When advising new US clients on their investment and divestment transactions, we often encounter points of English law and practice that our clients find surprising.
While such issues are always surmountable, we find that prior familiarity with the key points can allow for superior transaction planning, outcomes and a reduction in timelines and costs.
The purpose of the “View from 30,000 feet” series is to provide a brief, high-level introduction to the key issues our US clients encounter on a regular basis with a view to reducing the number of surprises. The first notes will focus on some key UK purchase agreement points and subsequent editions will branch out into other areas relevant to institutional US clients.
These notes are not exhaustive (nor are they intended to be) as each transaction will turn on its facts. We are always available to discuss and engage with any follow up questions and we hope you the series useful.
Issue 2: Conditionality provisions in a UK purchase agreement
Set out below is a brief note on conditionality provisions in a UK purchase agreement that may be unfamiliar to a US buyer or seller of a UK private company. I hope you find useful!
Conditionality: In the UK, if there is a requirement for a split sign and close (e.g. due to a requirement for a mandatory and suspensory regulatory approval) it is not customary for signing to occur until the buyer has satisfied the seller that its funding (both debt and equity) is in place. This being the case:
a. No financing condition: it is not the practice for a UK transaction to signed subject to a financing condition.
b. No Material Adverse Change (MAC): it is not common for closing to be subject to a MAC or to a breach of warranty condition, the rational being that a simultaneous sign and close would have occurred but for the requirement for the mandatory and suspensory condition as the buyer has “cash confirmed” the transaction and should not have the benefit of an “out” for any other reason.
As US buyers are accustomed to these buyer protections, UK sellers must make clear at the outset and throughout that they intend to transact on an unconditional cash confirmed basis. If not, there may be scope for a buyer to push for either or both of the above.
Previous issue
Disclaimer
This information is for general information purposes only and does not constitute legal advice. It is recommended that specific professional advice is sought before acting on any of the information given. Please contact us for specific advice on your circumstances. © Shoosmiths LLP 2025.