Glossary
The body that administers and enforces the Takeover Code, supervising the conduct and timetable of public bids.
Public Takeovers
When a listed company is the target, the Takeover Code — enforced by the Takeover Panel — imposes strict procedural and timing rules. A bidder must announce a firm intention to make an offer once a certain threshold is crossed, and the board of the target must obtain independent advice on whether the offer is fair. Hostile bids, where the target's board opposes the acquisition, generate the most dramatic M&A stories — think defence tactics, rival bidders, and regulatory intervention. The Competition and Markets Authority (CMA) and, for larger deals, the European Commission may also need to clear the transaction before it can complete.
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.