I didn’t fully appreciate how specialised and broad M&A practice is until I found myself thinking about how various legal issues discussed in the articles I read apply to M&A transactions.

While reading an article on whether consideration is required for the variation of contracts, I was reminded of a document I came across during legal due diligence. Although it was not labelled as a contract, it appeared to fulfill the requirements of a contract and varied another contract.

M&A is a specialised practice that requires a solid grasp of concepts used in M&A transactions, such as completion accounts, locked box mechanisms, earnouts and adjustment mechanisms.

At the same time, legal due diligence on target companies in M&A transactions requires a broad understanding of various areas of law. The following are some of the key areas of law and related issues that often arise during due diligence:

1. Companies Act 2016

• Are shares properly allotted and transferred?
• Have the target companies complied with legal requirements for filing annual returns and financial statements?
• Is there any breach related to financial assistance or the prohibition of loans to directors

2. Contracts Act 1950

Are any employment contracts in breach of section 28 (restraint of trade)?

3. Employment Laws

Are the employment contracts and policies of the target companies compliant with employment laws?

Consider post-acquisition litigation risks.

4. Personal Data Protection Laws

Do the privacy notices of the target companies comply with the Personal Data Protection Act 2010 and related regulations?

A breach in personal data protection laws could be a red flag for reputational or regulatory risk.

5. Stamp Act 1949

Has stamp duty been paid on agreements entered by the target companies?

Even a small oversight could lead to costly penalties.

M&A is an intellectually stimulating and demanding practice area. It requires a deep understanding of transaction nuances, which may vary depending on whether the lawyer is acting for the seller or purchaser, as well as an understanding of the interplay of laws across a wide range of fields.

This post was first posted on LinkedIn on 2 March 2025.