TRW & Co · M&A and private capital
The M&A Process in the UK: From Heads of Terms to Completion
The M&A process UK private acquisitions follow runs from heads of terms and exclusivity through due diligence, SPA negotiation and regulatory clearance to completion. Timing depends less on the number of stages than on structure, clearances and consents. This guide explains each step under English law and where buyers most often lose time or value.
Key pointIf a deal needs mandatory NSIA clearance, completing early makes the acquisition void, so the conditions and long-stop date must be set before signing, not negotiated after.
At a glance
Heads of terms first
Usually non-binding except exclusivity, confidentiality and costs, but they anchor price mechanism, structure, conditions and timetable for the rest of the negotiation.
Diligence drives the SPA
Every material diligence finding should become a price adjustment, specific indemnity, condition or pre-completion action rather than relying on general warranties.
NSIA can void a deal
Government guidance lists 17 sensitive areas; completing a notifiable acquisition without approval makes it void and can expose the acquirer to penalties.
CMA thresholds revised
Since 1 January 2025 the CMA's target turnover test is £100 million, with a new hybrid test and a £10 million small-merger safe harbour.
Stamp duty on shares
Buying shares with a stock transfer form usually attracts Stamp Duty at 0.5% where the transaction is over £1,000, according to HMRC guidance.
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The short answer: how the M&A process UK buyers follow actually runs
The M&A process UK private deals follow is broadly predictable: agree heads of terms and exclusivity, run due diligence, negotiate the share or asset purchase agreement and disclosure letter, satisfy any regulatory conditions, then sign and complete. A straightforward domestic acquisition can move from heads of terms to completion in a matter of weeks; a deal needing government or competition clearance can take several months.
What makes the difference is not the number of stages but how early the parties identify the issues that drive timing: price mechanism, structure, clearances, third-party consents and key employees. Buyers who surface those points in the heads of terms usually avoid the late renegotiation that kills deals.
This guide walks through each stage for a private acquisition governed by the law of England and Wales. Public company takeovers follow a separate regime under the Takeover Code and are covered on our public takeovers page.
The legal framework behind a private acquisition
There is no single "M&A statute" in the UK. A private acquisition is primarily a matter of contract, sitting on top of several layers of legislation and regulatory control.
- Companies Act 2006. Governs share transfers, director approvals, shareholder consents for certain transactions with directors, and the filings that follow completion.
- National Security and Investment Act 2021 (NSIA). Requires mandatory notification and clearance before completing certain acquisitions of entities active in sensitive sectors. The government's NSIA guidance currently lists 17 sensitive areas, and a notifiable acquisition completed without approval is void.
- Enterprise Act 2002, as amended by the Digital Markets, Competition and Consumers Act 2024. Gives the Competition and Markets Authority (CMA) jurisdiction to review mergers. UK merger control is voluntary to notify but the CMA can investigate on its own initiative.
- TUPE. The Transfer of Undertakings (Protection of Employment) Regulations 2006 transfer employees automatically on most business (asset) transfers.
- Tax legislation. Stamp duty on share transfers, Stamp Duty Land Tax on land, VAT on asset sales and the seller's capital gains position all shape structure.
Sector regulators add further layers. Acquiring control of an FCA-authorised firm, for example, requires prior approval of the change in control, and there are equivalent regimes in other regulated sectors.
Stages of the M&A process UK deals follow
The sequence below reflects a typical negotiated private acquisition. Auction sales run by a sell-side adviser compress some stages and add a bid round, but the legal building blocks are the same.
- Preliminary approach and NDA. The buyer signs a non-disclosure agreement before receiving confidential information. Check that it covers employees, advisers and funders, and whether it contains a non-solicitation clause that will bind you if the deal fails.
- Heads of terms and exclusivity. Heads of terms record price, structure, conditions and timetable. They are normally expressed to be non-binding, except for exclusivity, confidentiality and costs provisions. Exclusivity periods are commercially negotiated; the buyer wants enough time to complete diligence and financing.
- Due diligence. Legal, financial, tax and commercial teams review the data room and raise enquiries. Findings feed into price, specific indemnities, conditions and the warranty package. Our legal due diligence checklist sets out what to request.
- Drafting the SPA and disclosure. The buyer's lawyers usually produce the first draft of the share purchase agreement (or asset purchase agreement). The seller responds with mark-ups and prepares a disclosure letter qualifying the warranties.
- Regulatory filings and third-party consents. NSIA notifications, CMA engagement, sector regulator approvals and change-of-control consents from landlords, lenders and key customers run in parallel with negotiation.
- Exchange (signing). If no conditions are needed, signing and completion happen simultaneously. If clearance is required, the parties sign first and complete later, with interim covenants controlling how the target is run between the two.
- Completion. Completion deliverables are exchanged, the price is paid, board changes take effect and share transfers are stamped and registered.
- Post-completion. Companies House filings, updates to the register of people with significant control, any completion accounts process and integration steps follow.
Why the heads of terms matter more than they look
Although usually non-binding, heads of terms anchor the negotiation. Points left vague at this stage, such as whether the price is on a locked box or completion accounts basis, or whether the buyer will take out warranty and indemnity insurance, tend to resurface as expensive arguments later. See our guide to locked box vs completion accounts for how that choice shifts risk.
Completion mechanics in practice
Completion is largely an exercise in choreography. A completion agenda lists every deliverable: signed stock transfer forms, share certificates (or indemnities for lost certificates), resignations of outgoing directors, board minutes approving the transfer and appointing new directors, releases of security held by the seller's lenders and evidence of any third-party consents.
Funds flow is agreed in advance, often with the buyer's lender releasing money to repay existing debt and pay the seller simultaneously. After completion, the buyer arranges for stamp duty to be paid, the register of members to be updated and the necessary Companies House filings to be made, including changes to officers and to people with significant control.
Timeline and key documents compared
Timing in the M&A process UK practitioners run is driven mainly by diligence scope and by conditions. The table summarises what each stage produces and the main variable.
| Stage | Key document | Main timing variable |
|---|---|---|
| Approach | NDA | Negotiation of non-solicit and standstill terms |
| Agreement in principle | Heads of terms, exclusivity letter | Valuation gap and structure |
| Diligence | Data room index, enquiries, due diligence report | Size of target, quality of records, number of jurisdictions |
| Negotiation | SPA or APA, disclosure letter, ancillary documents | Warranty and indemnity scope, price mechanism, W&I insurance |
| Clearances | NSIA notification, CMA briefing paper, regulator change-in-control filings | Statutory review periods and any call-in or Phase 2 review |
| Completion | Completion board minutes, stock transfer forms, resignations | Funding drawdown and third-party consents |
For NSIA, the government's guidance says the review period for an accepted mandatory notification can last up to 30 working days, and if a deal is called in, a further assessment period applies which can be extended. Build those periods into the long-stop date rather than assuming quick clearance.
Regulatory conditions: NSIA, CMA and sector approvals
National security screening
The NSIA catches acquisitions of qualifying entities active in specified sectors, including defence, energy, communications, data infrastructure and artificial intelligence. In March 2026 the government announced its intention to revise the sector list by secondary legislation, so buyers should check the definitions in force at the time of their deal. Our NSIA team can assess whether a filing is mandatory, voluntary or unnecessary.
Competition clearance
Since 1 January 2025 the CMA's jurisdiction tests have been revised. The target turnover threshold is £100 million of UK turnover, the share of supply test remains at 25%, a new hybrid test captures acquirers with a large UK share and turnover, and a safe harbour applies where each party's UK turnover is below £10 million. The CMA's notification guidance explains the briefing-paper route. See our merger control page for detail.
Sector regulator approvals
Financial services, energy, telecoms, healthcare and other regulated targets may require prior approval of a new controller. These conditions often take longer than competition clearance and should be scoped during diligence, not after signing.
If an NSIA filing is mandatory, completing before clearance renders the acquisition void. Make clearance an express condition in the SPA, keep a clear long-stop date, and do not let integration teams take control of the target in a way that could be treated as early completion.
Negotiating the SPA: where value is won and lost
The share purchase agreement allocates risk. The most heavily negotiated provisions are usually the same in every deal.
- Price and adjustment. A locked box fixes the price by reference to historic accounts with protection against "leakage"; completion accounts adjust the price after completion.
- Warranties. Statements of fact about the target. The buyer's remedy is a damages claim, limited by the disclosure letter and by financial and time caps. See warranties and indemnities.
- Indemnities. Pound-for-pound protection for specific known risks identified in diligence, such as a tax exposure or a live dispute.
- Limitations. De minimis and basket thresholds, an overall cap and claims periods. These are commercial and vary by deal.
- Restrictive covenants. Non-compete and non-solicit undertakings from sellers, which must be reasonable in scope and duration to be enforceable.
- W&I insurance. Increasingly used to bridge the gap between a seller wanting a clean exit and a buyer wanting meaningful recourse.
The disclosure letter
The disclosure letter is the seller's main protection. It sets out matters that qualify the warranties, usually with "general disclosures" of public registers and the data room, and "specific disclosures" against individual warranties. Buyers typically resist general disclosure of the whole data room and insist that disclosures be fair, with sufficient detail to identify the nature and scope of the matter.
Because a fairly disclosed matter generally cannot found a warranty claim, the disclosure exercise is where diligence and drafting meet. In any M&A process UK buyers should review the disclosure letter as carefully as the SPA itself, and ask for a specific indemnity where disclosure reveals a quantifiable risk.
An illustrative scenario
Illustrative only; the parties are generic. A UK trade buyer agrees heads of terms to acquire a privately owned software company with customers in the UK and the EU. Diligence reveals that the target licenses encryption technology that may bring it within an NSIA mandatory sector, and that two large customer contracts contain change-of-control termination rights.
The buyer's response illustrates a sensible M&A process UK teams would recognise. It splits exchange and completion, makes NSIA clearance a condition, and asks the seller to approach the two customers for waivers before signing. It also negotiates a specific indemnity for a historic data incident found in diligence and takes out W&I insurance for general warranties. The long-stop date is set with enough margin for a possible call-in.
Risks and common mistakes
Treating heads of terms as a formality
Heads of terms are the last point at which the buyer has maximum leverage before costs are sunk. Leaving the price mechanism, treatment of cash and debt, or the approach to W&I insurance open invites a second negotiation later, when the seller knows the buyer is committed. Agree the key commercial points in writing, even if the document is non-binding, and make sure exclusivity is long enough to complete diligence and financing. Check that the binding provisions (exclusivity, confidentiality and costs) are clearly separated from the rest.
Diligence that does not feed into the documents
A diligence report is only useful if its findings change the deal. Each red flag should translate into a price adjustment, a specific indemnity, a condition, a pre-completion action or a warranty. A common failure is to rely on general warranties for a known issue: under English law a buyer may struggle to claim for a matter that was fairly disclosed. Track every material finding to a contractual response before signing.
Missing a mandatory filing or consent
Overlooking an NSIA mandatory notification can make the acquisition void and expose the acquirer to penalties. Equally, missing a landlord's consent to assignment in an asset deal, or a lender's change-of-control right, can trigger defaults on completion. Map every filing and consent early, assign responsibility, and build realistic timing into the SPA conditions and long-stop date.
Gun-jumping between signing and completion
Where clearance is required, the buyer should not exercise control before completion. Interim covenants that allow the buyer to veto ordinary business decisions, or integration planning that shares competitively sensitive information, can raise competition and NSIA issues. Use clean teams and limit interim consent rights to protecting value rather than running the business.
Cross-border deals and the UK–Bangladesh angle
Many UK acquisitions involve a foreign buyer, a foreign seller or subsidiaries abroad. English law is commonly chosen to govern the SPA even where the target group operates in several countries, but local law will still govern the transfer of shares in foreign subsidiaries, local employment rights and local regulatory approvals.
For buyers from Bangladesh, the Gulf or Asia, two issues recur: foreign exchange approvals in the buyer's home jurisdiction for outbound investment, and whether the UK target falls within NSIA. TRW & Co works across London and Dhaka on UK–Bangladesh transactions and can coordinate home-jurisdiction approvals with the UK timetable.
Sellers outside the UK should also consider how the price will be paid and taxed in their own jurisdiction, whether escrow or deferred consideration is acceptable, and how warranty claims would be enforced against them. For an overseas buyer, the M&A process UK targets expect is familiar from other common-law markets, but NSIA screening and the absence of mandatory merger filing are distinctive features worth explaining to a home-country board early.
What to do next: a buyer's checklist
- Agree heads of terms covering price mechanism, structure, conditions, exclusivity and W&I insurance.
- Scope diligence to the real risks of the target and its sector.
- Run an early NSIA, merger control and sector-regulator analysis.
- List all change-of-control and assignment consents needed.
- Decide between a share and asset deal; see share purchase vs asset purchase.
- Plan completion mechanics, funds flow, stamp duty and post-completion filings.
The M&A process UK buyers navigate rewards preparation. To discuss a transaction, contact our London office or read more about our M&A practice.
Frequently asked questions
01How long does the M&A process take in the UK?
It depends on the target and the conditions. A small domestic acquisition with no regulatory approvals can complete within weeks of agreeing heads of terms, because signing and completion can happen on the same day. Where an NSIA mandatory notification, CMA review or sector regulator approval is needed, the parties normally sign first and complete later, and timing is then driven by statutory review periods and any call-in or in-depth investigation. Diligence scope, quality of the target's records and financing also affect timing.
02Are heads of terms legally binding?
Heads of terms are normally expressed to be subject to contract and therefore not binding on the main commercial points, such as price and structure. However, certain clauses are usually intended to be binding: exclusivity, confidentiality, costs and governing law. Courts look at the wording and the parties' conduct, so it is important to state clearly which provisions bind. Treat them as a negotiating anchor: although not enforceable, departing from agreed heads of terms later is commercially difficult and can damage trust.
03What is the difference between exchange and completion?
Exchange (or signing) is when the parties enter into the binding sale agreement. Completion is when ownership actually transfers and the price is paid. On simple deals they happen simultaneously. Where conditions must be satisfied first, such as NSIA clearance, merger control or regulatory change-in-control approval, there is a gap. During that period interim covenants restrict how the seller runs the target, and the buyer must avoid taking control before it is legally permitted to do so.
04Do I need to notify the CMA of an acquisition?
UK merger control is voluntary: there is no legal obligation to notify the CMA. However, the CMA can investigate qualifying mergers on its own initiative, including after completion, and can impose interim orders. Since 1 January 2025 its jurisdiction covers targets with UK turnover above £100 million, deals creating or increasing a 25% share of supply (subject to a safe harbour where each party's UK turnover is under £10 million), and a new hybrid test. Many parties brief the CMA informally to gauge interest.
05Who pays stamp duty on a UK share purchase?
Stamp duty on a share transfer is a liability of the buyer in practice. HMRC guidance states that buying shares using a stock transfer form usually attracts Stamp Duty at 0.5% where the transaction is over £1,000, and electronic transfers attract Stamp Duty Reserve Tax at the same rate. The stamped transfer is needed before the company can register the buyer. Asset purchases are different: Stamp Duty Land Tax may apply to land and VAT may apply unless the transfer qualifies as a going concern.
06What is W&I insurance and when is it used?
Warranty and indemnity insurance covers the buyer against loss from breach of the seller's warranties, and sometimes tax indemnities. It is popular where sellers, such as private equity funds, want a clean exit with minimal post-completion liability. It does not usually cover matters the buyer already knows about, so specific indemnities may still be needed for diligence findings. Underwriters review the diligence reports, so the quality of diligence directly affects the scope of cover.
Sources and official materials
- National Security and Investment Act: guidance on acquisitions — Mandatory notification, review periods and consequences of non-compliance
- National Security and Investment Act 2021 — Statutory text of the UK investment screening regime
- Mergers: how to notify the CMA of a merger — CMA guidance on briefing papers and merger notices
- Tax when you buy shares — HMRC guidance on Stamp Duty and SDRT on share purchases
- Transfer of Undertakings (Protection of Employment) Regulations 2006 — Employee transfer rules on business and asset sales
- Transfer a business as a going concern (VAT Notice 700/9) — HMRC guidance on VAT on business transfers
General information only, current as at 21 October 2026. It is not legal advice and does not create a solicitor–client relationship. It reflects the law of England and Wales unless stated otherwise; Scotland and Northern Ireland have separate legal systems, and the law changes frequently. Check current official sources and take advice on the facts of your matter.