BELGIUM: An Introduction to Corporate/M&A

Economic Conditions

Although its anticipated level of activity slowed down, the Belgian economy has proved to be more resilient than expected with GDP growth of 1.3% in 2023 thanks to robust private consumption and a rebound in both public and corporate investment. GDP growth is expected to have slowed down to 1.0% in 2024 according to the latest macroeconomic forecast from the National Bank. According to the HICP (a measure of Eurozone inflation), inflation in Belgium was 4.4% in December 2024.

The general forecast for the investment climate in Belgium for 2025 is moderately positive. According to the European Commission, business investment growth is expected to range from 1.8% in 2025 to 1.9% in 2026. This is supported by stabilising inflation and recovering consumer confidence, which is expected to boost private consumption and household investment. In addition, Belgium remains attractive to foreign investors thanks to its well-educated workforce, strong infrastructure and strategic location in Europe. Potential challenges to growth are labour shortages and rising public debt.

The European Central Bank lowered the interest rate in December 2024 from 3.25% to 3.00% and more recently again, in January 2025, to 2.75%. Also in September, the US Federal Reserve lowered interest rates for the first time in more than four years with a bigger than usual cut. The Federal Reserve has paused its rate-cutting cycle, the rates are now steady at 4.5%. There are still upside risks to inflation, including potential shifts in trade policies, geopolitical disruptions to supply chains, and stronger-than-anticipated household spending. However, the general prospect of interest rates cuts and a regulatory easing will breathe new life into loan markets and M&A activity in 2025.

Market Environment

Looking back at 2024, the Belgian takeover market generally underperformed 2023 with an estimated value of EUR24 billion compared to EUR32 billion. This was largely due to the decrease in billion euro transactions with six deals compared to eight a year earlier. Most of the billion-euro transactions involved partial holdings with, for instance, the sale of shares in the Cava restaurant chain by the Wittouck family (for a total of EUR2.24 billion) or the agreement among the D’Ieteren shareholders (for EUR2 billion). The first full acquisition of 2024 was of the French logistics group Staci by bpost (for EUR1.3 billion).

Globally, general M&A activity in 2024 had a fairly weak recovery, mainly suffering from the sustained difficult financial environment, reinforced by important elections and geopolitical uncertainties. This has also led to a significant decrease in so-called “mega deals”. The year was characterised by a slow start, which was somewhat expected given uncertainties around elections and leadership changes in Belgium, Europe, the United States, etc. However, there were also positive M&A drivers, such as decreasing inflation rates, interest rates being lowered by central banks and the energy shift. There are even further silver linings, as it appears that the valuation gap between sellers and buyers is getting smaller, and private investors have continued to pile up dry powder waiting to be deployed when market conditions are deemed more favourable. Despite an increase in failed or aborted processes, competition for the right assets remains intense.

Legal Developments

Civil Code changes

As part of a more general modernisation of civil law, several books of the Civil Code have been completely revised and modernised. After the adoption of the new Book 5 of the Civil Code on contract law (applying to contracts entered into as of 1 January 2023), the Belgian Parliament also approved a new Book 6 of the Civil Code on 1 February 2024, which introduces significant changes to the country’s tort liability regimes.

Screening of foreign direct investment (FDI)

Since the entry into force of the Belgian FDI screening regime on 1 July 2023, only very few notified transactions have triggered second-phase screening. The majority of notifications involved the “data” and healthcare sectors. 16.2% of all notifications involved internal restructurings, which are not exempt from the Belgian FDI regime. However, in 81.8% of these cases, the ultimate beneficial owner remained unchanged, raising questions about whether such notifications add value and align with the regime’s goal of protecting security and public order.

Transfer of significant assets in listed companies

On 27 March 2024, the Belgian Parliament adopted a law introducing a new article into the Belgian Companies and Associations Code, requiring approval from the general meeting for a transfer of significant assets by listed companies. This law aims to increase minority shareholder protection and aligns Belgian company law with that of its neighbouring countries, where shareholder involvement is already required for significant asset transfers.

Stronger cybersecurity regulation

For many organisations, cybersecurity has also become a legal imperative. In 2024, Belgium was the first EU member state to transpose the Directive (EU) 2022/2555 (the “NIS2 Directive”) into national law. In January 2025, the Digital Operational Resilience Act entered into force throughout the EU, setting high cybersecurity standards for the financial sector.

In addition to implementing technical and organisational risk management measures, organisations will need to review their contracts with suppliers and subcontractors and ensure that agreements explicitly include more robust cybersecurity warranties. Management bodies will also be heavily involved, as the law imposes numerous obligations and responsibilities on them. This will undoubtedly also impact M&A transactions, as cybersecurity is set to become a board level priority in 2025.

Potential Hurdles and Solutions

Regulatory scrutiny

Increased regulatory scrutiny has become a significant challenge in the M&A landscape. Governments worldwide are tightening foreign investment regimes and enhancing regulatory oversight, which can create deal uncertainty and increase execution risk. This heightened scrutiny often leads to longer approval times and more complex compliance requirements, potentially derailing deals or making them less attractive to investors.

To navigate these challenges, companies should adopt a proactive compliance strategy. Staying ahead of regulatory changes and ensuring thorough compliance can mitigate the risks associated with regulatory scrutiny.

Market volatility

Market volatility has significantly impacted deal-making confidence in the M&A market, leading to lengthier M&A processes and “stop and go” dynamics. Economic fluctuations, geopolitical tensions, and rapid technological advancements contribute to an unpredictable environment, making it challenging for companies to commit to large-scale transactions.

Adopting a programmatic approach to M&A can provide more stability and value creation. This involves executing multiple small to mid-sized deals rather than relying on a few large transactions. Embracing technology, such as generative AI, can also enhance decision-making and integration processes, allowing companies to adapt quickly to market changes and maintain a competitive edge.

ESG

ESG concerns are increasingly influencing M&A transactions, with potential red flags in a target company’s ESG performance halting deal activity. Implementing robust ESG due diligence processes is crucial to identifying and mitigating risks early in the process. Companies should integrate ESG considerations into the entire M&A life cycle, ensuring alignment with sustainability goals and enhancing the overall value proposition of the deal.

On 26 February 2025, the Commission has presented its Omnibus package, a significant legislative initiative by the European Commission aimed at streamlining and consolidating various regulatory frameworks (such as the Corporate Sustainability Reporting Directive (CSRD), the EU taxonomy, and the Corporate Sustainability Due Diligence Directive (CSDDD)) to reduce the administrative burden on businesses and to enable them to focus more on innovation.