Post-completion on corporate deals…. the job isn’t done yet!
Success – the deal you worked on for 2 months has finally completed. You got up early to catch the train, met your client, met the other side, hammered out the final negotiation points on the share purchase agreement and got everyone to sign on the dotted line. Champagne out and time to celebrate!!
Whilst at this stage it may be (more than) tempting to wave goodbye to the matter that kept you in the office all those evenings doing due diligence and disclosure exercises, you’d be a fool to completely forget about it. Why? Because for the corporate lawyer Completion for the client does not mean Completion for you.
The reality is that there is still a lot of important work following Completion and it is highly advised that you deal with this whilst the matter is still fresh in your head. Below we go through a non-exhaustive list of some of the main post-completion work required when acting for a Buyer on a typical merger or acquisition.
1 – Paying Stamp Duty on Shares
Great your client signed the share purchase agreement (SPA) and the Seller delivered executed stock transfer forms transferring their shareholding to your client. Well, until these stock transfer forms have actually been sent to the HMRC for stamping and the relevant stamp duty has been paid, your client is not the legal holder of these shares. A detailed cover letter will need to be drafted explaining what the Buyer acquired and how much tax is payable. Often a breakdown of the consideration mechanisms operating in the SPA is required. Furthermore, make sure your client has actually put you in funds in order to pay the required stamp duty.
2 – Company House Filings
Following completion, a Target may require its old directors to resign, new directors to be appointed, its registered office and account reference date to be changed and…..yeah why not…., new articles of association to be adopted. It doesn’t take a genius to see that these things need to be filed in order to take effect and it is up to you to send this off to Companies House. A word of warning, you only have 15 days to file new articles of association before your client is technically committing a criminal offence!
3 – Post-Completion Bible
What to do with all those original documents? Well, they need to be scanned onto the computer system and a full post-completion bible and index needs to be prepared ready to send out to all parties. Not particularly technical but time consuming.
4 – Key dates calendar
Be a good sport and run through the SPA identifying all the important deadlines for your client that will come up over the next couple of years. Set them out in a nice, easy to read, key dates calendar.
5 – Release of Security
It may have been an obligation on Completion that the Seller would arrange for the Target to be released from any security debentures it was subject to e.g. with a Bank / Lender. You need to make sure that the Seller actually does this and chase them if things are not moving quick enough.
6 – Updating statutory books
Hurrah!! The stamped stock transfer forms came through. Be sure to include these in your post-completion bible. Now you also need to write up the Target’s statutory books, updating (among other things) the register of members, register of directors, register of transfers and register of persons of significant control.
As you can see, Completion does not really mean Completion! Post-Completion work is a vital part of any M&A deal and needs to be properly factored for. The client may lose motivation after the glitz and glamour of the Completion celebrations but part of providing a first class corporate law service is quietly dealing with all of these matters without the client needing to stress about it. Speaking from experience I can guarantee that the sooner you attend to this work the simpler it will be.
Be sure to keep your client in the loop and update them on how the post-completion work is progressing. Not only will you reassure your client but it will help them remember you long after the glamorous lights of the deal start to fade. And, providing you did a good job, it hopefully won’t be long before you are asked to step up to the plate and do it all again!
Name: Aleks Wulff
Current Seat: Corporate
Previous Seats: Client Services, Employment, Corporate Real Estate
Studied: History and Law
Outside of work, I can usually be found… Trying to play practically any and every sport.
Favourite Film: Any film with DiCaprio (except for Romeo and Juliet)