Planning on conducting an M&A deal in Great Britain? Looking for information on the specifics of M&A regulation in England? Then what follows below will definitely be of interest to you.
How Private M&A Transactions are Structured
For an M&A deal to be considered legal & valid, parties are required to sign a contract containing conditions for acquiring or selling private companies, businesses or assets in Great Britain. Purchasing private companies in Great Britain is carried out on the basis of a contractual offer followed by the “crowding out” of minority stakeholders.
The following factors affect the acquisition of companies in Great Britain:
- the number of parties involved;
- conditions of a transaction;
- auctions in which several potential.purchasers take part.
The auction process usually includes:
- drafting an SAP agreement in Great Britain & other purchase-related documentation;
- the 1st stage involving bidders’ performing DD of a British company;
- the 2nd stage involving bidders’ making offers;
- negotiating purchase-related documentation with several parties before agreeing on the final terms.
Potential investors contemplating concluding an M&A deal in Great Britain should keep in mind that the duration of each stage is directly proportional to the size of target companies/businesses/assets. Normally, drawing up an information memorandum & finalizing transaction-related documents shouldn’t exceed three months.
Great Britain: Regulation of Private M&A Deals
Regulatory framework for M&A transactions in Great Britain is laid out in CA 2006 & a number of laws & regulations applicable to the target companies’ business.
In spite of the fact that M&A transactions in Great Britain are governed by English law, foreign laws are applicable, too. However, the latter must comply with the requirements for the transfer of shares, assets & liabilities contained in British legislation.
Restrictions on Transfer of Shares
Please, note that stakeholders selling their stakes may have “preemptive” & “hold” rights. Preemptive rights require stakeholders to offer their shares for sale to other stakeholders prior to selling them to 3rd parties.
M&A transactions are governed by the 2002 Act under which the CMA may look into transactions falling within certain jurisdictional thresholds. It should also be borne in mind that reporting transactions to the CMA is voluntary.
If a target company’s shares are transferred to a British company, their new owner won’t be included in a company register until a stamp duty is paid.
Looking for more information on M&A legislation in Great Britain? Need help with conducting DD of a British company or drafting an M&A agreement in England? Need an individual consultation on M&A transactions in Europe? IQ Decision UK is at your service. Our legal advisors will be happy to give you a hand with any legal issues you might be facing in this regard.