Five Ways that Brexit Will Complicate Cross-Border M&A

By Jonathan B. Wilson CrowdFundBeat Sr. Guest Editor, Partner, Taylor English Duma LLP 

Last week’s referendum in the UK and the decision for Great Britain to exit the European Union has caused turmoil in financial markets.  For M&A practitioners, however, the impact is only just beginning.  Here are five key ways in which Brexit will complicate cross-border M&A:

1. Deal Terms Will Need to Contemplate the Potential for Additional Exits

If you thought the UK exit was tumultuous, just imagine the complications that might result if the Netherlands, France or another EU stalwart held a referendum that allowed its voters to possibly leave the EU.  M&A deals with European targets should contain provisions that contemplate these complexities and either allow the acquiror an “out” if the situation in Europe changes or that provide a mechanism to make changes if another EU member state serious contemplates an exit.

2. Taxes Will Get Complicated

The terms of UK’s exit from the EU have not even begun to take shape.  At a minimum, though, the harmonized system of taxation that was developing under the EU will no longer apply to UK companies or companies with subsidiaries in the UK.  Counsel in M&A transactions will need to grapple with the complexities of multiple, competing tax regimes when target companies have significant assets in both the UK and the EU.

3. Data Protection Rules Will Get Complicated

In our ever-digital world, data is everything (or nearly so).  For the past decade, U.S. firms have become familiar with the EU Data Privacy Directive and its member-state implementing legislation.  U.S. firms with data flows out of the EU have had to deal with the EU/U.S. safe harbor rules, to ensure that such data flows do not offend the EU requirements.

Counsel in M&A transactions will need to account for the possibility of different treatments for data flows into the U.S. from the EU and the UK and the possibility of different (or multiple) safe harbor regimes in the future.  The EU safe harbor provisions will (in all likelihood) cease to apply to UK data outflows once the UK’s exit is completed, but we cannot predict what safe harbor regime (if any) will govern UK data in the future.

4. Multiple Sets of Regulatory Approvals

U.S. acquirors looking at targets with both UK and EU assets previously could look to a single set of EU regulators for deal approvals.  Post-exit, there will be at least two sets of regulators whose approval may be required for the acquisition of mixed UK/EU companies.

5. Multiple Sets of Local Counsel

U.S. acquirors doing deals in the UK before Brexit could often hire out European firm to provide pan-European local counsel services for the deal.  Most UK law firms had developed continental offices to facilitate deals across borders.

Post-Brexit it is more likely that U.S. acquirors will need to retain both UK and European counsel (or at least involve the continental partners of UK law firms).  While law firms with offices in both the UK and Europe will have an advantage in providing cross-border advice, the coming divergence in legal systems between the UK and the EU will require an increased level of effort from lawyers in both regimes in M&A deals that span the UK and the EU.

Tags: , , , , , , , , , ,

HEADLINE NEWS

TIMEA Crowdfunding Effort Launches to Commemorate Khadija Saye, Artist Killed in London InfernoHyperallergicOn Saturday, friends and supporters of the artist Khadija Saye — who died in the devastating Grenfell Tower fire in west London last week — launched a crowdfunding campaign to c [...]

Santa Ynez Valley NewsTrikke Tech consolidates operations in Buellton, launches crowdfunding campaignSanta Ynez Valley NewsTrikke Tech Inc. has consolidated all its operations at a new location in Buellton and launched a crowdfunding campaign to help the company expand and introduce n [...]

The HinduMoroccan youth set their sights on crowdfundingThe HinduThe meteoric rise in crowdfunding, which allows an entrepreneur to raise funds from the donations of private individuals, has taken many countries by storm. Some estimates have predicted the industry to be worth around 1 [...]

CBS NewsNow you can crowdfund a 529 college savings plan - CBS NewsCBS NewsIt's getting easier to have friends and family add their contributions to these accounts for college savings.and more » [...]

ForbesThis $130 Million Fund Is Leading The Way In Real Estate CrowdfundingForbesWhen people think of crowdfunding, the first word that jumps to mind is Kickstarter. But crowdfunding is not limited to supporting the next card game or independent film. Crowdfunding is becoming a viable [...]

Business News WalesRaising Capital Through Crowdfunding: A How-To GuideBusiness News WalesRecently, 'crowdfunding' has evolved into a buzzword, with new fintech companies launching in Wales every month. First introduced as a way for charities to raise funds, crowdfunding tec [...]

Forbes"Make Yourself Available" - An Audio Entrepreneur's Tips For Successful CrowdfundingForbesIt takes a brave individual to launch Bluetooth speakers and headphones into a crowded audio market. Take a stroll around your local consumer electronics stores and you' [...]

9to5MacFinal Cut Pro X documentary hits crowdfunding goal, check out the trailer here [Video]9to5MacFinal Cut Pro X has been used for everything from ads to Hollywood movies, but the software didn't get the easiest of rides from the industry when Apple first launched the radicall [...]

PC GamerAshes of Creation launches 'Summer Crowdfunding Extension ...PC GamerThe ambitious MMO Ashes of Creation was successfully crowdfunded in just one day last month, before ultimately accumulating a staggering $3271809—this ...and more » [...]

Business InsiderCrowdfunding for medical expenses - Business InsiderBusiness InsiderAlmost half of the money raised on crowdfunding sites like GoFundMe and YouCaring is going toward medical expenses. Medical campaigns make up $930 ...Americans Losing Health Insurance Turn To Crowdfund [...]

CFB Finance

Marketwired

  • Crowdfunding
  • Crowdfund
  • Peer to Peer Lending
  • FinTech
  • Reg A+
  • Reg CF
  • Crowdfunding USA

Press Release

Live Crowdfunding .tv

What's Next Step in Regulation A+ JOBS ACTS Title IIII :L Interview : Steve Cinelli with Brian Korn Securities and Crowdfunding/Peer-to-Peer Lending Lawyer, Watch more video library | Conference | Interview | Campaign Showcase | Research | Education |