Glossary
A transaction in which the existing management team acquires the business it runs, usually backed by private equity or debt financing.
What Is M&A?
Mergers and acquisitions is an umbrella term for transactions where ownership of a business changes hands. A merger combines two entities into one, while an acquisition sees a buyer purchase a target outright. Deals may also take the form of disposals (selling a division), management buyouts (MBOs), or joint ventures. Private M&A — where neither party is publicly listed — accounts for the vast majority of deal volume and is where most junior lawyers cut their teeth. Public M&A, governed by the Takeover Code, attracts the headlines but follows a distinct, more rigid procedural framework.
SPA (Share Purchase Agreement)
The primary contract governing the sale and purchase of shares in a target company, setting out price, warranties, and completion mechanics.
Due Diligence
The investigation process where a buyer examines a target's legal, financial, tax, and commercial position before committing to a transaction.
Warranty
A contractual statement of fact by the seller about the target company — if untrue, the buyer may claim damages for the resulting loss.
Indemnity
A pound-for-pound reimbursement obligation for a specific identified risk, offering stronger protection than a warranty claim.
Completion Accounts
A price adjustment mechanism where the final purchase price is determined by accounts drawn up shortly after completion, reflecting the target's actual financial position.
Locked Box
An alternative pricing mechanism where the price is fixed by reference to a set of accounts at an agreed date before signing, with protections against value leakage.
Condition Precedent
A requirement that must be satisfied (e.g., regulatory approval) before the parties are obliged to complete the transaction.
Material Adverse Change (MAC)
A clause allowing a buyer to walk away if a significant negative event affects the target between signing and completion — heavily negotiated and rarely invoked.