Preparing for a Deal

5.1Preparation: the cheapest value-add on any deal

Nothing in this chapter is glamorous. There are no courtroom moments and few clever clauses — mostly it is chasing signatures, tidying registers and writing lists. But preparation is the cheapest value a lawyer can add on any deal, because problems cost almost nothing to fix before a buyer is looking, and a great deal once one is.

For a seller, a clean company sells faster and for more. Every defect a bidder's due diligence team uncovers — a missing contract, an unsigned IP assignment, a late regulatory filing — becomes ammunition. The defect becomes a price chip (“we'll need €200,000 off for that”), a demand for an indemnity, or simply delay. And delay is dangerous in itself: markets move, boards get cold feet, rival deals appear. A seller who finds and fixes its problems before going to market keeps control of the story; a seller whose problems are discovered for it does not.

For a buyer, preparation is about credibility and speed. In a competitive process the seller is comparing not just prices but the likelihood that each bidder actually reaches completion. A buyer that turns up with funding arranged, a board mandate in hand, advisers instructed and the regulatory path already mapped is simply a better bet than a higher bidder still “exploring options”. Prepared buyers win auctions; unprepared ones fund other people's fees.

5.2Sell-side preparation: cleaning, packaging, marketing

Sell-side preparation has three strands: put the company's affairs in order, assemble the information a buyer will want to see, and run a controlled marketing process. Junior lawyers do a great deal of the first two.

Legal housekeeping comes first. The classic list:

• Statutory registers written up and consistent. The register of members is what actually evidences who owns the shares — the buyer's lawyers will check title against it, and gaps here go to the heart of the deal.
• Signed copies of key contracts located. Many companies can produce only an unsigned “final” draft of their most important client contract; chase signatures now, while counterparties have no idea a deal is coming.
• Missing IP assignments chased down — founders who wrote code before the company existed, freelancers who never signed anything. For a business like Solaris, whose value sits partly in the Helia platform, an IP gap is a price chip waiting to happen.
• Regulatory filings regularised — overdue returns filed, missed notifications made, so the compliance record is as clean as it can honestly be.
• Small disputes settled. A grumbling €30,000 claim is far cheaper to settle than to explain five times to five bidders, each of whom will price it at €300,000.

Next, some sellers commission vendor due diligence (VDD): the seller instructs accountants (and sometimes lawyers) to prepare a due diligence report on its own company, which is handed to bidders. It sounds odd: why would a buyer trust the seller's report? VDD works because the winning bidder is ultimately given reliance on it, meaning it can sue the report's authors if the work was negligent. Sellers commission VDD when they expect several serious bidders: it saves each bidder duplicating months of work and lets the seller control first impressions of known problems. On smaller or bilateral deals it is usually skipped, and each buyer does its own digging.

Then the data room — the virtual document library the seller opens to bidders for due diligence. Building it is a genuine junior-lawyer craft. The discipline that matters is indexing: numbered folders that mirror the structure of a standard due diligence questionnaire (1 Corporate, 2 Financial, 3 Material contracts … 7 Regulatory), consistent document names, and a maintained index so that anyone can find anything. A shambolic data room generates hundreds of bidder questions, and every question plants suspicion. In our deal, the Sunrise Data Room is hosted by Vaultline Limited under the project name “Sunrise”. Document 7.4.1 is the CBI inspection letter about past failures in the target’s anti-money-laundering (AML) transaction monitoring. Those failures are the risk the SPA defines as the “Legacy AML Matter”, and the subject of Chapter 7. The letter is filed, indexed and findable, exactly where a regulatory reviewer would look.

Notice something else in that definition: the Data Room's contents are listed in an index annexed to the Disclosure Letter and preserved on archive USB drives delivered to the buyer's solicitors at signing. That archive is not ceremony. Under clause 8.3 of the SPA, the warranties (other than the Fundamental Warranties) are qualified by everything Disclosed — which includes matters fairly disclosed in the Data Room.

Finally, the marketing sequence itself, usually run by the seller's corporate finance adviser — on Sunrise, Harborne & Co. It starts with a teaser: one or two pages describing the business in attractive but anonymised terms (“a profitable, EU-authorised digital-asset platform”), sent to a list of plausible buyers. Anyone interested signs the NDA and receives the information memorandum (IM) — the full selling document: history, products, customers, financials, forecasts, now with the target's name on it. Shortlisted bidders are then invited to management presentations, where the CEO and CFO present the business and take questions. Alongside all of this the adviser issues process letters: letters to bidders setting the rules of each round. Those rules cover the deadline for offers, the form they must take, what assumptions to state, and whether a mark-up of the draft SPA must be included. Each letter also carefully reserves the seller's right to change the rules or abandon the process entirely.

The whole marketing pack in one view:

5.3Buy-side preparation: earning the right to bid

Buy-side preparation is less about documents and more about decisions. Before a serious buyer approaches a target — or answers a teaser — five things should be in place.

A strategic case and a walk-away price. The deal team writes down why the acquisition makes sense and, crucially, the number beyond which it does not. Agreeing the walk-away price internally, in cold blood, before the auction adrenaline starts, is the best-known inoculation against deal fever — the well-documented tendency of bidders to keep raising simply because they have started.

Funding lined up. Cash from the balance sheet, debt from banks, or new equity — whatever the source, it must be arranged early, because sellers now expect it. In auctions you will hear the term certain funds: the standard, borrowed from public takeovers, that a bidder should have binding financing commitments with only minimal conditions before its bid is accepted. A private seller cannot force this on anyone, but a bid “subject to financing” is worth a fraction of its headline number, and process letters routinely demand proof of funds with final offers.

A board mandate. The deal team needs authority to negotiate — typically board approval of the strategic case, the price range and the key parameters, so the team is not scurrying back for permission after every meeting. Formal board approval of the final documents comes later, at signing: on Sunrise, Atlas's board authorised the transaction and Jonathan Hale signed the SPA under a power of attorney.

An adviser team. Lawyers (Blackwood & Steel for Atlas), financial due diligence accountants (Calder Fox LLP), and any sector specialists — instructed, conflict-cleared, with scopes and fee arrangements agreed before the clock starts running.

Early regulatory analysis. Which approvals will the deal need, how long do they take, and what will the regulator want to know? Getting this wrong is how buyers lose auctions and, worse, how signed deals die in the gap between signing and completion.

5.4The NDA — your first drafting job

Before any real information flows, the parties sign a non-disclosure agreement (NDA, also called a confidentiality agreement). On most deals this is the first document a junior lawyer drafts or reviews, usually from a house precedent — which makes it worth knowing intimately. The moving parts:

The definition of confidential information. Sellers want it broad: all information disclosed in connection with the possible transaction, in any form, together with notes and analyses derived from it — and, easily forgotten, the fact that discussions are happening at all. The existence of the deal is often the most explosive secret in the room, especially where a listed company is involved.

The carve-outs. Standard exclusions from the definition: information that is already public (other than through the recipient's own breach); information the recipient already held or later develops independently, without using what it was shown; and disclosure that is legally required — demanded by law, a regulator or stock exchange rules — usually with an obligation to tip off the discloser first where it is lawful to do so.

Permitted disclosees. The buyer cannot evaluate a deal alone, so the NDA permits disclosure to its group companies, professional advisers and financiers — on a need-to-know basis, with the recipient remaining responsible for their breaches. The SPA's own confidentiality clause, clause 12.2, uses exactly the same architecture.

Term. Confidentiality obligations commonly run for two to three years from the date of the NDA. Sellers of genuinely secret technology sometimes push for longer; open-ended obligations are resisted.

Return or destruction. If the deal dies, the seller wants its information back or destroyed, with certification. Standard carve-outs let the recipient keep copies in automatic IT backups and copies required for legal or regulatory compliance — which remain confidential for as long as they are held.

Non-solicitation of staff. At management presentations the buyer meets the target's best people; if the deal dies, the seller does not want them poached. So NDAs commonly include a non-solicit: the buyer will not, for 12–24 months, solicit senior employees it met through the process — with a carve-out for hires responding to general public advertisements.

Standstill provisions. Where the target (or its parent) is listed, sellers add a standstill: the bidder promises not to buy shares in the listed entity, or launch an unsolicited offer for it, for a period. It stops a spurned bidder using what it learned in the process to go hostile. Solaris is private, so Sunrise needs none.

Remedies. Damages are a poor remedy for a leak: once information is out it cannot be recalled, and proving which lost client or spoiled negotiation flowed from the breach is close to impossible. NDAs therefore recite that damages would not be an adequate remedy and that the innocent party may seek an injunction — a court order restraining the breach. The recital cannot force a court's hand (injunctions remain discretionary), but it records the parties' shared view and helps at the urgent hearing.

On Sunrise, Atlas and Meridian signed their NDA on 12 February 2026, weeks before heads of terms. Five months later it is still doing work — the SPA itself decides its fate:

Read the relay race in that clause. Once Atlas owns Solaris, it would be absurd for the buyer to owe the seller confidentiality about the target's own information. So the NDA dies at completion, and the SPA's confidentiality clause (clause 12.1) governs what remains, such as the deal terms themselves. But if the deal collapses before completion, Atlas walks away carrying a data room's worth of a competitor's secrets — so the NDA snaps back into force for its full term. Whenever you draft an SPA, check that someone has decided what happens to the NDA; whenever you draft an NDA, remember it may have to outlive a dead deal.

5.5Exclusivity: buying a clear run

Serious due diligence and SPA negotiation cost real money — adviser fees on a deal like Sunrise comfortably reach six figures before signing. No buyer wants to spend that while the seller is still shopping the company around. So the preferred bidder asks for exclusivity: the seller's promise to deal only with it for a period. The document is often called a lock-out agreement, and the name matters under English law.

In Walford v Miles (1992) the House of Lords held that an agreement to negotiate in good faith is unenforceable: it is too uncertain. How would a court ever decide whether someone negotiated genuinely, or when they were entitled to stop? A bare “lock-in” promising positive engagement is therefore worthless. But a negative promise — not to solicit or negotiate with anyone else — is perfectly certain and perfectly enforceable, provided it runs for a fixed period. (In Walford itself the lock-out failed precisely because it had no end date.) So exclusivity agreements are drafted as time-boxed prohibitions, not promises of good faith.

Typical terms: four to eight weeks, extendable by agreement if the deal is progressing. On Sunrise, Meridian granted Atlas a six-week lock-out in the heads of terms of 3 April 2026 and extended it twice while the CBI analysis and SPA negotiation ran on. In exchange, buyers give comfort: proof of funds, commitments to a timetable, and occasionally a contribution to the seller's costs if the buyer walks away without cause. Break fees are payments triggered if the deal fails in defined ways. They are common in US practice but rare in UK private M&A, where the lock-out period is usually the only deal protection a buyer gets.

5.6Deal hygiene: codenames, insiders and clean teams

A leaked deal is a damaged deal: staff worry, customers hesitate, rival bidders appear, and if a listed company is involved a leak can move a share price. Hence the rituals of deal hygiene, which start on day one.

Project codenames. The deal gets a neutral name — ours is “Sunrise” — used in every document, email, invoice and data room label, so that a stray glance or misdirected message reveals as little as possible. The Vaultline data room is hosted under the project name, not the target's. Choose names that carry no clues — calling a struggling target “Project Sunset” is a screenshot waiting to happen.

Insider lists and market-abuse discipline. Atlas is London-listed, and a possible €42 million acquisition may well be inside information — information that, if public, could move Atlas's share price. UK market-abuse rules then bite: everyone who knows goes on an insider list, maintained with dates and times; insiders must not deal in Atlas shares or tip anyone off; and announcements are tightly controlled. That is why the SPA provides for a single agreed Announcement at signing (clause 12.3) and nothing else without consent.

Clean teams. Where the buyer competes with the target, the most sensitive data — customer-by-customer pricing, margins, pipeline — raises two dangers. Competition law limits sharing between competitors, and if the deal dies the buyer has seen its rival's playbook. The answer is a clean team: a ring-fenced group, often external advisers only, who review the sensitive material and report only aggregated conclusions to the wider deal team.

Who-knows lists. Broader than the insider list and kept on every deal, listed or not: a live record of every person, on every side, who has been told. It disciplines the tent — before anyone new is briefed, they are added, bound by confidentiality and told the rules.

And the golden rule, which costs nothing and is broken weekly: nothing sensitive in an unprotected email subject line. Subject lines are quoted in replies, glow on locked phone screens, and survive every forward. “Atlas/Solaris — SPA final” in a subject line has ended more codenames than any hacker.

5.7The preparation checklist

Everything above, as two lists to run down at the start of a deal.

Sell-side:

• Statutory registers written up; register of members matches the cap table.
• Signed copies of all material contracts located — missing signatures chased before launch.
• IP assignments from founders and contractors executed.
• Regulatory filings up to date; known issues regularised or ready to be disclosed on the seller's terms.
• Small disputes settled or provisioned.
• Data room structure, index and naming conventions fixed before documents are loaded — and archive arrangements agreed for signing.
• Teaser and IM drafted with the corporate finance adviser; NDA precedent ready to issue.
• Process letters and the bid timetable prepared.
• Codename chosen; who-knows list opened.

Buy-side:

• Strategic case written; walk-away price approved internally before bidding starts.
• Funding committed or clearly mapped — ready to show proof of funds with a final offer.
• Board mandate to negotiate within agreed parameters.
• Advisers engaged, conflict-cleared, scopes and fees agreed.
• Regulatory analysis done: which approvals, how long, what the regulator will ask for.
• NDA reviewed line by line — term, disclosee list, non-solicit scope, no creeping non-compete or standstill surprises.
• Insider list and market-abuse procedures live, if any party is listed.
• Clean-team protocol agreed, if buyer and target compete.

With both sides prepared, the first real negotiation can begin: outline terms, recorded in a heads of terms — the subject of Chapter 6. When diligence begins, Chapter 7 shows what the buyer's team does inside that carefully indexed data room.