The Shifting Sands of Corporate Transactions

3 mins

Posted on 05 Oct 2023

The Shifting Sands of Corporate Transactions

The format of corporate transactions has undergone a remarkable transformation over the past 25 years. With globalisation, technological advancements, and changing market dynamics, legal frameworks governing corporate transactions have adapted to meet new challenges and opportunities. Various key changes have shaped the landscape of corporate transactions and their implications for businesses.

Embracing the Digital Era

The last decade has witnessed a profound digital revolution, affecting every aspect of business operations; corporate transactions have not been immune to this shift.

E-signatures and online contract management have streamlined the process of concluding deals, making it quicker and more efficient. Artificial intelligence is being used more and more to complete basic tasks, although it has not replaced the value of experienced professional advisers.

Rising Focus on Data Protection

As data becomes the lifeblood of modern business, the need for robust data protection has intensified. The General Data Protection Regulation (GDPR) and other stringent data privacy laws have significantly impacted how corporate transactions handle personal and sensitive information.

Companies must now conduct more thorough due diligence to ensure compliance and minimise potential legal risks related to data breaches during mergers, acquisitions, and other transactions. For example, lawyers now need to consider if information, such an employees’ personal data, should be anonymised during the due diligence process.

Navigating Cross-Border Complexity

Globalisation has blurred the lines between international markets, prompting an increase in cross-border corporate transactions. Consequently, lawyers and businesses alike must navigate a labyrinth of legal systems and regulatory frameworks to ensure smooth transactions.

Emphasis on Environmental, Social, and Governance Factors

Business owners and investors have become more attuned to the impact of corporate activities on the environment, society, and governance (ESG). Consequently, there has been a growing emphasis on ESG factors in corporate transactions, with companies now considering more extensively the sustainability and ethical implications of their deals.

Strengthening Minority Shareholder Rights

Corporate transactions have seen an increasing focus on protecting the rights of minority shareholders. Laws have sought to ensure that minority shareholders are not unfairly prejudiced or marginalised, and greater employee involvement is sought where the labour market is difficult.

This emphasis on equitable treatment has provided minority shareholders and employees with greater confidence during transactions, but it is still not without its faults.

Expanding Antitrust Scrutiny

To maintain healthy market competition, antitrust regulations have tightened their grip on corporate transactions, especially given the now international nature of business.

Transactions are now subject to more extensive scrutiny to assess their potential impact on the market, especially given the recent implementation of the National Security and Investment Act 2021 in England and Wales, which requires notification to the government of transactions in certain industries.

The past quarter century has seen an incredible evolution in the way that corporate transactions are undertaken, driven by technological advancements, changing market dynamics, and increased awareness of social and environmental responsibility.

As businesses continue to adapt to an ever-evolving landscape, it is essential to stay abreast of legal changes and seek expert advice to ensure compliance and success in an increasingly interconnected and competitive global marketplace.

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Thomas Clark

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The articles published on this website, current at the date of publication, are for reference purposes only. They do not constitute legal advice and should not be relied upon as such. Specific legal advice about your own circumstances should always be sought separately before taking any action.

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