Tuesday, 6 July 2010

Play time is over for Transaction Lawyers

And to be fair the sundry other hangers on in the formerly booming M&A market.

Robert Peston is reporting Vince Cable, The Business Seccie's plans to put the brakes on M&As. Granted the City of London will scream bluddy blue murder about this and lobby like a good un to get any change watered right down or killed off but even so, seems lasting change is on the way.

So what will the new business secretary, Vince Cable, do about all this?

Well three things.

First he may insist that all big deals are subject to a period of lengthier advance notification scrutiny, by competition and other regulators, as well as by investors, before a formal offer is put on the table and the formal takeover clock starts ticking. The pros and cons of the deal could then be discussed in a less fraught and pressurised climate than that which pertains once the deadline looms for shareholders to say yea or nay.

Second he may massively push up the so-called merger fees payable to the Office of Fair Trading for examining the competition implications of any deal. These are currently a maximum of £90,000, which isn't even big enough to be described as a rounding error for any takeover.

My understanding is that these fees are likely to be increased sufficiently to add a bit of grit in the takeover wheel, to increase the costs of a takeover sufficiently so that the acquiring management thinks a bit harder and longer before pouncing on prey.

And finally he'll keep an eye on the Takeover Panel's review of the rules of the takeover game, and if it doesn't tilt the playing field to make it harder for deals to be completed, well he could legislate.

From Peston's Picks

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