Mergers and acquisitions (M&A) can be a great way to scale your business, increase value, or offer a wider range of services. It may also allow you to absorb a competitor or move into new territory. However, if you wish to acquire a business located outside of the UK or take part in a cross-border merger, you may face additional challenges. There can be complications with regulation, tax and practicalities. We can help. In this post, we look at some of the challenges you can expect to face when going through an M&A deal.
Of course, it would be impossible to list all of the unique challenges a business might face when entering into such a transaction. Every company is different, and so too is every M&A transaction. However, according to an assessment by Deloitte, the most common issues occur as a result of cultural differences, market assessment, legal and regulatory challenges, and tax matters.
The report identified these key areas of difficulty:
The biggest challenges for UK companies seeking to enter into an M&A deal at present is arguably the ongoing impact of Brexit along with the difficulties of the ongoing COVID-19 pandemic. As a result, you can expect the process to take significantly longer than in previous years, and it may be more expensive. Governments across the globe are taking a more protectionist approach in the current political climate, and for example, some countries will require greater scrutiny of any M&A deals with overseas companies. Your transaction may be subject to additional regulation and disclosure requirements. Similarly, some countries (including the US) have recently reformed their tax laws, dramatically changing the landscape for mergers and acquisitions.
In rare circumstances, you may face direct political challenges, such as if the company you plan to acquire or merge with provides a public service. You may also face political difficulty if the deal affects a large number of jobs in a local area. Such political challenges can seriously complicate the deal, so it is important to anticipate and seek advice early.
We have excellent experience in helping businesses to navigate the legal challenges of cross-border M&A deals. As a result, we are prepared to help you overcome these practical difficulties.
In many cross-border deals, we will often encounter a more complex due diligence process than that of the UK. While we are capable of handling this, it may take longer than expected. We also have experience in legal negotiations with parties from other cultures and understand the nuances and approach required to get your deal done.
The most important step you can take to ensure that you can effectively handle difficulties you might face during an M&A deal is to get the right people on your team. You need cross-border experts with experience in handling similar transactions. While you will need lawyers, you may wish to instruct tax, financial or industry professionals too.
We can help to investigate any legal matters which may arise at an early stage. We are proactive and will seek to find solutions to your difficulties before they arise. Our lawyers specialise in transactional work and in getting the deal done whatever it takes — provided this is in your interests.
When problems arise, we find ways to overcome them, and when the pressure is on to conclude a matter quickly, we have the capacity to upscale resources so that any deadlines can be met. For more information, please contact Marcin Durlak on 0330 107 0106 or email us at business@imd.co.uk.
This article is for general information only and does not constitute legal or professional advice. Please note that the law may have changed since this article was published.
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