David Beveridge: Always be closing? Completing corporate deals during COVID-19

David Beveridge: Always be closing? Completing corporate deals during COVID-19

David Beveridge

David Beveridge, managing director at Macdonald Henderson, discusses how corporate deals are being completed during COVID-19.

“Always be Closing” – the old mantra, made famous by Alec Baldwin’s speech in Glengarry Glen Ross has resonated in the corporate world in the 20 years since it was made.

But Blake (Baldwin’s character in the film) and his sales team didn’t have to contend with a global pandemic.



For UK parties looking to close a business acquisition or disposal in the coming months, significant challenges are faced, particularly by the buyer, who will need understand the impact that COVID-19 has had, or may have, on the target business.

Let’s examine a few potential issues:

Cashflow – Many businesses are facing cash flow issues with the knock on effects of COVID-19, including reductions in capacity and output, supply chain failures, drop-offs in demand and delays and defaults in payments. A buyer will want to understand how significant an impact the pandemic is having on the target’s cash flow and the options it is exploring to address any issues, including whether it is likely to require to refinance the target after completion.

Employees – In some businesses, work may be able to continue with adjustments to working procedures to enable social distancing to be observed. In others, employees will be able to work effectively from home. However, many will be furloughing employees and relying on the government’s job retention scheme, or reducing employee’s hours and pay. This is all likely to be materially impactful on the target’s financial health.

Supply chain issues – Suppliers are facing the same pressures as other businesses in terms of cash flow issues and restrictions on travel and gatherings. It will be important to understand whether the target is able to exercise any force majeure or termination rights, or conversely, whether a supplier or customer might do so.

Insurance – the buyer will want to explore whether the target has business interruption cover and confirm that any claims are pursued appropriately.

Government support – the business may be able to benefit from one or more of the government support packages, such as financing support. The buyer will want to understand what support is being applied for and have some input into that decision.

Acquisition finance – on leveraged deals, the continued support of the bank/finance provider will be key. In addition, the buyer will have to be confident that any assurances and ongoing covenants it is required to give in connection with the loan can still be given. Deals financed through a share issue, may also find that exercise more challenging, given the obvious impact on investor confidence.

Regulatory clearances – Where deals are still subject to regulatory controls or merger approvals, obtaining these approvals may take longer because of logistical issues for the relevant authorities.

Execution of documents – where documents must be signed, there may be logistical issues, for example in getting a document witnessed. Workarounds have now been sanctioned across the UK jurisdictions, but advice should be taken. It will be important to ensure that alternative signatories are available if the first authorised signatory has to quarantine or is taken ill.

Shareholder approval – the restrictions on gatherings and travel may affect a company’s ability to hold shareholder meetings to approve a transaction. Companies should proceed with the minimum quorum possible and urge shareholders to use proxies rather than attend in person.

Stock transfer forms – new guidance from HMRC provides that stock transfer forms should no longer be posted to HMRC but instead an electronic copy should be emailed instead and electronic signatures will be accepted (of course, stamp duty must be paid before HMRC will process the form).

Companies House filings – all same day services have been suspended and the processing of documents may take longer than usual.

Scottish business and its advisory community continues to progress transactions, notwithstanding the challenges and hopefully that resilience will continue.

Meantime, click here for that tour de force speech, in its full, parental advisory glory.

  • Read all of our articles relating to COVID-19 here.
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