DENMARK: An Introduction to Corporate/M&A

Economic Environment

The Danish economy in 2025 is expected to maintain a stable and resilient trajectory, underpinned by several macroeconomic and sector-specific developments.

The Danish economy is projected to grow modestly by approximately 1.5% in 2025 (according to the OECD), supported by steady domestic demand and robust export activity, particularly in the pharmaceutical sector. Inflation is projected to stabilise at approximately 2.1%, aligning with central bank targets. The labour market remains strong, with continuous low unemployment and moderate wage growth expected to contribute to economic stability (the Danish National Bank).

Exports are expected to continue growing at an annual rate of 4–5%, driven by the pharmaceutical industry and increased activity in key markets such as the UK and Sweden (and despite some uncertainty in Germany; Nordea Q3 2024 Outlook).

Overall, the Danish financial environment for 2025 is characterised by resilience, and driven by strong fundamentals, a stable fiscal position and proactive economic policies. However, external risks, such as geopolitical tensions and global economic fluctuations, remain potential challenges.

M&A Environment

The Danish M&A market in 2024 experienced mixed trends influenced by global and regional economic factors. While the number of deals declined, reflecting broader trends across Europe, deal values remained resilient, bolstered by activity within technology and energy. Denmark mirrored the European trend where larger deals and strategic acquisitions helped counterbalance a decline in transaction volume.

Despite high interest rates and inflationary pressures, investor confidence gradually improved towards the latter half of 2024, as borrowing conditions stabilised and valuation expectations between buyers and sellers aligned more effectively.

Renewable energy has suffered from the high interest rates and uncertainty in respect of the political framework, but is expected to benefit from Denmark’s status as a hub for green technology; accordingly, activity is expected to increase here as well.

The Danish M&A market is poised for a robust recovery in 2025. The slowdown observed in 2023 and early 2024, driven by inflation and high interest rates, has given way to renewed optimism as transaction pipelines grow across sectors.

Public M&A has been relatively active, and activity may also see an uptick, as favourable market conditions and strategic acquisitions by listed companies play out.

Legal Environment

Danish contract law is characterised by a high level of freedom of contract, though public M&A must follow the rules of Nasdaq Copenhagen, the Danish Capital Markets Act, the Prospectus Regulation, etc.

Within non-public M&A (including when a listed company acquires a non-listed company), freedom of contract means that transactions can be tailored to a large degree, though corporate law must be complied with in respect of the financing of acquisitions, requirements for a company’s governing bodies and similar. An important principle in Danish M&A is that of caveat emptor; this is mirrored by an obligation for the seller to loyally disclose information of relevance to a potential buyer. This places the burden of due diligence on the buyer, since generally information in the data room is deemed known by the buyer, limiting the scope of warranties – disclosure letters are not common as an alternative to data room disclosure.

At the same time, W&I insurance remains standard for almost any transaction where the seller is a private equity house, increasing the requirement for due diligence in order to obtain satisfactory coverage. To facilitate processes, vendor due diligence and a stapled W&I insurance on the basis thereof is close to standard in any structured sale process above a certain size.

Other Legal Considerations

Generally, the regulatory environment is flexible, allowing share transfers without notary, digitalised filings with the Danish business authority; and it is well-regulated by an “easy to hire and fire” labour market. However, pitfalls do exist within employment law, tax law (which is complex and affects how transactions should be carried out), permits, etc. In the case of carve-outs or asset transfer transactions, further legal challenges arise, including within the General Data Protection Regulation (GDPR) where Danish application can give rise to challenges.

While, from a general perspective, none of the above are deemed adverse to M&A (including when compared with other jurisdictions), diligence legal considerations must be taken into account when conducting M&A in Denmark.

Regulatory Environment

Merger clearances will be required whenever thresholds are met. In general, the Danish Competition Act is aligned with EU competition law, though, evidently, with lower thresholds for merger control.

Regulated industries may have additional approval requirements – as an example, financial businesses will require additional filings and approvals depending on the type of financial business.

Foreign direct investment (FDI) regulation is becoming increasingly topical. While only one rejection of a transaction is known in the market (which was refiled and approved), more and more transactions face filing requirements, including many transactions where a merger filing is not required. This is a delaying factor that must be considered, especially in smaller transactions and in venture capital where it often comes as a surprise, and where it can have a real impact if closing – and thereby funding – of the venture company is delayed.

In highly sensitive industries, FDI seems to serve as a pre-selector in terms of bidders with a less positive outlook on FDI approval, who either do not participate or are filtered out by the sell-side.