The M&A market is booming with Ernst & Young finding that, “the UK deal market remains exceptionally active in 2021.” Not only do B P Collins’ corporate and commercial lawyers have extensive M&A expertise, but as B P Collins is a cross practice firm, they also work closely with its employment, commercial property and dispute resolution teams to ensure a seamless service for clients. In this latest edition of Insight, the combined team offer key advice to help achieve a successful merger.
David Smellie, corporate and commercial partner
Where the businesses which are merging are separately well-established, each may well have long-standing intellectual property rights (IPR). But, from a market-facing perspective, when one joins another, you are creating something new, so it’s important to protect IPRs. If rights can be registered, think about doing so.
In some cases, a business’s key assets will be its existing contracts. However, some contracts include provisions which allow one side to terminate if there is a change in those who control the other contracting party. A thorough due diligence process should highlight these issues, so take time to know what you are buying or merging with and get assurances in advance where necessary.
Simon Carroll, dispute resolution partner
Don’t rely on verbal assurances. Instead write the agreement down and get it signed. It may not always be binding, but it’s a lot easier to prove something has been agreed if it’s in writing, or even better, put it into the contract.
Seldom can something be as divisive as a name, particularly for a newly merged business, bringing with it implicit views on the balance of power in the merger process. If one brand is being subsumed, ensure that stakeholder views are aligned and everyone is clear on how that will work at an early stage, as it will help avoid internal conflict and help the external, market-facing transition.
Real estate is often one of the top items on a company’s balance sheet and therefore time is needed to evaluate the entire real estate portfolio in detail. Owned and leased real estate can be both an asset or a liability so it is important to identify any potential risks and problems as well as ascertaining approximate values.
A strategy will be required to work out how to align the real estate with what will best serve the business’ needs. Owned and leased property will need to be physically inspected, property valuations carried out and leasehold documents reviewed to disclose liabilities, presence of break clauses, rights to deal with the property and the length of the lease term, amongst other things.
Jo Davis, employment partner:
The seller should try to ensure that all staff are on standard employment T&Cs as much as possible. This way, you can disclose just one pro forma contract as part of due diligence and then simply add a schedule of who is paid what, what benefits they enjoy and so on.
The seller should also identify any employment issues, such as employees who work longer than 48 hours per week but haven’t signed a working time opt-out or who have been made a promise of some sort and deal with it prior to the merger.
Change can be daunting, so it is vital to communicate with staff prior to the merger to alleviate any concerns they may have and highlight any additional benefits they will enjoy following the merger.
For further information or advice please call 01753 889995 or email enquiries@bpcollins.co.uk.
