04 Oct, 2011

New takeover rules will make M&A more expensive and time consuming, say advisers


The majority of M&A specialists (59%) believe target companies should not be required to reveal potential bidders and should have the choice to keep them confidential, according to research conducted by Imprima, a leading provider of iRooms virtual data rooms and financial documents services.


Imprima has conducted research amongst executives in sell-side institutions, law firms and corporate advisers to determine the impact of the new rules from the Takeover Panel governing mergers and acquisitions in the UK, which came into force on Monday 19 September 2011. 


According to the survey, four in ten (40%) believe the new rules would make M&A activities more expensive and 43% said they will make the bid process more time-consuming.


One in six (16%) believe that the new rules could even drive M&A activities away from the UK to other financial centres and more than a third (36%) said that they would not be easy to enforce.


The new rules introduced as part of changes to the Takeover Code are designed to give more power to companies that are the subject of bids. Under the new rules, companies in talks with a target at the start of an ‘offer period’ have to be named. 

Meredith Foster from Imprima said: “While the new rules have been introduced for valid reasons, this research suggests that the new changes could affect the flow and efficiency of doing M&A deals in the UK.

“People are clearly concerned about the extra time and expense in complying with the new regulations and many would like the choice to keep details under wraps. While it appears that some potential targets may be able to win dispensation from the panel over the requirement to name bidders, in most cases they will have to adapt to the new rules.

“Those companies that become more efficient in their M&A activities will be able to adapt to this new regulatory landscape.  The changes will place greater emphasis on the need to conduct due diligence as swiftly and efficiently as possible. 

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