What M&A Actually Is

1.1Deals, in one paragraph

M&A stands for mergers and acquisitions — the business of buying and selling companies. In English legal practice the everyday deal is not really a “merger” of equals at all. It is an acquisition, where one party (the buyer) buys a company (the target) from its owners (the sellers) for a price (the consideration). The deal is recorded in one central contract — usually a Share Purchase Agreement, or SPA — and supported by a cast of documents, advisers and processes.

1.2Why companies buy — and why owners sell

Buyers rarely buy “a company” in the abstract. They buy something the target has that would be slow, expensive or impossible to build themselves:

• Customers and revenue — the classic reason: buy the competitor, gain its client book. A payments processor might buy a rival to add its merchant portfolio.
• Licences and regulatory permissions — enormously important in fintech. Getting a new banking, e-money or crypto-asset licence can take years; buying a company that already holds one takes months. This is a key driver in the deal this course follows, where the target holds an authorisation under MiCA, the EU’s Markets in Crypto-Assets Regulation.
• Technology and people — a broker might buy a software house mainly for its trading platform and the team that built it (sometimes called an “acqui-hire”).
• Geography — a UK firm buying an EU-licensed business to serve European clients after Brexit is a pattern you will see again and again.
• Synergies — the hope that the combined business will be worth more than the two parts: shared costs, cross-selling, better pricing power.

Sellers have their own reasons: founders retiring or moving on; a venture capital or private equity fund reaching the end of its fund life and needing to return money to investors; a group selling a division that no longer fits its strategy; or simply an offer too good to refuse. Knowing why each side is at the table is negotiating gold — a fund under time pressure to exit negotiates very differently from a founder who doesn’t need to sell.

1.3What exactly do you buy? Shares, and everything behind them

A company is a separate legal person. It — not its shareholders — owns the office lease, employs the staff, holds the licences and owes the debts. What the shareholders own is the company’s shares. So in a share purchase, the buyer buys the shares, and the company underneath carries on exactly as before — same contracts, same employees, same licences, same skeletons in the same cupboards. Only the ownership changes.

That has a profound consequence. Buying shares means buying the company warts and all: every liability the company has ever incurred — known or unknown — comes with it. And English law adds a second, equally important principle: caveat emptor — let the buyer beware. With narrow exceptions, a seller of shares has no general duty to volunteer the bad news.

Here is how that looks in a real clause — the operative heart of our course SPA. Short, but every phrase is doing work: “full title guarantee” imports statutory promises about ownership, and “free from all Encumbrances” confirms no one else has rights over the shares:

There is an alternative to buying shares: buying the business and assets out of the company (an asset deal), where the buyer picks what it takes. We compare the two properly in Chapter 3. For now, just note that regulated fintech businesses are almost always bought as share deals, because the licence usually lives in the company and cannot simply be handed over.

1.4The shape of a deal

Every deal is different, but the skeleton is remarkably constant. A typical private acquisition runs through these stages:

Roughly: the seller prepares and quietly markets the business; the parties agree outline terms on a term sheet; the buyer investigates in due diligence while the lawyers negotiate the SPA; the parties sign; any regulatory approvals are obtained; and the deal completes — shares and money change hands. Each stage gets its own chapter.

1.5Signing and completion — the two moments that matter

New joiners are often surprised that “doing the deal” happens twice:

If nothing needs to happen between the two, they occur on the same day — a simultaneous signing and completion. But if the deal needs, say, a regulator’s approval before the buyer may take ownership, there is a split signing and completion: the parties sign, then wait, then complete. The waiting period — “the gap” — has its own rules and risks, covered in Chapter 13.

1.6The language of deals

You will hear these words daily. Learn them early and meetings become much less mysterious:

1.7How long does a deal take — and why deals die

New joiners consistently underestimate deal timelines. A simple bilateral sale of a private company with no regulatory approvals can go from heads of terms to completion in 8–12 weeks if everyone is motivated. A regulated deal like Project Sunrise takes far longer: several weeks of preparation and diligence, a month or two of SPA negotiation, and then a regulatory approval process that is measured in months, not weeks. That is why the Sunrise SPA gives the parties until 31 March 2027 — over eight months after signing — before either side can walk away for want of approval.

It is also worth knowing early that most deals that start do not finish — and that this is normal, not failure. Deals die for recurring reasons:

• Price gap. Diligence reveals problems, the buyer re-prices, the seller refuses. The polite phrase is that the parties “could not reach alignment on value”.
• A diligence red flag. Some findings can be fixed or priced; a few — a licence that doesn’t cover the actual business, litigation that could sink the company — cannot.
• Financing falls away. The buyer’s lenders lose appetite, markets move, the money isn’t there at the moment it is needed.
• The world changes. A market shock, a regulatory intervention, a lost major client — timing kills more deals than negotiation does.
• Deal fatigue. Underestimated and real: negotiations drag, trust erodes, management gets exhausted, and one Friday someone simply stops returning calls.

Dead deals also come back to life — the same parties often return to the table months later, which is one reason experienced lawyers stay courteous even when a deal collapses. For you, the practical lesson is discipline about two things that outlive any failed negotiation: confidentiality and costs. The NDA survives — see Chapter 5. Each side normally bears its own costs, win or lose, as clause 16.1 of the Sunrise SPA records.

1.8Where you fit in

As a junior lawyer on a deal you will typically: run parts of due diligence and draft sections of the DD report; manage the conditions-to-completion checklist; keep the working documents list up to date; draft transaction documents (board minutes, resignations, powers of attorney); take negotiation notes and turn them into issue lists; and manage completion logistics. You will work on the SPA itself, too: proof-reading each draft, checking that defined terms are used consistently, verifying that every cross-reference still points where it should after a renumbering, and building in the riders and amendments the senior lawyers hand you.

Do not let anyone — including yourself — file this under “admin”. The partner sets the strategy, but the deal actually happens at the level of detail you control: a checklist that is complete, a cross-reference that is right, a defined term that means the same thing on page 12 and page 84. Deals have been saved by a junior who noticed something everyone else was too busy to see; several of this course’s chapters are, quietly, stories about exactly that. Every chapter maps onto one of these jobs — and the same map applies whether you sit in a law firm or in-house, since many buyers run deals end-to-end with their internal legal team.

Ready? Check your understanding, then meet the cast of characters in Chapter 2.