M&A Lawyers

The M&A team cover a wide range of transaction types, ranging from smaller transactions to multi-million pound, complex deals. One part of the team specialises in complex M&A which involves intricate consideration mechanisms, multiple phased transactions, reorganisation of group structures pre-acquisition and often in tandem with our overseas colleagues where the transactions have international elements.

Yavan Brar leads the complex M&A team, using his particular understanding of the law and his skillset in translating the clients’ desired commercial outcomes into the drafting.

Recent M&A Corporate deal highlights include:

• DataOps.Live – advice on their £70 million Series Seed funding round led by the west-coast US venture capital investor, Anthos Capital alongside co-investor, Snowflake Ventures
• $60 million – New York Stock Exchange listed SatixFy Communications Ltd advised on sale of SatixFy Space Systems UK Limited
• £21.2 million sale of national financial advisory business to market consolidator
• £10.5 million sale of self-storage asset to US private equity fund
• £8.2 million sale of market-leading travel agency
• £5.3 million trade sale of multi-generational steel business to key supplier
• £2.7 million acquisition of independent financial advisor business by expanding financial advisory network
• £400k sale of UK manufacturing branch of US-based private equity backed label business
• £250k pre-pack sale of the business and assets of a national EV station installer in administration
• £100k sale of the business and assets of an insolvent regional audio-visual installer during liquidation

Our dedicated team of financial services corporate lawyers provide specialist advice on all aspects of transactional work to the Financial Services industry. Led by Alex Canham, the Financial Services team is widely recognised as a specialist in the financial services industry, and has extensive experience of supporting businesses looking to grow by acquisition, shareholder sales and exits, and with restructuring.

Businesses that are regulated by the FCA have unique considerations in the context of a corporate transaction. These range from the requirements of the Financial Services & Markets Act and the FCA regulations, to the ways that they generate revenue and provide advice to their clients.

Our specialist team have extensive experience of navigating these points during a transaction and are able to deliver pragmatic legal solutions to achieve clients’ objectives.

The team are frequently invited to speak at industry events and forums and are recognised as specialists in this area of law.

Recent highlights of the team include:

• £60m sale of retained equity from 12 subsidiaries to national financial advisory consolidator
• £27.5m sale of discretionary fund manager
• £2.7m acquisition of entire issued share capital of independent financial advisory business
• £9m sale of financial advisory division of regional chartered accountancy practice
• £5.5m sale of financial advisory limited liability partnership

Financial Services M&A FAQs:

I’m buying / selling a Financial Services firm: What approvals are required from the FCA?
If the business is directly authorised by the FCA and you are buying / selling shares in the directly authorised company / LLP, then the FCA must first approve the Buyer as the new owner before they can acquire the shares.

However, if you are selling the assets / clients of your firm, no approval from the FCA is normally required.

After the Sale of my Financial Services business, what liability will I have for past advice I have given?
If you are selling your company, it is likely that the buyer will require you to give some assurances in relation to the past advice you have provided before the sale concludes. This is typically in the form of an “indemnity” (which means you must reimburse the buyer for any costs or liabilities it incurs in relation to a specific matter). However, these should be accompanied by appropriate limitations on your liability; such as a maximum time period (after which the indemnity expires), and obligations on the buyer to pursue professional indemnity insurance first.

HC’s Technology M&A practice is lead by Partner, Matthew Lea, who has overseen changes within the dynamic global tech ecosystem marked by rapid innovation, with emerging technologies like AI, blockchain, and 5G shaping industries, fostering a digital transformation across the globe and continues to grow at an immense rate. The Herrington Carmichael M&A team have specialist expertise in working with technology companies whether in selling or buying companies or assets.

Matthew and his tech M&A team, use their particular knowledge on the nature of tech assets and the market to achieve a desired outcome for our clients.

Tech M&A FAQs:

I sell software as a service, how is would my business be valued?

There are three main ways to value a software-as-a-service company by examining the company’s earnings: SDE, EBITDA, and Revenue. SaaS companies are known for their subscription-based revenue model, making annual rate of return (ARR) a crucial metric. Using ARR, the valuation is determined by applying a multiple to the company’s ARR. Seller Discretion Earning (SDE) is another popular valuation method which is appropriate for SAAS businesses with a sole owner. EBITDA stands for Earnings before interest, taxes, depreciation and amortisation and is a beneficial method for companies with high profits.

I want to expand into overseas markets to broaden my businesses customer base and global reach, what steps do I need to take to do this?
Once a business has decided to expand internationally and decided which locations to expand into it is important to consider the local laws and practices in those locations. For instance, to conduct business in some locations you might need to incorporate a local company with the requirements for a local director or local company secretary. E.g., in Ireland there is a requirement to have at least one EEA resident director. Similarly, some countries require a level of local shareholding. Taxation in the location you choose is also important to consider as well as local employment laws if the intentions to hire people locally.

HC’s Healthcare M&A team is led by Partner, Matthew Lea, in navigating a transformative healthcare landscape, embracing digital innovation, personalised medicine with an increasing emphasis on preventative care.

Matthew Lea, works closely with Emma Docking, acts for a plethora of clients ranging from care homes, medical labs, medical equipment suppliers and dental practises and guides his clients through the intricacies of healthcare related transactions. In particular, Matthew has extensive experience in dealing with Care Quality Commission regulations and General Medical Council regulations. The team are familiar with the processes required to ensure the relevant approvals are sought leading to an overall smoother process for our clients.

Healthcare M&A FAQs:

What considerations outside the M&A transaction should business owners think about?

The healthcare industry in the UK is characterised by small and medium sized operators who sit alongside the giant multi-nationals. Smaller operators tend to neglect long-term considerations for themselves and their businesses.  This is especially true when looking at exiting the business.  One way to ensure a smooth way to exit the business is to review the structure of the business to make sure that it is appropriate for you as the owner and for the business itself. We have come across many healthcare business owners that are looking to exit but require the business to be restructured or structured appropriately before an exit can be actioned.  Ensuring the structure is correct earlier in the business’ lifecycle may be costly initially but will pay off when exiting.

What to consider when purchasing a care home?

Care homes are often operated by their owners through limited companies. Therefore, you need to consider at the outset whether the transaction should be undertaken by way of a purchase of the shares in the company or by way of a purchase of the business and assets of the company. Much will depend on tax. As a buyer, you would pay 0.5% stamp duty on a purchase of shares whereas a business and asset purchase is likely to result in a greater stamp duty liability. However, a seller will be keen to consider the implications of things such as entrepreneurs’ relief and capital gains tax.

As a buyer, you will need to be registered with the CQC before you can take over the care home. This process can take several weeks and will need to be factored into the timing of the transaction. However, if the purchase will be undertaken by way of a share purchase of the seller’s company which operates the care home, the company should already be registered with the CQC. As a result, the process is easier as you will not require a separate registration. You will simply be stepping into the shoes of the company’s existing registration.

If you are seeking bank funding for the purchase, you will need to ensure that you fully understand the terms of any loan and security documentation you will be required to enter into with your bank. If you are using a limited company for the purchase, your bank may require a personal guarantee from you. Further, if you are purchasing the care home by way of a company share purchase, you will need to ensure that any security currently registered against the target company is discharged prior to completion of the sale.

The team has many years of experience building in depth and specialist knowledge to handle the technical aspects of advising businesses operating in the leisure, hospitality and retail sectors and are able to advise on all sale, acquisition, commercial contract and compliance matters for any size of business.

The team can provide strategic advice to guide you through a sale or acquisition and to assist with the day to day running of a business. We understand the time pressures involved in a sale or purchase of a business and will project manage the transaction from instruction through to completion.

The team understands the employment, real estate and regulatory law considerations that apply to businesses operating in the leisure, hospitality and retail sectors and can provide a full, holistic legal service to support your business.

The team has a track record of assisting business owners to successfully sell and also to grow, via acquisitions, their independent leisure, hospitality and retail companies ranging from one off smaller shops through to garden centres and marine businesses.

Leisure, Hospitality and Retail FAQs:

How can I find out if the business I am buying is viable?
The process of buying an established business can be daunting but we can provide a full legal due diligence review of the business to ascertain what contracts it has in place, if any property is involved, are the required permits and licences in place and has the business complied with the required laws and regulations. We can also advise on legal areas that could be enhanced to offer increased protection to you and the operation of the business. A financial due diligence process should also be undertaken to check the financial stability of the business and we have a network of accountants who can assist with this.

How do I raise finance to purchase a leisure business?
There can be several options ranging from traditional high street lenders through to specialist finance companies. We recommend firstly approaching your bank and asking to speak with their corporate finance team. There are also a wide range of lenders who specialise in the leisure, hospitality and retail sectors. We would like to have a conversation with you to discuss your proposed acquisition to ascertain how best we can help you to acquire a business.

We have many years of experience advising professional service firms on corporate matters with a specific focus on assisting with the sale and purchase of accountancy and bookkeeping businesses. Each professional service business and transaction requires a tailored approach having regards to the specific industry’s regulations and professional bodies interaction with the anticipated transaction.

We have acted for a broad range of professional services firms ranging from accountants to insurance brokers assisting owners who are looking to expand their businesses by acquiring additional client books or who are looking to sell their entire business. The team understands the regulatory requirements that apply to professional services firms and are adept at project managing transactions from instruction through to completion.

Professional Services FAQs:

How will my position be protected in a transaction so as to reduce my exposure to risk?
The agreement will be drafted to include specific provisions called warranties and indemnities which will set out and help to share the transactional risks between the buyer and the seller so they are proportional and in line with market standards.

How can the sale price for my company be calculated and paid to ensure it provides an up to date and realistic valuation of the business?
The sale price can be split into tranches so that a proportion is received on the date of the sale and then deferred payments can be made over a set number of years which can be linked to the real time revenue of the business measured against pre-determined criteria.

Our corporate insolvency team has vast experience advising on business acquisitions and sales that are driven by insolvency.

Frequently working alongside industry-leading insolvency practitioners, Herrington Carmichael is able to provide swift and effective advice to complete transactions within tight timeframes, with a tailored service for the requirements of each individual transaction.

Our corporate insolvency team’s pragmatic services also extend to assisting with the regulatory considerations that parties to distressed M&A need to make, thereby providing a full service to its valued client base.

Distressed M&A FAQs:

Can I sell my business while it is struggling financially?
The short answer – yes! The long answer is slightly more complicated, and depends on the type of sale that is being planned. Directors need to be wary of the duties applicable to them when companies are in financial difficulty, and this will inevitably influence how to structure and the timing of any business sale for companies financially struggling. In any event, directors should obtain the advice of an insolvency expert to determine whether a sale is appropriate and how to proceed.

Can I buy the business and assets of my insolvent company using a new company and continue trading?
This is a complex question, as there are a number of legislative provisions in the UK that are designed to prevent directors and shareholders “phoenixing” their companies having rid themselves of creditors. While it is possible, it is important that legal advice is sought to ensure that the legislation is not breached and the relevant individual does not commit an offence and incur personal liability.

Can I buy a company that is in administration?
Yes! Acquiring a company that is in administration is a slightly different process to acquiring a solvent trading business, as you will need to agree the acquisition with the appointed administrator. Usually administrators will look to sell businesses as quickly as possible if an appropriate buyer is found and so having appropriate legal advice to ensure a smooth transaction is required.

There are many ways to value a business and different industries prefer different methods. Accountants should be able to carry out a strict financial valuation for you however please note, it is worth engaging corporate finance advisors who have experience in the relevant industry to determine a valuation on the market. 

Yes you can. There are many variations on the structure of a sale which can be adapted to suit each client and their needs. With an asset sale, you can select the parts of the business which you intend to sell while maintaining ownership of the remainder of the company. Another option is to go through a de-merger process by splitting the company into two and splitting the assets up in readiness for the sale of one of the companies. Please get in touch if you wish to find out more.    

It’s crucial to get some legal advice early on in an M&A transaction, ideally before you even begin exploring potential targets or draft any agreements. Our team are primed to give advice on a range of matters including:

• The legal aspects of any term sheet agreed with the other party
• Any pre due diligence agreements i.e. non-disclosure agreements or exclusivity agreements
• Raising or answering any due diligence questionnaires
• Drafting and negotiating the legal documentation
• Navigating you through the disclosure process
• Completing the deal

No, not necessarily. There are many different types of consideration which can be used to pay for a business. The most straight forward is cash but it is unusual to have enough cash funds available to cover the value. Often there is a part payment in cash. Consideration can also be satisfied by a loan from the Seller to the Buyer which will be repaid in accordance with some terms. This could attract interest and be secured against the business. The Buyer may offer the Seller shares in its company or a connected company to satisfy the consideration. If the Seller needs to sell the business in tranches, it is possible to grant an option over the business to the Buyer for them to buy in several stages to allow the cash to be released periodically. Please get in touch if you wish to find out more.