Skip to main content

Latest Releases

August 29, 2018

AUGUST'S NEWSLETTER

Corporate news     

The UK showing positive growth in M&A market



British business leaders have a lot to smile about. 

The value of announced M&A deals skyrocketed to $120bn (£87bn) during the first quarter of 2018 according to data published by EY. Not for 11 years has the UK market seen such dizzying levels of activity. Bullish attitudes and a confidence in the improvement of the economic outlook mean that deal expectations are at a record high with EY predicting that the number of UK businesses looking to merge or purchase other companies are at levels not seen in 18 years of surveys.

Inbound activity where foreign investors buy into the UK market has seen the most impressive levels of growth with a whopping 133 deals valued at $11bn announced for Q1 of 2018.

Here at the Greenaway Scott Group, we’ve borne witness to the increasing phenomenon, having been involved in an increased number of inbound deals, an example being the recent acquisition of the NAT Group by ComfortDelGro for £13.4m earlier this year. Brexit and all the uncertainty that comes with it is still looming on the horizon and so it’s important for UK companies to make sure that they take advantage of this foreign appetite, particularly whilst we await clarity on Brexit’s impact on future trade relations. Brexit-proofing business activity now should set UK companies in good stead for the future. 

It’s certainly a sellers’ market at present, with many UK based companies looking to expand and diversify into unchartered sectors. The number of business leaders who have M&A on their agenda is increasing and so buyers need to be prepared to bring their best possible offers to the table if they are serious about trumping the competition. Technological innovation doesn’t appear to be slowing down anytime soon and it’s likely that larger tech companies, both at home and away, will continue to acquire smaller ones.

Mergers and acquisitions can take place for many strategic business reasons, most of which are economic at heart. Acquiring or merging with a competitor allows companies to leverage what can be costly manufacturing positions and their market positions generally. If a company obtains another’s capabilities, it is able to expand its own database and will invariably acquire know-how, processes and tools that it wants access to without having to invest in organically developing abilities. Similarly, acquiring a larger market share can give a company a larger customer base overnight.

 

Despite the uncertainty over the future of the UK’s economic and trade relations, M&A activity is booming, with growth forecasted to continue for the rest of 2018. With the UK looking set to retain its position as the third most popular destination for inbound M&A deals globally, exciting times await.

Commercial news

 

Business to Business Contracts: Understanding Sale of Goods legislation to improve the position of your business.

When entering into business to business (B2B) contracts, it can be beneficial for commercial parties to be aware of the operation of the Sale of Goods Act 1979 (SOGA).
The act implies terms on key issues in an agreement by default where the buyer and seller have not explicitly covered what happens in a certain event in the contract, therefore knowledge of the operation of the act can assist you in your business as a buyer or seller entering into contracts in:

 

  • Informing you in how to approach negotiations into the contract;
  • Informing you in the event of a breach by your own business, what your exposure to risk may be;
  • Informing you what rights of action you can take, in the event of a breach by the other party to the contract.

Payment dates 
When entering into a contract, your business and the other business party to the contract will most likely negotiate a date when payment will take place in return for the goods sold by the seller.

However, what may be less commonly known is that the SOGA by default implies that with regards to the agreed date for payment time is not of the essence. This means that should the buyer fail to pay on the agreed date, the seller does not have the right to treat the contract as terminated, but only to sue the buyer for damages. This standard position is suboptimal for the seller, as practically it means there is less onus placed upon the buyer to pay on time, as the seller suing for damages involves time and cost. The potentially increased risk of the buyer not paying on time is also undesirable for the seller as it could cause cash flow issues for the seller. 
However, if in the contract the seller made time for payment of the essence, the default SOGA position would no longer apply and the seller would be able to treat the contract as terminated. 

Delivery dates

Where a date has been agreed for delivery of goods, it is likely that time is of the essence. This means that should the seller fail to deliver on the agreed date, the buyer is free to treat the contract as terminated and go elsewhere to buy the goods. This position is problematic for the seller as they could lose out on a potentially lucrative contract due to a late delivery.

However, if in the contract the seller negotiated that for the delivery dates time is not of the essence, the sellers exposure to risk in losing out on valuable contracts would be reduced.

Knowledge of sale of goods legislation can help your business achieve the best result possible in contractual negotiations in maximising business certainty and reducing financial risk.

The information contained in this article is for information purposes only and is not intended to constitute legal advice. If you require further information our commercial team would be more than happy to assist you. Please contact us at commercial@greenawayscott.com or call us on 02920 095500 to speak to one of our team. 

Employment news

 

Internal Disciplinary Procedures: The Role of the HR advisor

Whenever employers involve Human Resources personnel (HR) in internal proceedings, they should always have the following cases (set out below) in mind. It is important that the decision to discipline or dismiss comes from the disciplinary officer. 

In Chhabra v West London Mental Health NHS Trust, the court considered the role of the HR advisor, and to what extent they can be involved in an investigation without the investigation being deemed ‘unfair’. Lord Hodge provided the following guidance:-

 “There would generally be no impropriety in a case investigator seeking advice from an employer’s human resources department, for example on questions of procedure. I do not think that it is illegitimate for an employer, through its human resources department or a similar function, to assist a case investigator in the presentation of a report, for example to ensure that all necessary matters have been addressed and achieve clarity”.

In that case, HR’s involvement went beyond advising on law and procedure as substantial amendments were made to an investigatory report to the extent that the court felt it no longer was the true product of the investigating officer.

The issue was further debated, and the above principle reiterated, In the case of Ramphal v Department for Transport UKEAT/0352/14

In this case, the initial report of the investigating officer had found simple misconduct, and recommended a written warning, but the final report, after suggested changes by HR, found gross misconduct, and resulted in a summary dismissal. The Employment Appeal Tribunal (EAT) considered that the “dramatic” change in the report was “disturbing” and remitted the case back to the employment tribunal. 

In that case, the judge stated that:-

“In my opinion, an Investigating Officer is entitled to call for advice from Human Resources; but Human Resources must be very careful to limit advice essentially to questions of law and procedure and process and to avoid straying into areas of culpability, let alone advising on what was the appropriate sanction as to appropriate findings of fact in relation to culpability insofar as the advice went beyond addressing issues of consistency. It was not for Human Resources to advise whether the finding should be one of simple misconduct or gross misconduct.”

This view was further supported by the case of Dronsfield v University of Reading where the investigatory process was instigated due to allegations that associate professor Dr Dronsfield had sexual relations with a student. The investigation report was conducted with the assistance of a HR advisor and latter drafts of the report excluded some of the favourable paragraphs about Dr Dronsfield following HR’s input. 

On appeal, the EAT were critical of the involvement of HR, saying that it was not “normal practice” as HR should have a mostly “supporting” role. 

It is worth noting that the above cases do not mean that an employer cannot seek guidance from HR however, such guidance should be limited to legal issues and/or procedure. 

Practical Guidance for Employers 

1.       Ensure that the investigating officer has reached any decision about the conclusion, and resulting sanction (if appropriate) independently based on the evidence collated. ACAS guidance in ‘Conducting Workplace Investigations’ on the topic states that:-
The report should reflect the investigator’s own conclusions. While an investigator may seek advice from a third party such as HR, the conclusions should be their own.

2.       Remember that an investigation report should cover all the facts that were and were not established, and whether there were any mitigating circumstances that also require consideration.  To exclude any information may leave an investigation open to accusations of bias and filtering evidence to suit their findings.

 

3.       Employers should be mindful that, generally draft reports/internal memorandum and commentary between HR and an employer are disclosable during any potential proceedings. Advice obtained from a solicitor will generally not be admissible.

For further guidance on following a fair disciplinary process, please contact our employment team for a confidential discussion at employment@greenawayscott.com

 

Return to index