Partner Piece: M&A ten years on – plus ça change plus c’est la même chose?

April 27, 2022

M&A ten years on – plus ça change plus c’est la même chose?

By Louise Eldridge of Bristows LLP


The realisation that it has been ten years since the launch of Bluebox caught me by surprise. I remember, as if it were yesterday, the first Bluebox event hosted from my office, working with Paul and Tracy as we collaborated on those early presentations.


Reflecting upon these past 10 years there is no doubt that we’ve lived through enormous changes to the political, socio-economic and global landscape. We have seen the recovery from the effects of the banking crisis, the digital revolution, the polarising effects of Britain’s exit from the European Union, an unprecedented global pandemic and more recently the war in Ukraine.


Given the enormity of these events and their various consequences and the numerous less seismic changes in law and regulation, one might think that the M&A landscape might also have undergone dramatic changes during this time but on examination, is the M&A landscape so very different, or it is a case of plus ça change plus c’est la même chose?


Ten years ago when selling service focused businesses, often due diligence centred around the use of contractors, the position around IP rights and ownership and whether the business had “got the tax right”. Arguably these issues are still as relevant as ever.  The recent changes to the IR35 rules surrounding the use of personal companies used by so many contractors have shifted the onus onto  client companies engaging contractors to undertake their own assessment if they fall within the relevant parameters in terms of their size, they bear the risk if they get it wrong.


So, where have we seen changes in the M&A landscape?

With increased digitalisation the importance of technology for all businesses has grown significantly. So too therefore has its importance in the context of M&A transactions. Buyers typically are much more savvy about technology and nowadays we see much more informed due diligence processes with a focus on validating any underlying technology and the related intellectual property rights, alongside more detailed due diligence on data protection and cyber security risk.


Following the implementation of the GDPR, there is also wider recognition of the importance of robust day-to-day compliance through policies and procedures. This has become more evident in recent years with the rise of the number of data breaches being reported. In 2018 the ICO, the UK regulator fined hotel group, Marriott the sum of £18.4 million following its acquisition of Starwood, for what was in fact a Starwood breach that happened prior to the acquisition. Cases such as this provide a clear direction not only for thorough due diligence but for robust procedures and policies to be in place post-acquisition to ensure ongoing compliance.


As the UK has retained its position in the forefront of key developments in technology, UK IP rich growth companies have become targets for overseas trade and private equity purchasers for whom the importance of sanctions compliance and ESG policies are a hot topic with buyers unwilling to take on risk on this points whether legal or reputational.


Many of these new areas of focus still boil down to a “risk passing” exercise so whilst the issues might be new the conversations between buyer and seller have a familiar ring.  In the current climate there is a great deal of capital to be deployed and buyers’ expectations in terms of the deal timetable and the target’s ability to react to issues during the deal process are higher than ever. To ensure a business looking to embark on a sale process is able to meet those expectations the value in getting ones ducks in a row in advance remains as important a message to impart today as it did ten years ago.

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