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A Corporate Lawyer's Perspective on life…

A Corporate Lawyer's Perspective on life…

An Insight into: Mergers and Acquisitions – Part 2

Corporate lawyers have never been busier, and all signs suggest that trend is going to continue for some time yet.  So with all that M&A activity, are there any common themes starting to emerge?

International

On almost every M&A deal that we work on at Mills & Reeve, there is an international element, with overseas buyers, particularly from the US and Canada, being attracted to UK businesses, with the added benefit of continuing advantageous exchange rates.

Due Diligence

Due diligence is now carried out by buyers and their advisers far more thoroughly than was the case in the past, with deals therefore taking much longer to conclude, which needs to be factored into the transaction timetable at the outset.

Warranty and Indemnity (“W&I”) Insurance

W&I insurance is now more widely available, and at a more competitive price, than it was say 5 years ago, as a result of more insurers entering the market wanting to underwrite such cover. Whilst sell-side W&I cover can be taken out, most policies are buy-side, with bidders competing in an auction sale process often using buy-side W&I cover to make their offer appear more attractive to sellers.

National Security and Investment Act 2021 (“NS&IA”)

The NS&IA is already starting to have an impact on M&A transactions, notwithstanding that it does not actually come into effect until 4 January 2022.  This is because certain aspects of the NS&IA, introduced by the Government to strengthen its powers to scrutinise transactions on grounds of national security, will have retrospective effect, enabling the Secretary of State to “call in” relevant transactions for investigation that have completed since 12 November 2020.  This means M&A lawyers are having to consider whether a transaction they are working now could be at risk of being “called in” after 4 January 2022, and in certain circumstances seek an informal (but not binding) view from the NS&I team.

Thanks to Anthony McGurk
Partner – Mills & Reeve LLP

Read Part 1 of the M&A series here.

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