First determine whether what is being acquired is the company or an operational business
Financial qualifications generally attach to a specific entity and scope of services. An equity acquisition gives the buyer control of the company, but it does not automatically expand the license, nor should the company's qualifications be treated as an asset that can be independently transferred to another entity. Suppose the target company is licensed only for exchange services, and the buyer plans to launch a customer balance wallet and transfer services on behalf of clients; the new functions would still need to be verified. Registrations or qualifications under legacy regimes that the target previously held should also be checked for their current status, rather than relying solely on historical certificates.
A change of control may first require regulatory procedures
Taking EU CASPs as an example, Article 83 of MiCA establishes notification and regulatory assessment procedures for transactions intended to acquire qualifying holdings or reach the corresponding control thresholds. Transaction documents may set conditions in advance, but signing an agreement should not be equated with being able to immediately complete a change of control or replace management. Which approvals or notifications apply and whether closing can occur first should be confirmed on a jurisdiction-specific basis; in addition, change-of-control clauses in bank, payment channel and material contracts should be reviewed.
Due diligence cannot be limited to licenses and bank balances
It is advisable to review regulatory correspondence, outstanding remediation, consistency between customer assets and ledgers, handling of historical suspicious transactions and complaints, tax matters and material contracts. Wallet control must also be verifiable; obtaining a screenshot of assets is not sufficient. It should also be checked whether the original team and outsourced institutions are willing to continue performing their duties and which key systems cannot be transferred; if the so-called mature company in fact has only certificates and no operational capability, the buyer will still bear most of the cost of rebuilding. If the actual transaction is a purchase of customers, technology and brand rather than equity in the company, customer migration and service continuity must be analyzed separately; an asset transaction does not automatically carry over the original entity's financial qualifications.
Compare an acquisition and a new application using the same endpoint
The comparison endpoint should be "the ability to continue lawful operations as planned on a sustained basis," not "signing" or "submitting an application." The acquisition option should account for due diligence, approvals, remediation, integration and potential historical liabilities; the new application option should account for preparation, hiring and regulatory engagement. Acquisition documents may set conditions such as the qualifications remaining valid, completion of regulatory procedures, confirmation of key channels and asset handover, as well as liability arrangements for historical issues, but contractual indemnities cannot replace regulatory compliance, nor can they ensure that the seller will have the ability to pay in the future.
Recommended actions
- First verify the entity, status, licensed services and restrictions against official registries and licensing documents.
- Include regulatory control procedures and consents from key banks and channels in the transaction conditions checklist.
- Complete targeted due diligence on customer assets, regulatory history, key personnel and system controls before comparing total costs and launch timelines.
Information note: This article provides general information only and does not replace legal advice based on specific facts.
References
- MiCA Article 83 — Assessment of proposed acquisitions — ESMA
- MiCA Article 59 — ESMA
- Supervisory Briefing on Authorisation of CASPs — ESMA
