdraw from the company. The bylaws of an S.r.l. may provide for a term not exceeding two years from the incorporation of the company or subscription of the quota, before which the right of withdrawal may not be exercised.

The bylaws of S.p.A. and S.r.l. companies may also provide for pre-emption or first refusal rights, whereby any shareholder who intends to transfer its shares for any reason shall first offer them pro rata to the other shareholders.

Subject to certain limitations, other examples of restrictions on share transfers in the company's bylaws include lock-up provisions as well as tag-along and drag-along rights.

The acquisition of the assets of an Italian target business may be achieved through a sale or contribution of the target's business as a "going concern" or a branch thereof. A purchase of assets provides a higher degree of isolation of the buyer from the overall liabilities of the seller and permits the selection of the specific assets to be transferred. On the transfer of part of a business as a "going concern," it is necessary to identify the perimeter of the business, so that the list of assets and liabilities is appropriate to help identify the business being transferred. Failing to identify certain assets (registered assets and contracts) might adversely affect their assignment to the buyer. Although the buyer and the seller remain jointly liable vis-a-vis the seller's creditors for the seller's liabilities (and the relevant unsatisfied creditors of the seller could therefore later on also raise their claims against the buyer of the business), this is limited to liabilities specifically reflected in the seller's accounting books (which the buyer should thoroughly inspect prior to entering into the sale agreement). Specific rules are provided with respect to labor and tax liabilities. The buyer will be jointly liable with the seller for both of the following:

• Vis-a-vis the employees for TFR and any other payments or obligations connected to the employment relationships that are accrued at the time of the transfer
• The seller's tax liabilities (including unpaid taxes and penalties due for any non-compliance with tax laws) of the transferred business related to the year in which the closing occurred and to the two prior years (and for any tax assessments by the tax authority in the same period), regardless of whether they were reflected in the seller's accounting book

Before completion of the transfer, the buyer can apply for a certificate relating to the seller issued by the tax authorities, stating whether there are any outstanding liabilities at the transfer date. If the certificate shows there are no such liabilities or the authority does not issue a certificate within 40 days, the buyer is exempted from the joint liability for pre-transfer taxes. Otherwise, if the issued certificate shows pre-transfer taxes, the buyer's liability is limited to those indicated in the same certificate.

The buyer may further limit its liabilities through ad-hoc provisions inserted in the sale transaction documentation.