The Company Secretary in an M&A Process

A transaction is the moment a company’s governance record stops being an administrative matter and becomes a commercial one. Gaps that nobody minded for five years are found by a buyer’s solicitors in a fortnight, and they arrive back at the board as warranty requests, escrow retentions or a reduced price.

This article covers what the Company Secretary actually does through a sale or acquisition, what buyers look for, and what to fix before a process begins rather than during one.

Before the process: the record

The single most valuable contribution is made twelve months before anyone opens a data room. Five things should be reconciled.

The statutory registers against reality. Members, directors, secretaries, charges and persons with significant control. In businesses that have issued shares to employees, brought in investors or restructured, these frequently diverge from what people believe.

Filing history at Companies House. Late filings, missing confirmation statements, allotments never registered, charges not satisfied on the register long after repayment. Each is small; collectively they signal an organisation that does not attend to detail.

Share history. Every issue, transfer and buyback, with board and shareholder authority documented for each. This is where transactions most often stall — a buyer cannot verify who owns what if the paper trail is incomplete.

Option and incentive schemes. Grant documentation, exercise conditions, valuations and whether the scheme rules were followed. Employee schemes are a common source of unpleasant surprises.

Board minutes. Companies must keep records of directors’ meetings and retain them for ten years under section 248 of the Companies Act 2006. Buyers read them, and they read them looking for decisions that were taken but never recorded.

What buyers actually look for

None of these individually kills a deal. What they do collectively is shift the buyer’s assessment of risk, and risk is priced. A seller whose record is in order negotiates from a stronger position simply because there is less to argue about.

During the process

Once a transaction is live the Company Secretary’s role changes character, and three responsibilities dominate.

The data room. Assembling corporate documents, verifying they are complete and current, and managing what is disclosed and when. Disclosure has legal consequences — what is properly disclosed qualifies the warranties — so this is not an administrative task delegated downward.

Board process under pressure. Transactions generate frequent decisions on compressed timetables, often between scheduled meetings. Written resolutions, short-notice meetings, quorum where directors are conflicted, and a record that will be scrutinised later. Getting this right while everyone is moving quickly is the core of the job.

Conflicts. Management participating in a buyout, directors with shareholdings on different terms, a non-executive connected to the buyer. Each needs declaring, recording, and in some cases the director excluding themselves from the decision. The Company Secretary is usually the only person whose job it is to raise this.

Completion and afterwards

The work does not end at signing. Completion generates a substantial governance workload: share transfers registered, stock transfer forms stamped, registers updated, director appointments and resignations filed, charges registered or released, and the registered office or accounting reference date changed where the acquirer requires it.

Where a group is acquiring, the target’s board needs reconstituting, its articles may need replacing, and its governance framework aligning with the group’s. This post-completion phase is routinely under-resourced because everyone involved is exhausted, and it is where filings get missed.

Do you need someone in post, or support?

Three practical options for a business heading toward a transaction without an established company secretarial function.

Corporate finance advisers and lawyers. They will run the transaction, and their teams will handle much of the documentation. What they will not do is know your history, or have been in the board meetings that produced the decisions now being examined. Their time is also considerably more expensive per hour.

A fractional company secretary. Frequently the right answer for a business twelve to eighteen months out. Someone experienced attending board meetings a few days a month, tidying the record, and present through the process — at a fraction of a permanent appointment.

A permanent appointment. Justified where the business will remain independent with an active board, or where the transaction is the start of an acquisition strategy rather than an exit. Our guide on how to hire a Company Secretary covers the process, and the outsourced versus in-house comparison sets out where each model fits.

One point on timing: do not change company secretarial arrangements during a live process. Switch a year ahead, or wait until after completion.

Frequently asked questions

What does a Company Secretary do in a sale process?

Prepares and verifies the corporate documents for the data room, manages board process and minutes through a compressed timetable, handles conflicts and declarations of interest, and completes the filings and register updates that follow completion.

How far ahead should a company prepare its statutory record?

Twelve months where possible. Reconciling registers, filing history, share transactions, option schemes and board minutes takes time, and doing it under transaction pressure with lawyers billing is considerably more expensive.

What governance problems most often affect deal value?

Incomplete share transaction history, decisions taken without recorded authority, option schemes not operated in accordance with their rules, and undeclared conflicts. Individually manageable; collectively they raise the buyer’s assessment of risk, which is priced.

Can our lawyers handle this instead?

They will run the transaction and produce the documentation. What they cannot do is know the company’s history or have been present for the decisions now under examination. Most sellers use both, with the Company Secretary handling the corporate record and the lawyers the deal.

What happens to the Company Secretary after completion?

In a trade sale into a group, the target’s governance is usually absorbed and the role may not continue. In a private equity transaction the requirement typically increases, because investor directors bring reporting obligations and consent matters that need administering properly.

Adrian Lawrence

Adrian Lawrence FCA is the founder of Exec Capital. He is a Chartered Accountant and holds an ICAEW practising certificate in his own name with over 25 years’ experience operating at C-suite level, Adrian brings direct executive experience to senior search. His background spans private equity-backed businesses, owner-managed companies, and listed environments, giving Exec Capital a practitioner’s understanding of what leadership hires actually require.