During the course of 2016 there were approximately 144 mergers
and acquisitions (M&As) of UK businesses by foreign companies
and around 104 mergers and acquisitions by UK companies of foreign
businesses. A merger or acquisition frequently provides the
dominant partner with increased traction and market share in its
industry sector. It is a successful way for a business to
expand its offering to its clients, break into an associate market
or simply weaken the competition by the instant
Any business aiming to expand into
the global arena would do well to look at a cross-border merger as
its main strategy. A cross-border merger may be a little more
complicated but can bring strategic benefits to a business in one
transaction that would take would take some considerable time to
For limited liability companies
based within the EU, Directive 56/2005 signposts the steps to a
successful M&A, providing a regulatory framework
outlining the phases to be taken to merger. The first crucial
steps that the Directive defines are as follows:
Draft a complete merger plan
including the terms of the merger
A report on the management of the
A third party report on the
consequences of the merger and the impact on the organisations
Approval of the terms of the
merger by way of a general meeting with both parties to the
With regard to the employee
participation rights, it is generally held that the national law of
the country in which the new entity is based applies.
There is a strict supervisory
system to protect all parties involved in a cross-border merger
once the initial documents have been drafted and each party must
ensure that they conduct a thorough due diligences exercise before
embarking on the project. Clearly there are far more
considerations in a cross-border merger than in a home merger,
particularly if there are some employees that are to be re-located
to a different country. It goes without saying that a
considerable amount of research into the market, the rivals and
costs involved should be undertaken, which must be considered as
money well spent to ensure the success of your cross-border
There is no reason that a
cross-border M&A should not go smoothly provided the parties
are assisted by meticulous professional advisors with an astute
understanding of the commercial impact.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
To print this article, all you need is to be registered on Mondaq.com.
Click to Login as an existing user or Register so you can print this article.
An assignment of rights under a contract is normally restricted to the benefit of the contract. Where a party wishes to transfer both the benefit and burden of the contract this generally needs to be done by way of a novation.
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).