Navigating Cross-Border Transactions:
Key Considerations for UK Sellers and US Buyers in Private M&A
Cross-border private M&A deals between UK sellers and US buyers were on the rise in 2024 and are predicted to continue to rise during 2025. These transactions bring compelling opportunities: UK sellers can tap into substantial US capital, while US buyers gain a foothold in the European market.
However, differences in legal systems, market practices, and cultural expectations can challenge and complicate negotiations. This article explores some key considerations for Transatlantic parties to be aware of to help encourage smoother negotiations and better outcomes.
Due Diligence
US buyers often approach due diligence through a more detailed and rigorous lens than their UK counterparts, diving deep into areas such as compliance, environmental, intellectual property, tax, and regulatory matters at a more granular lever compared to UK buyers. For UK sellers, preparing a well-organised data room is essential to meet US buyers’ expectations.
Legal Agreements
A key difference in UK and US transactions lie in how representations, warranties and indemnities are treated in the share purchase agreement. In the US, representations and warranties are often used interchangeably and are typically given on an indemnity basis generally meaning that the buyer is likely to obtain more costs in the event of a successful claim. UK agreements, on the other hand, take a more tailored approach. Indemnities are usually reserved for specific risks, with breaches of warranties being addressed through a claim of damages.
Material adverse change (“MAC”) clauses are another area where UK and US approaches differ. In the US, MAC clauses are a standard feature and can give buyers an option to walk away if something significant goes wrong between signing and closing. In the UK, these clauses are used more sparingly and are much narrower in scope, which can make them a point of contention during negotiations.
For UK sellers, it’s important to be aware that US buyers are likely to include a comprehensive set of warranties, insist on indemnities as a matter of course and push for broader MAC clauses while US buyers need to adjust to sellers from the UK taking a more cautious approach to such matters and be open to finding a middle ground.
Disclosure Practices
In the UK, it has been typical to disclose the entire data room although this is increasingly becoming less acceptable to UK buyers. In contrast, US buyers tend to favour narrower disclosures tied directly to specific warranties. UK sellers should aim for clear, detailed and welldocumented disclosures to avoid misaligned expectations.
Buyer’s Knowledge
The UK principle of caveat emptor —“buyer beware”—means buyers are expected to uncover risks during due diligence and buyers are generally expected to expressly agree antisandbagging provisions which state the buyer cannot claim for breach of warranty where they were aware of issue before signing. In the US, however, prosandbagging provisions are more common which allow buyers to claim for breaches even if they were aware of the problem pre-signing, further emphasising the buyer-friendly nature of US transactions.
UK sellers should be prepared to negotiate over known risks and address them early during due diligence, disclosure or by well negotiated indemnities.
Cultural and Operational Integration
The success of a cross-border transaction doesn’t end at signing; it hinges on effective post-completion integration. Cultural and operational differences can make or break the deal’s ultimate value.
US companies often favour more hierarchical decision-making structures, whereas UK businesses tend to operate with flatter, more collaborative framework. Mismanaging these differences can harm productivity and morale.
The best way to address this is to begin integration planning early, ideally, before the deal is signed. Appointing integration leads from both sides, conducting cultural assessments, and fostering open communication can go a long way in easing the transition.
Conclusion: Bridging the Gap
Cross-border private M&A transactions between UK sellers and US buyers offer enormous opportunities but require careful navigation of the differences between the two jurisdictions. By understanding the nuances in due diligence, legal agreements, disclosure practices, and cultural dynamics, both parties can avoid common pitfalls and maximise the value of their deal.
Success often comes down to preparation and communication. Engaging experienced cross-border advisors and addressing challenges early can help bridge the transatlantic divide and achieve a good outcome for both buyer and seller.
Authors
Kathryn Beasley Partner
kathryn beasley@laytons.com
+44 (0)20 7842 8000
Alexandra Ahlgren Associate
alexandra ahlgren@laytons.com
+44 (0)20 7842 8000
Disclaimer:
relate to circumstances in England & Wales.
This publication is provided by Laytons LLP for informational purposes only. The information contained in this publication should not be construed as legal advice. Any questions or further information regarding the matters discussed in this publication can be directed to Laytons LLP and its Corporate team.
