The UK technology M&A market remains robust, with technology transactions proving to be one of the most active sectors in the last 12 months, outperforming other key sectors such as retail and consumer, financial services, energy and utilities, and health and life sciences.

Compared to 12 months ago, activity in the UK has been similar to the global pace, with sustained investor interest and strong deal flow. This reflects continued confidence in the sector and aligns with broader international trends in technology M&A.

Over the past 12 months, the UK has seen several defining trends in technology M&A.

AI

AI leadership has become a key differentiator, with acquirers prioritising businesses that demonstrate excellence in AI implementation, robust governance and scalable, repeatable outcomes commanding certainty premiums in valuations.

Cybersecurity

Cybersecurity remains a strategic focus, as buyers seek firms with proven, automated and compliant solutions that deliver measurable risk reduction at scale.

Strategic M&A

Strategic M&A is also accelerating growth for both technology and non-technology businesses, particularly those in globally emerging sectors such as cloud-native AI, analytics and industrial IoT.

Spin-Offs

High-tech spin-offs are powering innovation, as corporates carve out advanced divisions to unlock value and drive focused growth.

In the UK, start-up companies are typically incorporated locally.

Generally, the incorporation of a UK limited company can be completed online within 24 hours; otherwise, paper applications take eight to ten days.

There is no minimum capital requirement for most private limited companies, which can be formed with as little as GBP1 share capital. However, sector-specific regulations may require higher capital for certain industries and public limited companies (PLCs) must have a minimum allotted share capital of GBP50,000.

Entrepreneurs in the UK are typically advised to choose a private company limited by shares for initial incorporation, as this structure offers separate legal personality, limited liability for shareholders, and flexibility in ownership and management.

Other options include limited liability partnerships (LLPs), general partnerships and sole trader status, but these are less common for start-ups seeking external investment or growth. Companies limited by guarantee are usually reserved for non-profit ventures.

The choice of entity ultimately depends on factors such as liability, management structure, funding needs, regulatory requirements and tax.

Early-stage financing will typically come from:

• family and friends; and/or
• angel investors in the first instance.

Angel investors will be high net worth or sophisticated investors. They will vary in their structure, sophistication and requirements, with some choosing to act alone, and some acting with representation through either a family office or an angel syndicate. The initial financing round will often be referred to as a “pre-seed” or “seed” round. Where applicable, investments may be made pursuant to the Seed Enterprise Investment Scheme or the Enterprise Investment Scheme, which is a crucial aspect of early-stage financing for companies that are eligible.

Other sources of funding, such as grants or loan financing, may also be available to some companies operating in certain sectors. Companies will often look to maximise such alternative sources of non-dilutive funding alongside an equity fundraise.

Companies that have received some funding in the past may subsequently receive investment from venture capital (VC) investors at future investment rounds, who will generally be able to invest larger sums of money than seed investors. This funding is usually not accessible at the earliest stage, as many VC investors will only invest in companies that have previously received funding or that have reached a certain age and stage.

In the UK, VC funding usually comes either from dedicated VC funds or from investment syndicates.

There are also some government-sponsored funds that are active in this space, including British Business Bank, National Wealth Fund, Scottish Enterprise and Development Bank of Wales. Often, they will not lead investment rounds, but aim to fill “gaps” in the VC market where private investment may not be as readily accessible. Government-sponsored funds can be the difference between a fundraise being successful and failing. However, they naturally bring more oversight and control, which the investee companies must weigh up as they look to fill the gaps in their funding requirements.

VC funding is generally accessible in the UK, although the level of accessibility and the amount investors are able to invest varies between different markets.

The geographical source of funding varies. In the BVCA’s report on VC investment published in May 2025, over 50% of venture capital investment originated from UK-based investors, with just over 25% from North America and 19.3% from other European countries. However, foreign investment (particularly from the USA) is much more common at later stages (Series B and beyond) than during the early stages of a company’s lifecycle.

The industry has generally shifted towards using the BVCA’s model documents as a universal standard for venture investments in UK-based companies. This means there is an increasing degree of standardisation in the documentation used, although deviations from the model documents are common. In some circles, aspects of the BVCA model documents have been criticised for being overly founder-friendly and not reflective of industry practice.

In general, UK-headquartered start-ups that are receiving direct investment from VC investors tend to stay in the same corporate form, with some exceptions, including the following.

• Where an overseas market is potentially much more lucrative than the UK market – for example, producers of medical devices may find the private US healthcare system much more lucrative due to the differences in the healthcare systems. The company may be encouraged to carry out a relocation, for example by conducting a “Delaware Flip”.
• Where a start-up thinks it can raise more funds in another market.
• Where a start-up is looking to establish an overseas branch or to hire employees in another jurisdiction.
• Where a start-up is anticipating an exit involving a buyer based in a foreign jurisdiction.
• When negotiating a significant commercial contract, foreign counterparties may prefer to contract with a company registered in the same jurisdiction rather than a UK-registered entity.

Rising Popularity of Sales

In terms of numbers of transactions executed for UK companies over the last few years, sale processes have clearly been far more popular than IPOs. This is due to a variety of factors, including that the UK public markets have not been readily open to a broad range of companies undertaking IPOs in recent years.

Opening Up of the UK IPO Market

The picture for IPOs is now starting to improve. The number of UK IPOs had reached historic lows, but there are now signs that the UK IPO market is starting to open up, alongside markets in other jurisdictions. The Beauty Tech IPO is one example of a technology company choosing a UK flotation in 2025, which signifies greater positivity in the UK IPO market.

Advantages and Disadvantages of a Dual-Track Process

The dual-track process is popular (even if not the default choice), as it offers flexibility in responding to market appetite. However, a dual-track process can be difficult for SMEs to execute effectively as it can take up the limited capacity of management teams (particularly where such teams are smaller). Running a dual-track process may also prove to be more costly than choosing either an IPO or sale process route alone.

Floating on a Home Exchange

It is likely that a company would decide, in the first instance, to pursue a listing on its home country exchange for the initial public offering. Benefits of this include better brand recognition in the local market and easier communication lines with investors and regulators. Floating in one’s home market potentially improves the chances of local market institutional investor interest, which may be important to make an offering in connection with a listing viable.

Floating on a Foreign Exchange

Recent trends show that certain foreign-headquartered companies in certain industry sectors (eg, in the technology space), and above a particular size or stage of development, may seek to float on the US markets, as there is a perception that these markets will have a deeper pool of capital available to certain companies, particularly in certain industry sectors. There have been some high-profile examples of such foreign IPOs, but careful assessment would need to be made, alongside a company’s broker, on a case-by-case basis, regarding whether a foreign listing is genuinely in the best interests of the company concerned, particularly where the business of a company has little connection with the jurisdiction in which the foreign stock market is located.

Evidence suggests that listings of UK companies on foreign exchanges may often not result in more beneficial valuations compared to market peers, and there are several examples of such companies subsequently choosing to delist. UK companies may also find there is an additional compliance burden, and associated expense, in obtaining and maintaining a foreign listing; such companies also may not benefit from the low litigation environment experienced on the UK securities markets (eg, in respect of shareholder class action claims).

Dual Listings

Dual listings can be popular for certain companies, particularly following a company’s original IPO and for companies with international businesses that may be familiar to local investors on each stock exchange, and that may find relevance and liquidity on both exchanges. Such dual listings are rare at the time of a company’s IPO, due to, amongst other things, the significant resource requirements needed to comply with often complex – and not necessarily complementary – listing requirements in two different jurisdictions. A recent example, however, is the simultaneous dual listing of Fermi Inc., an AI data centre developer, on both the London Stock Exchange and NASDAQ.

If a company is UK incorporated, listing on a foreign exchange should not affect the feasibility of a future sale of such company by reference to issues regarding minority non-assenting shareholders. Rights and obligations governing minority shareholder squeeze-outs for UK incorporated companies cannot be overridden by foreign stock exchange rules.

In the context of a company sale as a liquidity event, the choice between running an auction process or engaging in a bilateral negotiation with a chosen buyer has evolved over the past 12–18 months. There has been a noticeable increase in off-market and bilateral sale processes, with fewer formal auctions, reflecting greater appetite for primary and off-market deals. Nevertheless, auction processes remain preferred for highly sought-after assets, where strong competition enables sellers to leverage competitive tension and secure key legal terms early in the process. For transactions involving a limited buyer pool or special situations, bilateral negotiations are more common and typically simpler, with lower associated fees. Even in bilateral scenarios, sellers are advised to create the illusion of competitive tension to maintain negotiating leverage.

For sales of privately held UK technology companies with multiple VC investors, transaction structures are highly deal-specific and depend on factors such as the company’s growth stage, buyer appetite, valuation expectations, and alignment between incumbent and new investors. Sellers typically consider both a full 100% share sale (often to a trade buyer) and a secondary transaction with private equity, which may allow existing VC investors to reinvest in the new investment vehicle.

The exit terms of the original VC investment and the ambitions of the target company’s owner managers are also key: management may prefer a full exit for immediate liquidity, or may choose to de-risk and reinvest alongside private equity for, typically, a further three to five years. Increasingly, sellers run a dual-track process to maximise value and flexibility, enabling both full exits and partial sales with ongoing VC participation, depending on market response and stakeholder objectives. The chosen structure ultimately reflects these commercial and strategic considerations.

In the UK, the form of consideration in sales of privately held companies is varied. Over the past 12 months, there has been continued use of alternative deal structures, with consideration including a mix of cash, shares in the buyer (stock-for-stock) and loan notes. Share or loan note consideration is often used to bridge funding or valuation gaps, giving sellers a potential upside in the buyer or its enlarged group.

Full cash consideration deals remain prevalent, especially with trade buyers, but these frequently include deferred or contingent mechanisms such as earn-outs or deferred payments to bridge funding gaps. The chosen form of consideration is ultimately driven by deal dynamics, buyer profile, and the parties’ appetite for ongoing involvement and risk.

In the UK, founders and owner managers are generally expected to stand behind warranties and indemnities (including tax) after closing. VC and private equity investors, however, usually only provide fundamental title and capacity warranties relating to ownership of their shares, and do not typically give broader warranties or indemnities.

Deal-specific indemnities are included in many deals, and liability caps remain low, with GBP1 caps backed by warranty and indemnity (W&I) insurance now standard. The competitive insurance market has driven down W&I premiums, and insurers are enhancing cover, such as offering nil excess on certain operational deals.

Retention or holdback arrangements are less common, particularly where W&I is utilised, but are still utilised as a risk allocation tool for known liabilities on deals.

Spin-offs are more common within bigger technology groups, to enable innovation to continue at a quicker pace (thus maximising revenue generation ability). Key drivers for these spin-offs in the UK tend to be the technology arms growing at a more rapid pace and needing greater scale, autonomy and more focused delivery expertise (through a specialised management team) to enable them to innovate quickly, which cannot be delivered under their current company structure.

Demergers and Requirements

The typical structure for a spin-off in the UK would be by way of “demerger”. This is a complicated area of the UK tax code and requires specialist advice to ensure that:

• there is no taxable distribution;
• no capital gains arise; and
• as far as possible, the spin-off is neutral from a stamp duty perspective.

Tax Treatment on Demergers

Whilst there are statutory exemptions to ensure no distributions arise, these are narrowly cast and often lead to demergers being structured as a capital reduction demerger, particularly if the spin-off precedes a sale to a third-party purchaser. However, when properly structured, a demerger should occur tax neutrally, provided the ultimate beneficial owners of the demerged entity are the same prior to the demerger taking place.

Spin-Offs and Mergers

The UK is a common law jurisdiction and there is nothing preventing a company from spinning-off and then undertaking a merger. However, this is not particularly common, given the tax exemptions available where a company sells a wholly owned subsidiary.

Key Requirements

The key requirements for spin-offs and subsequent mergers include overcoming regulatory hurdles, including competition and national security. The National Security and Investment Act 2021 (NSIA) is increasingly relevant for the technology sector, due to:

• key components being manufactured for defence or used by the government; and
• interest in UK technology companies from Chinese investors.

Early analysis will need to be done on these two regulatory aspects to ensure the subsequent merger is not blocked; otherwise, significant time and cost could be wasted. Early engagement is possible with the regulators, however, which UK law firms are able to assist with.

Timing for Demergers

It is typical to seek HMRC tax clearance on a demerger, although not compulsory. It typically takes 30 days to receive a response from HMRC to a clearance application. This response can take the form of further questions, which then further elongates the timescale. Accordingly, it is prudent to factor in six to eight weeks for the full clearance timetable.

Seeking Clearance From HMRC

Increasingly, clients are choosing not to seek clearance owing to timing difficulties or perceived risk. Bespoke insurance is becoming a popular alternative to traditional clearance. Typically, the demerger also requires (post-completion) applications to secure stamp duty relief. These are perennially delayed and it often takes more than six weeks to hear back from HMRC.

A potential bidder may consider building up a stake in a target company in connection with a UK takeover, whether before or during its takeover offer. Whilst stakebuilding is not uncommon in UK takeovers, it is not the norm. Stakebuilding can have a variety of implications on the pricing, terms, timing and deliverability of any subsequent formal offer. Various disclosure obligations can arise, depending on the size and timing of any stakebuilding.

Stakebuilding Outside of a Formal Offer

Stakebuilding in UK incorporated companies, whether by a bidder or by another party, will be publicly disclosable at the 3% level and any whole percentage above it. Such disclosures must be made to a UK issuer as soon as possible following a trade but in any event within two trading days of it. For Main Market listed companies, disclosure must also be made to the UK’s Financial Conduct Authority. It is important that bidders are mindful of the mandatory offer rules (see 6.2 Mandatory Offer).

Stakebuilding During Offer Periods

Any stakebuilding by a bidder, target or person interested in 1% or more of a company’s shares, during an “offer period” (as defined in the UK Takeover Code) will require disclosure under Rule 8 of the Takeover Code, by no later than 12pm on the business day following the date of dealing. Ordinarily, an acquirer will not need to state the reason for its share acquisition(s) nor its plans for the target company. Later in the process, if a formal takeover offer is announced, a bidder will need to state publicly its plans for the target business should its takeover complete.

Put Up or Shut Up Periods

Once the possible interest of a potential bidder in making an offer is publicly announced, there is a requirement under the Takeover Code for a bidder to either announce a firm intention to make an offer (in accordance with Rule 2.7) or announce that it does not intend to make an offer (in accordance with Rule 2.8) by no later than 5pm on the 28th day following the date of the announcement in which the potential bidder is first identified. This 28-day “put up or shut up” period can be extended only with the consent of the target board in consultation with the UK Takeover Panel.

Under Rule 9 of the Takeover Code, if a person acquires interests in shares which, together with interests held by its connected parties (“concert parties”) carry 30% or more of the voting rights of a company or, if already interested, together with its concert parties, in a position of between 30% and 50% of a company’s voting rights, the person then acquires any further interests in voting rights of the company, a mandatory bid obligation is triggered to make a cash offer to all remaining shareholders. A bidder and its concert parties should generally be careful in respect of stakebuilding since there are various other rules setting price floors and similar as a result of share acquisitions.

An acquisition of a public company in the UK will usually be carried out using two alternative structures.

Takeover Schemes of Arrangement

Court-sanctioned schemes of arrangement are frequently used. This is a process initiated and led by the target company, and requiring:

• approval by a majority in number representing at least 75% in value of the target shares voting at a court-convened shareholder meeting; and
• sanction by the court.

Once the scheme is sanctioned by the court and made effective, it becomes binding on all target shareholders.

Contractual Takeover Offers

A contractual takeover offer arrangement (akin to a “tender offer”) is another structure used for an acquisition of a public company in the UK, whereby the bidder makes an offer directly to the shareholders to conditionally purchase their shares, with such purchases to complete on the offer becoming unconditional. This is less commonly used, and usually only in hostile, unsolicited and/or competitive takeovers.

Merger Regulations

The UK does not have a domestic merger regulation regime akin to that available in the EU.

Cash Offers

Acquisitions of UK public companies in the technology industry are typically structured as cash transactions, since such consideration will often be the target shareholder’s preference and such transactions are, in the case of an attractive premium being offered, arguably less prone to competition from other bidders or to be voted down by target shareholders. Over the last decade, the overwhelming majority of UK listed technology company takeovers have been for an all-cash consideration.

Mixture of Consideration Permissible

Cash or any other type of consideration (eg, shares, listed or unlisted; loan notes) are permissible to be offered in consideration for UK takeover offers, whatever the structure used to implement the transaction.

Mandatory Minimum Pricing and Type of Consideration Obligations

Certain mandatory “minimum price” provisions apply in the case of acquisitions of the target’s shares in the three months prior to the announcement of an offer or during an offer period – ie, the acquirer is required to make its formal offer at no less than the highest price paid for acquisitions in such period. Other mandatory “type of offer consideration” provisions apply in the case of acquisitions for:

• cash representing 10% or more of a target’s issued shares in the 12 months prior to the announcement of an offer or any acquisitions during an offer period (in which a cash consideration or alternative must be offered); and
• shares representing 10% or more of a target’s issued shares in the three months prior to the announcement of an offer or during an offer period (in which a share consideration or share alternative must be offered).

Use of Contingent Value Rights

Contingent value rights are also permissible to be offered in UK takeover offers, including to bridge a value gap between an acquirer and seller. These can take a very wide range of forms but they are rarely used.

Restrictions on Offer Conditions

The Takeover Panel and the Takeover Code restrict the use of offer conditions in takeovers. Conditions are expected to be drafted in objective language and are expected to relate only to material events and matters. The takeover industry in the UK has developed a widely accepted standard set of generic conditions, which have streamlined negotiations. Specific conditions are also generally accepted where regulatory or national security clearances are required. Financing conditions or pre-conditions are permissible only in extremely rare circumstances and subject to strict requirements; they are seen extremely rarely.

Materiality Test Applied to Generic Offer Conditions

Generic conditions cannot be utilised by a bidder to attempt to lapse an offer, except in discussion and agreement with the Takeover Panel. The Panel will only permit the utilisation of such conditions where it agrees that the underlying circumstances to which the generic condition relates are material and adverse to the bidder in the context of the offer – although takeover precedents in the UK suggest that this is an extremely high materiality threshold that would extremely rarely be achieved in practice.

Exempt Conditions

Certain conditions relating to third-party approvals and similar that are legally required to be obtained or granted in order to permit an offer to complete (such as a sufficient majority of shareholders voting in favour of a scheme of arrangement and the court sanctioning the scheme) are not subject to the Takeover Panel’s materiality test referred to above. A minimum percentage shareholder acceptance condition in the case of a contractual takeover offer is also not subject to the materiality test.

Transaction Agreements

Whilst not strictly necessary for takeover offers, it has become common for a bidder to enter into a transaction agreement with a target in connection with a takeover offer, commonly called a “co-operation agreement”.

Breadth of transaction agreements

The co-operation agreement is much narrower in scope than equivalents utilised in many other jurisdictions in which takeovers are common. The Takeover Code significantly limits the protections that bidders (not targets) can seek in such agreements, as further described in Rule 21.2 and Practice Statement No 29 of the Takeover Code. Amongst other things, the target company and its connected parties cannot give representations and warranties to a bidder; instead, a bidder will need to rely on information available in the public domain and on any private due diligence it is permitted to undertake. The target board cannot undertake in any agreements to recommend an offer to its shareholders.

Commonly included protections

Co-operation agreements will often impose permissible “information and assistance” obligations on the target, where regulatory clearances are required to be obtained in connection with an offer. In a co-operation agreement, the target may include a very wide range of protections in its favour in respect of the implementation of an offer (including regarding the treatment of target share options and employee arrangements).

50% Acceptance Threshold

Tender offers (ie, contractual takeover offers) are commonly subject to a condition that the bidder acquires shares under the offer carrying more than 50% of the target’s voting rights (but this threshold is often set higher, at 75% or 90%). This is because a bidder would be able, under the UK Companies Act 2006, to consolidate the target into its group accounts as a “subsidiary” once it owns in excess of 50% of a company’s shares. Whilst this is the minimum, there is often a tactical decision to be made on what the most appropriate acceptance threshold is.

75% Acceptance Threshold

At a 75% share ownership threshold, the bidder can usually ensure that the target’s shares can be delisted from the relevant UK stock market on which they are traded and this would be sufficient to pass (“special”) resolutions of the company’s shareholders in respect of various other material matters, including the re-registration of the target as a private limited company.

90% Acceptance Threshold

At a 90% threshold, a bidder would normally be able to utilise squeeze-out mechanisms (see 6.8 Squeeze-Out Mechanisms).

Once a bidder has acquired 90% of the shares to which the offer relates (including 90% of the voting rights attached to a company’s shares), it can squeeze out the remaining dissentient shareholders in a target, through the service of prescribed forms of notice on them within prescribed time periods, subject to the right of dissentient shareholders to litigated objection. Such litigation is very rare.

Certain funds are required to launch an offer. Rule 2.7 of the Takeover Code outlines that a bidder cannot announce a firm intention to make a cash offer unless it has ensured that it has sufficient resources available to pay for the target’s shares.

Public Confirmation of Certain Funds

Where an offer is for cash or includes an element of cash, the firm intention announcement and offer document or scheme circular must include confirmation by the bidder’s financial adviser, or by another appropriate third party, that sufficient resources are available to the bidder to satisfy full acceptance of the offer.

Due Diligence

A bidder’s financial adviser will not provide such confirmation unless it has undertaken full due diligence on the sources of a bidder’s funds and has ensured that such funds are subject to absolutely minimal conditions regarding availability. The bidder makes the offer, not its lenders or equity providers. It is essential that the bidder collaborates with its financial and legal advisers to ensure that the funding structure is on a certain funds-compliant basis.

Deal protection measures imposing obligations on a target and/or its connected parties – such as break fees, matching rights, force-the-vote provisions or non-solicitation provisions – are prohibited for UK takeover bids, although a target may be permitted to grant break fees in extremely limited circumstances, and subject to significant limitations; in practice, break fees are very rare.

If a bidder obtains 90% ownership of the target’s voting shares, it can utilise the statutory squeeze-out mechanism to compulsorily acquire the shares held by remaining shareholders. There is no equivalent to the German domination or profit-sharing arrangement in the UK.

UK companies are normally directed by a company’s board of directors in their material day-to-day decision making, operating by majority board decision. Shareholders holding significant stakes – in particular, over 50% of a company’s shares – may be able to force the appointment or removal of directors at a general meeting of the company.

Not obtaining 100% of the ownership of a target is often a risk in hostile/unsolicited offers that are executed by way of contractual takeover offer (and not by way of a scheme of arrangement).

Irrevocable Shareholder Undertakings

It is common for irrevocable commitments or “undertakings” to be obtained by a bidder from target director shareholders or other target shareholders (usually major shareholders) shortly before the announcement of a firm intention to make an offer has been published in respect of a recommended bid. Where there are large shareholders in a target company, bidders will sometimes include a requirement in their indicative offer letter for irrevocable undertakings to be obtained from such shareholders as a pre-condition to announcing a bid.

Types of Undertaking

A “hard” irrevocable undertaking is a commitment that continues to bind even if a rival third-party offer is made for the target (including a higher offer). A “soft” irrevocable is a commitment that ceases to be binding if any rival offer is made for the target. A “semi-hard” irrevocable is a commitment that ceases to be binding if a rival offer is made for the target which exceeds the current offer by [x] per cent or more. Such percentage for semi-hard irrevocable undertakings is generally – but not always – set at around 10%.

For recommended takeover offers, target director shareholders will be expected to provide hard irrevocable undertakings, although there is no regulatory obligation on them to do so.

Non-Legally Binding Expressions of Support

Non-legally binding letters of intent may instead be provided by target shareholders, including various institutional shareholders. Shareholders are permitted to act or deal contrary to their stated intentions in their letters of intent.

Pre-Approval of Takeover Offers

The Takeover Panel does not customarily formally approve a takeover offer in advance of its making. Instead, it has a reactive role, responding to queries from a bidder or target in relation to the terms and form of an offer complying with the Takeover Code. Because of the requirements contained in various provisions of the Takeover Code, parties will inevitably need to discuss various elements of an offer with the Takeover Panel before a bid is announced and made. Provided a bidder complied with any mandatory price/type of consideration setting rules, the Takeover Panel does not interrogate the offer price for an offer, as this is a commercial matter for consideration between a bidder and the target board.

Timeline for the Tender Offer

Contractual takeover offers are subject to a relatively formal timetable set out in the Takeover Code, providing for, amongst other things, a default offer period of 60 days following the publication of an offer document. For takeover schemes of arrangement, this timetable is instead mainly determined by the target (since a scheme is a process driven by the target) in consultation with the bidder and, for certain dates, in consultation with the court.

Impact of Competing Offers on Completion Timelines

If a competing offer is announced, the Takeover Panel will need to be consulted on timetable implications, since these can vary from deal to deal, including depending on whether each bidder is implementing its bid by means of a contractual takeover offer or by scheme of arrangement, which bid is recommended by a target board and the dates of posting of offer documentation.

The following generally apply for competing offers:

• the “Day 60” default completion date for all bidders will be set by reference to the publication of the latest offer document produced by any of the bidders;
• a suspension in one bidder’s timetable (eg, for obtaining regulatory clearances) will apply to other bidders’ timetables;
• if a competitive situation continues to exist in the later stages of an offer period, the Takeover Panel will require revised and ultimately final bids to be announced in accordance with an auction procedure, which it will administer; and
• such an auction procedure will not normally be introduced until the last regulatory clearance has been obtained or waived by all bidders.

Extension of Offer Period

As indicated in 6.13 Securities Regulator’s or Stock Exchange Process, contractual takeover offers are subject to a relatively formal timetable set out in the Takeover Code. In connection with the receipt of regulatory clearances or official authorisations that will take longer to obtain, this offer period can be extended by the freezing of the timetable, with the approval of the Takeover Panel, either at the joint request of the bidder and target or, in the case of a regulatory clearance or official authorisation the Takeover Panel agrees is material, at the request of either the bidder or the target.

Setting up and starting to operate a technology company in the UK is subject to sector-specific regulations and authorisation requirements, which are generally dependent on the activities to be undertaken by the technology company. Early legal advice is recommended to ensure compliance and efficient set-up.

Relevant Regulatory Bodies and Timings

• Fintech firms that carry on regulated activities need to be authorised and regulated by the Financial Conduct Authority (FCA) and/or the Prudential Regulation Authority (PRA). They may also be designated by HM Treasury as a critical third party under the Critical Third Party regime.
• Technology companies that operate in the telecoms sector are regulated by Ofcom.
• Technology companies operating in the energy sector are regulated by, and may require a licence from, Ofgem.
• Technology companies that will hold or process personal data for purposes that are not exempt need to register with the Information Commissioner’s Office (ICO).
• Technology companies that are “relevant digital service providers” under the Network and Information Systems Regulations 2018 are also required to register with the ICO, and are regulated by the ICO and the relevant competent authority for the sector in which they will be operating.
• Timelines vary: ICO registration is typically immediate, while FCA and PRA authorisation can take six to 12 months, and Ofcom licensing may take several weeks to months.
• Additional requirements include export controls or intellectual property registrations.

The competent regulator for public takeovers and mergers of UK listed companies that are also UK incorporated is the Panel on Takeovers & Mergers.

Following recent deregulatory changes to the UK Listing Rules regarding FCA oversight of significant M&A by UK listed companies, the FCA now only retains significant oversight in respect of M&A transactions by listed companies that are sizeable enough to constitute a “reverse takeover”.

The UK Competition and Markets Authority (CMA) also regulates M&A, whether of listed or unlisted businesses, from a competition perspective.

The FCA and/or PRA have oversight of UK financial services businesses, and of certain other businesses involved in certain financial services-related activities, including regarding M&A activity involving those businesses.

Acquisitions of companies with business in certain stipulated national security-related sectors and sub-sectors, or of stakes in such companies, are regulated by the UK’s Investment Security Unit.

Foreign investment in the UK is not subject to a specific, overarching review regime. However, the NSIA establishes a mandatory and suspensory review process for acquisitions in 17 key sectors, including Advanced Robotics, Artificial Intelligence, Computing Hardware and Data Infrastructure.

Under the NSIA, clearance is required for acquisitions of shares or voting rights crossing 25%, 50% or 75% thresholds, or where material influence is acquired. The regime also allows for a broader “call-in” power for acquisitions of assets, IP or ideas. In addition, the government retains powers to intervene in transactions on public interest grounds, such as media plurality or financial stability, although these are used infrequently and are not limited to foreign investments.

The UK operates a national security review regime for acquisitions under the NSIA, which applies to both domestic and foreign investors. There are no specific rules that favour or restrict particular nationalities or types of investors; reviews are primarily driven by the target’s activities rather than the investor’s origin. However, in practice, investors from all backgrounds have faced scrutiny, including those from “friendly” nations and the UK, with some high-profile reviews involving investors linked to countries such as China.

In addition to the NSIA, the UK has export control legislation that may apply to certain transactions. Investors should assess whether export controls are relevant to their proposed acquisition, as compliance is mandatory where applicable.

The CMA has jurisdiction to review a transaction where two enterprises cease to be distinct and any of the following thresholds are met:

• the target has UK turnover of GBP100 million or more (the turnover test);
• the parties to the transaction have a share of supply of any goods or services within the UK (or a substantial part of it) of 25% or more (the share of supply test); or
• one party has UK turnover of at least GBP350 million and has a share of supply of any goods or services of at least 33% and one other party has a UK nexus (the hybrid test).

Whether enterprises have ceased to be distinct is technical and complex but can arise in the context of a merger or acquisition, including the acquisition of a minority share or certain rights over a target that amount to “material influence”. It can also apply to joint ventures.

Merger control filings are neither mandatory nor suspensory in the UK. However, the CMA has the ability to “call-in” a transaction for review for up to four months post-closing (although it can and has exercised this power significantly after this point where the transaction was not made reasonably public). Where the CMA intervenes in a transaction post-closing, it will almost always impose an initial enforcement order that places onerous obligations on the parties to hold the target separately and to maintain their businesses.

The Transfer of Undertakings (Protection of Employment) Regulations 2006 are likely to apply to a business and asset acquisition. They are unlikely to apply to share acquisitions.

• Employees automatically transfer to the buyer on their existing terms and conditions of employment (which are protected). Most liabilities regarding their employment also transfer.
• A seller must:
1. inform and consult with affected employees’ trade union or elected representatives (or with employees directly if there are less than ten transferring employees); and
2. provide “employee liability information” to the buyer at least 28 days before the transfer.
• A buyer must inform the seller of any post-transfer measures it envisages will affect transferring employees.

If 20 or more redundancies are proposed, the Trade Union and Labour Relations (Consolidation) Act 1992 will apply. An employer must consult with representatives about proposed redundancies for a minimum period before any termination notice is given to employees.

Works councils are not very common in the UK. If there is a works council in place, its opinion is not legally binding on an employer.

The UK does not have a currency control regulation nor require a central bank approval for an M&A transaction.

Regulatory Intervention

A key legal development in UK technology M&A was the Competition Appeal Tribunal’s decision in Meta Platforms, Inc. v Competition and Markets Authority [2022] CAT 26, which upheld the CMA’s order for Meta to divest Giphy. This case confirmed the CMA’s more assertive approach to technology sector M&A, focusing on potential future competition and dynamic markets. The Digital Markets, Competition and Consumers Act 2024 has since expanded the CMA’s powers in digital markets.

National Security and Sanctions

Another significant case was R (on the application of FTDI Holding Ltd) v Chancellor of the Duchy of Lancaster [2025] EWHC 241 (Admin), the first judicial review under the NSIA. The court upheld a government order requiring divestment due to national security concerns over sanctioned Russian ownership, highlighting the growing impact of national security and sanctions on technology M&A.

Copyright Risks for AI Models

A recent and particularly significant legal development in UK technology M&A was the High Court’s decision in Getty Images (US) Inc & Ors v Stability AI Limited [2025] EWHC 2863 (Ch). The Court held that AI model providers do not infringe UK copyright law by importing or offering in the UK models that were trained abroad on UK copyright-protected data. This judgment provides crucial clarity for the technology sector, especially for transactions involving UK AI assets built on US-trained models, by reducing uncertainty around copyright risk and the value of such assets in M&A activity.

The scope and focus of due diligence in UK technology M&A have broadened to reflect evolving risks and regulatory requirements. Cybersecurity, data privacy and regulatory compliance have become critical areas of focus, alongside traditional IP and contractual matters. There is also increased focus on technology infrastructure open-source software use, software licences and ESG considerations.

Cyber-attacks are becoming more frequent, sophisticated and damaging, and every client in every sector can be impacted by these issues, especially with the development of artificial intelligence technologies. Buyers will therefore routinely assess a target’s security policies, and seek assurances that its systems are robust and that any historical breaches have been properly managed and disclosed.

If buyers are seeking W&I insurance on a deal, insurers are becoming increasingly focused on specialist due diligence such as cybersecurity.

Due Diligence Provided to Bidder by Target

There is no general limit on the volume or granularity of the information a target may provide to bidders, or that bidders may request, in respect of a UK takeover offer. Bidders should be mindful that a listed company in the UK is subject to public disclosure requirements, so the level of due diligence tends to be lighter than for a private M&A due diligence exercise. Private equity bidders, in particular, may seek more detailed due diligence information, which targets may sometimes be nervous to provide, on the basis of the equal disclosure rule referred to below.

Bidders and targets will also need to have careful regard to competition rules that restrict the exchange of competitively sensitive information.

Target Company Obligation to Provide Due Diligence to All Bidders

In certain circumstances, a UK public company that is subject to a potential takeover offer is required to provide the same due diligence information to any subsequent bona fide potential bidder for the company as has been provided to any earlier potential bidder(s), if a subsequent bidder requests that information under Rule 21.3 of the Takeover Code. For bilateral takeover bids, because of this equal information requirement, a target may be cautious as to the volume, granularity and sensitivity of due diligence information provided to one potential bidder, being concerned that other – potentially less preferred – bidders (including direct competitors and/or hostile bidders) may approach the target and demand access to the same information. This might be the case even where a target may be concerned that a direct competitor is requesting such information in connection with a fishing exercise rather than because it is genuinely interested in making a compelling offer for the target.

In formal sales processes, a target company would normally voluntarily disclose the same information to all potential bidders who have formally agreed to participate in a sale process.

Level of Disclosure of Technology Information

There is also no general limit or practice on the volume or granularity of technology due diligence information exchanged in takeover bids, subject to the principles referred to above. Such information exchange may be more significant in respect of technology and tech-enabled businesses.

Level of Technology Due Diligence Allowed by the Board of Directors

For a private M&A transaction, the level of due diligence will be more extensive compared to a listed company due to the lighter disclosure requirements for private companies. Directors of technology or tech-enabled businesses should expect a higher level of technology due diligence on a company’s cybersecurity arrangements and its AI policies and capabilities (if any). There is no limit to the volume and granularity of information that can be provided. In an auction process, directors will be mindful to limit the amount of information provided at the initial diligence phase, in order to protect any commercially sensitive information, and vendor due diligence is becoming increasingly popular.

All companies must be mindful of their obligations under the GDPR – namely, the sharing of personal data and special category personal data. Employment diligence is expected to be on an anonymised basis for the majority of the transaction. There are additional considerations where, for example, the target company is in the cybersecurity sector. The parties may need to consider whether the relevant individuals require security clearance before they can be granted access to review sensitive information. The parties may also need to consider using “clean teams” that are permitted to access commercially sensitive information as part of an M&A transaction.

Announcement Requirements

Firm intention to make an offer

A public announcement is required under the Takeover Code when a firm intention to make an offer has been notified to the target board. This is called a “Rule 2.7 announcement” and should be released via a regulatory information service (for example, RNS).

Possible offer or offer discussions

In certain circumstances where a leak of the possibility of an offer has occurred or is suspected, a possible offer announcement is required to be made without delay to a regulatory information service (called a “Rule 2.4 announcement”). Those circumstances can arise where there is an untoward movement in the target’s share price (eg, 5% intra-day or 10% since an approach was first made) and/or where there has been public rumour or speculation concerning a possible offer.

Before an approach has been made by a bidder, the leak announcement obligation falls on a bidder. After a possible offer approach has been made, the obligation falls instead on a target, unless an approach has been unequivocably rejected by a target board. For these purposes, an “approach” is extremely widely interpreted, and details regarding offer price, conditionality and/or timetable are not required to meet the threshold of a communication constituting an approach.

Prospectus for Securities Exchange Takeover Offers

The regulation in this area is subject to change in the near future, with the new rules regarding the issuance of prospectuses to be consolidated within “The Prospectus Rules: Admission to Trading on a Regulated Market (PRM) Sourcebook” in January 2026.

Currently, for securities exchange offers, the issuance of a prospectus by a bidder is sometimes avoided. Sometimes, but not always, that can be achieved by making the offer by way of a scheme of arrangement rather than by way of contractual takeover offer. As an alternative, certain other restrictions might be capable of being imposed around the share element of the share consideration, to avoid the need for a prospectus.

Potential Reduction in Prospectuses

Under the soon-to-be-adopted PRM Sourcebook, in the case of a securities exchange takeover offer to which the Takeover Code applies, the offer document or scheme circular will normally constitute an “exemption document”, which may avoid the need for the issuance of a prospectus in respect of the bidder’s share consideration issuance, although that will not be the case where the offer is also a “reverse acquisition transaction” under applicable regulation.

Listing Requirements Regarding Bidder Share Consideration

For UK takeover offers, there is no requirement for a bidder’s shares offered in consideration to be listed on a UK stock exchange or any other identified markets; indeed, such share consideration will, on occasion, be unlisted.

For takeovers offering unlisted bidder securities or bidder securities listed only on foreign stock exchanges, however, issues might arise regarding the attractiveness of such an offer to UK-centric target shareholders, who may find they have no market on which to trade such shares or that trading will be difficult for them on foreign markets unfamiliar to them. A recent, albeit rare, example of foreign listed share consideration can be found in the announced takeover of technology business TT Electronics plc by SIX-listed Cicor Technologies. In that case, the bidder subsequently decided to also offer a cash alternative.

Publication of Financial Statements

For UK takeover offers, offer documents and scheme circulars must contain sufficient information to allow target shareholders to make an informed decision on the offer made to them. Specific disclosure requirements of the Takeover Code usually include the disclosure of at least the two most recent years’ audited financial statements of the bidder and target, and of any interim or preliminary results published since such audited statements. Such statements/results can be disclosed by cross-reference to financial information that has been made publicly available on a website.

Auditing Standards

Audited information is very often prepared in accordance with IFRS for listed companies, but the Takeover Code makes no specific requirements in relation to the auditing standards pursuant to which audited statements must be prepared.

Further Financial Information Required by the Takeover Panel

For certain bidders (eg, those not incorporated under the UK Companies Act 2006 and/or not listed or traded on a UK stock exchange), the Takeover Panel may require the disclosure of further information, including financial information, on the bidder and potentially also on persons investing in the bidder in connection with it making the offer and significant existing investors in the bidder.

Materials to be Disclosed to the Takeover Panel

Parties must send electronic copies of the scheme circular, offer documents and key offer announcements to the Takeover Panel and to all other parties to an offer.

Materials to be Displayed on a Website

Such materials, together with a range of other documents and agreements entered into in connection with the offer (eg, shareholder irrevocable undertakings and letters of intent, financing agreements and material contracts entered into in connection with the offer), must also be made publicly available by a bidder and/or the target on websites maintained by them.

On a technology M&A (and any other) transaction, the directors’ principal duty is to act in good faith to promote the success of the company for the benefit of its shareholders as a whole. While directors must have regard to the interests of other stakeholders (such as employees, customers and suppliers), this does not create a separate, enforceable duty to those stakeholders.

It is common for directors to establish committees in relation to the operational functions of a company – eg, a remuneration committee or a risk committee. Committees of directors can also be used where directors have a conflict of interest in a particular matter. In those instances, the non-conflicted directors need to review information and make decisions about that conflicted matter, and the creation of a separate committee of directors enables them to do this. Where there is a dispute between a company and some of its shareholders who have directors appointed to the board, a separate committee enables the directors of a company to continue to receive and review legal advice without waiving privilege.

The extent of the board’s involvement in M&A negotiations varies according to the size of the company and the board’s experience with such transactions. In smaller companies, directors are likely to take a more active role in leading the M&A process. In contrast, larger companies often rely on a specialist M&A team, typically led by one or two directors whose responsibilities include managing such transactions. Larger companies may also have a separate investment committee responsible for approving or rejecting proposed transactions.

Financial Advice for Directors: Targets

For UK takeovers offers, under Rule 3 of the Takeover Code, the board of the target company is required to obtain financial advice on whether the final terms of the offer are fair and reasonable, and must disclose the substance of such advice to target shareholders. The advice is typically given by an investment bank or a corporate finance firm that is sufficiently independent and competent to provide the advice. Disclosure of the advice itself is rarely detailed, focusing instead on whether the offer price is fair and reasonable. The target board will often publish its reasons for recommending the offer in some detail, which may also include reasons relating not only to the level of the offer price.

Financial advice privately provided to target boards in connection with an offer can take a variety of forms and analyses, and these may differ slightly from adviser to adviser.

Financial Advice for Directors: Bidders

A bidder will almost always receive financial advice in respect of the making of its offer, although the substance of that advice is not required to be published and the Takeover Code is not prescriptive regarding the extent or nature of the advice provided, except in very limited circumstances.

Private Company Merger

Typically, the parties will engage an independent corporate finance adviser or investment bank to prepare a market valuation of the company being sold. A bidder will also engage its own advisers as part of its due diligence to verify that the financial position of the target company aligns with the proposed valuation prepared by the target company’s advisers.