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Corporate

Health and Social Care (Wales) Act 2025: Transforming Children’s Social Care in Wales

Beyond the Bottom Line: Reflections on the First Few Weeks

Key contacts: Beverley Jones (corporate advice) and Jenny Wilde (regulatory advice)

The Health and Social Care (Wales) Act 2025, which received Royal Assent on March 24, 2025, reflects a comprehensive effort on the part of Welsh Government to reform health and social care services in Wales. The Act introduced a framework for non-profit provision in children’s social care services and signposted a more general move towards enhancing autonomy for individuals requiring care.

How does the Act change the provision of children’s social care services?

A key provision of the Act is the phased elimination of private profit from the care of looked-after children. By 2030, only public sector, charitable, or not-for-profit organisations will be permitted to provide fostering, children’s home, or secure accommodation services for children in Wales. This transition aims to ensure that funds generated through the provision of children’s care services are reinvested into children’s welfare rather than distributed as profits to shareholders.

When will the Act be implemented?

The key milestone dates for the implementation of this new legislation are:

1 April 2026: new providers registering with Care Inspectorate Wales (CIW) to provide children’s care home (either wholly or mainly to children), fostering and secure accommodation services (collectively “restricted children’s services”), must be a not-for-profit entity.

1 April 2027: existing for-profit providers will face transitional restrictions unless they re-establish their business as a not-for-profit model.

Restrictions will apply to:

  •  registering new homes and adding additional beds to existing services; and
  • the ability of local authorities in Wales to place children with a for-profit provider without approval from Welsh Ministers. 

1 April 2030: no new placements of children from Welsh placing authorities with for-profit providers unless approved by a supplementary placement process.  English placing authorities are only able to place children in existing for-profit children’s services in exceptional circumstances.

What is a not-for-profit entity?

For the purposes of the Act, a not-for-profit entity is one of the following:

  1. a charitable company limited by guarantee, without a share capital;
  2. a charitable incorporated organisation;
  3. a charitable registered society; or
  4. a community interest company limited by guarantee without a share capital.
How does a for-profit provider continue to provide restricted children’s services?

The Act does not provide any particulars, or even certainty, on a process for private providers to apply to be considered as a continuing provider.  The legislation is likely to be bolstered by related regulations and guidance that should clarify a pathway. Until then, there are no assurances that this will be straightforward. 

What will be the regulatory impact of changes to the provision of children’s social care services?

From 1 April 2027, CIW will have significant work to do (in addition to its existing registration and compliance work) to monitor how existing providers are transitioning into not-for–profit models. There will be increased scrutiny of corporate structures and financials, as well as more detailed reviews of the individuals behind the structure.

The regulator will be forced to divert from its typical work and this is bound to have a significant impact on all registered providers. We would expect a project of this magnitude to require a major shift in focus towards children’s services generally, which could have a knock-on effect for the adult social care arm of CIW.

What organisational and commercial impact will result?

Providers themselves are going to have to think carefully about how they are structured if they wish to continue to deliver children’s services in Wales. Most will wish to seek advice from solicitors and accountants, likely at significant cost, which could have been invested in the service itself.

The reasons behind these changes are clearly well meaning. However, it’s important not to lose sight of the fact that there are some clear risks in closing the door to for-profit service providers, not least because there remains a big question-mark (particularly in an environment where costs are ever increasing) over the ability of local authorities, charities and the not-for-profit sector to deliver the services that are so desperately needed.

Even in the current environment, which allows both for-profit and not-for-profit service providers to co-exist in the sector, there is already insufficient service provision, not just in Wales but in the UK as a whole. The existence of for-profit providers operating in the sector is not the cause of that, and it is difficult to see how excluding them from future service provision is going to fix it. 

Some commercial drivers are necessary to encourage new providers into the sector and to incentivise existing providers to expand their existing service provision beyond what is currently available. Investment requires capital, and that capital inevitably comes at a cost. If future investment can only be sourced by service providers in the form of lending, we risk exacerbating the problem of uneven distribution of wealth in our society. Those who can afford to deploy capital by advancing loans to service providers will be able to make a return (profit) on their investment, while owner-managers who pour their heart and soul into service delivery won’t reap the same rewards for their (often very considerable) efforts.

With so much uncertainty in the sector already, there is a real risk that this policy shift will cause providers to put any plans for growth on hold, which will only serve to exacerbate and compound the lack of sufficient service provision.

Are there other changes introduced by the Act?

So much attention has been drawn to changes made to the provision of children’s care services that some of the other changes introduced by the Act have been somewhat overshadowed.

Notably, the Act also facilitates the introduction of direct payments within continuing NHS healthcare. These payments grant individuals with disabilities and those with long-term health conditions greater control over their care arrangements and affords them the same rights to the payments as their peers who access social care.

Rhian Davies, CEO of Disability Wales, said:

“This new law will enable continuing healthcare recipients to make their own decisions regarding how and by whom their personal support is provided. It marks a significant milestone in progressing the right to independent living for all disabled people in Wales”.

Additionally, the Act:

  • extends mandatory reporting requirements for children and adults at risk (to ensure that all relevant professionals are aware of their duty to report and to facilitate timely interventions to protect vulnerable individuals);
  • amends the regulation of service providers (to strengthen the existing framework),
  • attempts to strengthen the social care workforce by broadening the definition of a social care worker to encompass childcare and play workers (thus ensuring they have the necessary skills and knowledge to protect vulnerable individuals).
Final thoughts

The Health and Social Care (Wales) Act 2025 marks a significant policy shift, particularly in its ambition to remove private profit from children’s social care. While the intent to reinvest resources directly into children’s welfare is commendable, the path forward is far from simple. Without clear, practical guidance and adequate support for providers and regulators alike, there is a real risk that the sector could face reduced capacity at a time when demand continues to grow. This would ultimately be to the detriment of the vulnerable children that this legislation was designed to protect.

The transition away from for-profit provision may inadvertently limit investment and innovation, especially if not-for-profit providers struggle to absorb the increased demand or secure necessary funding. The lack of clarity around the supplementary placement process and the additional regulatory burdens could compound these challenges.

If the ambition of the Act is to succeed, it must be accompanied by thoughtful implementation, meaningful consultation with all stakeholders, and a realistic understanding of the financial and operational pressures and economic headwinds that providers already face. Without this, we risk undermining the very outcomes the legislation seeks to improve.

For advice on preparing for the implementation of the Health and Social Care (Wales) Act 2025, including on restructuring your business model, contact our Health & Social Care team.

Can a Sole Director Run their Business, or Must New Directors be Appointed?

Understanding Re KRF Services (UK) Ltd and its impact for SMEs using the model articles of association

Key contact: Jon Lawley

The High Court has provided a clearer answer to the question can a sole director run their business, or must new directors be appointed? We explain the impact of the recent judgment in Re KRF Services (UK) Ltd on the powers of single company directors.

What are the model articles?

All limited companies (no matter their size) must have articles of association. Articles of association set out the rules that company directors must follow when running their companies; including for sole directors. To assist SME business owners, the government drafted the model articles of association with the intention of simplifying matters for SMEs and avoiding the need to instruct solicitors to draft bespoke articles.

Sole directors and the model articles

Some smaller companies are run by single owner directors who both own all the shares in the company and are responsible for the day-to-day management of it as directors. When these individuals take decisions on behalf of a company incorporated with the model articles, they will either be doing so in their capacity as a director or as a shareholder.

The authority of sole directors is governed by articles 7(1), 7(2), 11(2) and 11(3) of the Model Articles: –

  • article 7(2): where there is a single director appointed with no contrary provision of the articles of association, they may disregard the so-called ‘normal rule’ that directors will take decisions in a board meeting or by a ‘unanimous decision of the eligible directors’;
  • article 11(2):  the quorum for a directors’ meeting can be fixed from time to time, but it cannot be less than two, and the default quorum is two; and
  • article 11(3): if the total number of directors appointed is less than two, then they may not make any decisions apart from appointing new directors or calling a general meeting to allow the shareholders to appoint new directors.

A literal reading of the above provisions would restrict a single director from running their business as a sole director (for instance they would not be able to enter into contracts with third party suppliers on behalf of the company). Most practitioners previously took the view that article 7(2) of the Model Articles meant that sole directors were excluded from the effects of articles 11(2) and (3).

The situation prior to Re KRF Services

In 2022, in Fore Fitness Holdings Ltd, the High Court ruled that where a company had adopted the model articles but had inserted a bespoke article requiring a minimum of two directors to pass a decision of the company, then any decision of the directors would require a minimum of two directors even if only one was appointed. However, the latter case of Re Active Wear Ltd (Re Active Wear)concerned a scenario where the company had only appointed a single director and had adopted unamended the Model Articles. In this case, the High Court distinguished the facts from those in Fore Fitness and held that Article 7(2) of the Model Articles would prevail over the requirement for two directors set out in Model Article 11(2).

Unfortunately, Re Active Wear introduced some uncertainty due to comments made by the judge that, where a company with a sole director had previously appointed other directors, article 7(2) would not apply. This did not ultimately form part of the final decision given that in Re Active Wear there had only ever been one director appointed, but this added further layers of complexity to this area of law.

Fortunately, the recent case of Re KRF Services (UK) Ltd (Re KRF Services) has clarified the position and has been welcomed by practitioners.

How Re KRF Services has clarified the situation

In Re KRF Services, only one director remained appointed following the imposition of financial sanctions against its ultimate beneficial owner. As a result, no other directors wished to join. Crucially, there had previously been at least one other director appointed, and the company had adopted the Model Articles without modification. The sole director passed a resolution to file an administration application, and the question was whether the individual had the authority to do so.

The High Court ultimately decided that they did and to rule otherwise would have rendered Model Article 7(2) completely toothless. Therefore, article 7(2) of the Model Articles applied here notwithstanding the comments made by the judge in Re Active Wear that article 7(2) would not apply where a company with a sole director had appointed another previously. This applies in respect of unamended Model Articles only – amended articles that adopted a minimum number of directors would still be construed in the same way. 

Key takeaways for small business owners
  • Model articles are not a one-size-fits-all solution. While they are meant to be convenient, they may not account for all the nuances of how a sole director should manage the company.
  • As a sole director, it is important to understand that, whilst you have significant autonomy in company decision making, this autonomy is still subject to your company’s articles of association. If you intend to operate as a sole director, it may be worth seeking legal advice and asking your solicitor to draft bespoke articles to facilitate this.
  • Broadly speaking, the case law now distinguishes between two scenarios:
  • if the company adopts bespoke articles of association, which set a higher quorum, Model Article 7(2) will not apply; and
  • if the company has appointed a single director, it is irrelevant that there may have been another director appointed in the past.

Click here to read the High Court’s decision in Re KRF Services.

For further advice about the model articles or other corporate law issues, please contact our award-winning corporate team

Acuity Law Represents Discover Momenta in Acquisition by Liva Healthcare

Acuity Law Represents Discover Momenta in Acquisition by Liva Healthcare

Key contact: Jon Lawley

One of the UK’s leading law firms, Acuity Law, has represented the selling shareholders of Discover Momenta and its subsidiary, Momenta Newcastle, in their acquisition by Liva Healthcare, enhancing their ability to offer treatment options for chronic diseases linked to lifestyle choices.   

Momenta provides and licenses digital, virtual and in-person healthy lifestyle programmes to National Health Service (NHS) organisations, local authorities and other third parties across the UK, to help manage long-term conditions such as obesity, Type 2 diabetes and cardiovascular disease.

Liva, a digital platform offering human-led interventions for chronic health problems, will expand its reach through the acquisition of Momenta. The deal consolidates Liva’s position as a global leader in therapeutic lifestyle solutions, leveraging the strengths of both companies to improve patient care, with Acuity representing the selling shareholders throughout the acquisition process.

Jon Lawley (Partner) and Joe Smith (Associate) fronted the Acuity team on behalf of the selling shareholders.

Jon Lawley at Acuity Law, said: “We’re thrilled to have used our expertise to support the selling shareholders during the acquisition by Liva. This move represents a key milestone in expanding treatment options for those with lifestyle-driven health issues, and it’s incredible to be part of something that has the potential to make a real difference in people’s lives.”

Harry MacMillan, on behalf of the selling shareholders of Discover Momenta, said: “Acuity’s expertise has been invaluable throughout this process. The opportunity to join forces with Liva is truly exciting, and we’re confident that by combining our programmes with their position as a leading provider of long-term disease care, we can better address the growing demand for treatment.”

Liva’s acquisition of Momenta follows new funding from IBL Group and existing investors to accelerate its growth plans. The deal marks a pivotal step in Liva’s efforts to scale cost-effective treatments for chronic diseases, having already helped over 80,000 patients better manage lifestyle-related conditions. Over 155,000 people have participated in Momenta’s programmes.

Headquartered in Cardiff, Acuity Law is a fast-growing law firm with over 150 lawyers supporting business clients throughout the UK. The firm’s ambitious growth strategy has seen it open offices in Birmingham, Leeds and Liverpool in recent years, adding to its presence in Bristol, London and Swansea.

Need help with an acquisition or sale? Contact our Corporate team.

Acuity Law Advises MGY on a Further Acquisition in South Wales

Acuity Law Advises MGY on a Further Acquisition in South Wales

Leading UK law firm Acuity Law has acted on behalf of MGY Estate Agents & Chartered Surveyors on the acquisition of Priory Estates and Lettings, strengthening its presence across south Wales.  

With a strong foothold in Barry, MGY’s acquisition of Priory Estates reinforces its commitment to delivering comprehensive property services across Cardiff, Rhondda Cynon Taff, and the Vale of Glamorgan. Driven by a customer-centric strategy, the deal allows MGY to better meet the region’s housing needs by expanding its reach. 

Led by associate Joe Smith, supported by solicitor David Williams and partner Damien Cann on the property side, the acquisition enables MGY to broaden its housing services across the wider region, and continue to contribute to the development of sustainable communities.   

Joe Smith at Acuity Law said: “We’re delighted to have been able to use our expertise to support MGY on another acquisition. Through the expansion of its portfolio, MGY is able to better fulfil the needs of its clients and deliver an exceptional level of service across wider south Wales.” 

Michelle Bishop, director at MGY Estate Agents & Chartered Surveyors, said:  

“We are excited to announce the acquisition of Priory Estates in Barry, a well-established name in the local property market. This acquisition is a key milestone in our growth strategy, enabling us to expand our presence in the Vale of Glamorgan. By combining our strengths with the talented team at Priory Estates, we are confident that we can offer even greater value to our clients and continue to lead the way in providing exceptional service and stay at the forefront in our industry.”  

The acquisition of Priory Estates will elevate MGY’s delivery of housing services, covering residential sales and lettings, land, surveys, valuations, new homes and commercial property. The tactical step marks a key milestone in the organisation’s wider growth strategy.  

Headquartered in Cardiff, Acuity Law is a fast-growing law firm with over 150 lawyers supporting business clients throughout the UK. The firm’s ambitious growth strategy has seen it open offices in Birmingham, Leeds and Liverpool in recent years, adding to its presence in Bristol, London and Swansea.  

For help in buying or selling a company, contact our Corporate team.

Changes to Company Law in 2025: A Summary

We take you through a new set of company law changes on the horizon this year

Author: David Williams

Key contact: John Grant

2025 has landed, and companies and their directors will need to be aware of a new set of company law changes on the horizon this year.

Company law changes mean updated expectations of company directors. This set of anticipated reforms are thanks to implementation of the Economic Crime and Corporate Transparency Act 2023 and the progression of the Company Directors (Duties) Bill through Parliament.

We’ve summarised the main points so you can make sure you stay compliant in 2025.

1. Economic Crime and Corporate Transparency Act 2023 (ECCTA): Provisional timeline for implementation

The Economic Crime and Corporate Transparency Act 2023 (ECCTA) is intended to reform the role of Companies House, enabling it to become a more active gatekeeper of information filed on behalf of companies.

From Spring 2025: it is intended that anti-money laundering supervised firms and sole traders (such as accountant or solicitors registered with their respective professional bodies) will be able to apply to become authorised corporate service providers with Companies House. This would permit them to carry out identity verification services with individuals who can voluntarily verify their identity. It is planned that all directors and persons of significant control will eventually need to have their identity verified by either Companies House or an authorised corporate service provider.

From Autumn 2025: The identification verification requirements should become compulsory for all new directors and persons of significant control and a 12-month period in which all existing directors and persons of significant control will need to verify their identity will begin.

Following this, it is intended that any person making filings at Companies House will need to verify their identity, but this requirement is not expected to be implemented until 2026.

Note: be prepared for potential delay!

The new requirements noted above have been pushed back from their original implementation timeline already so there is a reasonable possibility of further delay – especially as implementation will require the passing of Statutory Instruments by Parliament.

From 01 September 2025: The new criminal offence of failing to prevent fraud under ECCTA will come into force.  

Under this new offence, large business structures or companies may be held criminally liable where an employee, agent, subsidiary or other associated person commits fraud intending to benefit the organisation. The offence will only apply to large companies (businesses with more than 250 employees and a turnover of more than £36 million or more than £18 million in assets), not-for-profit organisations and incorporated public bodies. It will a valid defence for businesses to show that they had reasonable procedures in place to prevent fraud.

2. Directors’ Duties Updated: Company Directors (Duties) Bill

The Company Directors (Duties) Bill is a private members bill due for a second reading on 4 July 2025. The Bill will amend the director’s duties under the Companies Act 2006. requiring directors to balance their duty to promote the success of the company with duties to the company’s employees and the environment.

The passage of the bill remains in its early stages and so the text of the amendment has not been finalised. Its overall impact if passed will therefore remain an open question until later in the year. Nevertheless, if the bill becomes law, directors will  need to reconcile these new duties with the duties that already exist under the Companies Act 2006. 

It will be important for company directors to stay up to date with changes to companies  law and their duties as directors in order to avoid unanticipated legal issues.

For further advice on understanding how the changes impact your business, and on implementing new duties, contact our Corporate team.

Need some corporate finance advice? Meet Acuity Alliance Partner Adam Street Advisers

Andrew Barnsley, founder and Managing Partner of Acuity Alliance Partner Adam Street Advisers, fills us in on his business journey, and the importance of good advice during the transactional process

Key contacts: Beverley Jones, Jon Lawley, Steve Berry

Tell us about your business. How do you help your clients?

We are a corporate finance advisory boutique. We tend to work primarily with founders, entrepreneurs and family-owned businesses who are looking to raise money, to grow their business or are at the stage where they’re looking to sell. So, we cover quite a broad spectrum.

We have deep experience in the healthcare and education sectors. However, we have completed transactions in a broad range of sectors such as food and beverage, fashion, engineering, manufacturing, leisure, software, technology and AI enabled businesses.

You’re an entrepreneur yourself. What was your journey towards founding your own business?

I’m a frustrated banker!  I got my first job doing deals in the healthcare sector when I was 30 after doing my MBA. By 32, I had set up a corporate finance advisory business. Over the last 20 years, that has evolved into what Adam Street is today.

How do clients find their way to Adam Street?

We do very little marketing. It’s 100% reputation and referrals, people know where to find us. We’ve built a really strong community amongst owners of private companies, they all know other entrepreneurs and, as a result, they tell people to come and see me. We also have a strong referral network, of which Acuity is a part.

What legal issues do your clients come up against? When do you bring in a lawyer?

I send them to a lawyer because they are about to embark on the biggest transaction of their lives: selling or raising equity for their business. They need to understand fully not just what we do, but how we work with lawyers to make sure that the transaction gets the best result for them.

The client needs to understand the legal process in doing a transaction: that it needs to cover everything from property (if they have a lease or own freehold), employment elements involving their workforce, any kind of investment agreement or SPA, finance and corporate matters. So, once we refer into the top at Acuity, it gets filtered out to all of your different teams.

It’s really, really important for us to work with quality, experienced lawyers, because we do so much work upfront and the deal has to be executed properly. Our lawyers have to be prepared to work hand in glove with us and listen to us from a commercial perspective, and we rely on them from a legal perspective – it’s a true collaboration, so it has to be the right partnership.

What do you wish your clients knew?

I wish my clients knew a good lawyer from a bad one. Many clients are going through the process for the first time and just tend to chase the lowest priced lawyer. We’ll often get a client come to us who will say they have a mate who knows somebody who’s a lawyer, and we have a call with that firm and realise quickly that they’re not going to do a good job on a deal. We have to explain to the client why that is the case, and it can be awkward.

What are the hallmarks of a good adviser?

A good adviser is somebody who is going to work very closely with their clients. If I take on a client, I’m working with that client all the way through the transaction until it completes.

Having a relationship based on trust with the client is important (… and we have a saying that a good client is one that listens!)

Who in the corporate world has most inspired you?

On the global stage, the obvious ones – global entrepreneurs that have built up these amazing businesses, taking massive risks and putting everything they own into it.

But I’m also inspired by smaller-scale businesspeople. I’ve worked with a number of elderly entrepreneurs who have been inspirational.

What has been your biggest learning point in business?

Nothing happens as you expect it! You set off to do one thing and, trust me, it will be completely different by the time you finish it. I think that’s a good thing. We like variety. Sometimes it’s frustrating from a planning perspective, but it makes life interesting.

What’s the best thing about being an Acuity Alliance Partner?

I’ve had a lot of partners over the years, but this is the partnership where we’ve just gelled. It’s a very symbiotic relationship, I’d say.

Are you buying, selling a business, or raising equity? Make sure you get the right advice. Contact Adam Street Advisers and our Acuity Corporate team. Sign up to My Digital Lawyer for guidance, document generation, insights and more from our Acuity Alliance Partners.

Acuity Law advises Do-It Solutions on acquisition by Lexxic

Acuity Law advises Do-It Solutions on acquisition by Lexxic

Acuity Law has advised the shareholders of Do-It Solutions, a global market leader in neurodiverse screening and assessments, on its acquisition by Lexxic, a specialist in workplace neurodiversity assessment, training and accreditation services.

This deal between Cardiff-based Do-It Solutions and Lexxic is the latest high-profile deal for the leading commercial law firm.

Do-IT was founded by Professor Amanda Kirby and is an internationally recognised tech-for-good company that has created highly effective web-based tools, supported by training and consultancy services, to deliver market-leading solutions across a wide and expanding range of sectors including corporate, justice and education.

The acquisition will enable Lexxic, a portfolio company of Agathos Management LLP, to expand its client offering by providing an end-to-end service, incorporating Do-It Solutions’ innovative tech-led approach.

Andrew McGlashan, Corporate Partner at Acuity Law, said: “Amanda and the team at Do-It Solutions have created something really special and we wanted this deal to reflect that. We have spent the last 18 months working closely with the shareholders to ensure that their objectives were met and that they were satisfied with the final outcome.”

Professor Amanda Kirby said: “The Acuity team has provided us with invaluable advice throughout this process. We are incredibly proud of all that we’ve achieved at Do-It Solutions and wanted to ensure that going forward our legacy continues with this exciting union with Lexxic.

“By combining Lexxic and Do-It Solutions’ expertise, we hope that the organisation can be a global leader in neurodiversity solutions, setting new standards for workplace inclusion, fostering supportive and productive environments for neurodiverse individuals.”

Headquartered in Cardiff, Acuity Law is a fast-growing law firm with over 150 lawyers supporting business clients throughout the UK. The firm’s ambitious growth strategy has seen it open offices in Birmingham, Leeds and Liverpool in recent years, adding to its presence in Bristol, London and Swansea.

Acuity Law Advises AIM Listed Facilities by ADF PLC on its Latest Acquisition and Placing

Acuity Law Advises AIM Listed Facilities by ADF PLC on its Latest Acquisition and Placing

Acuity Law has advised Facilities by ADF plc (ADF) on its acquisition of Autotrak Portable Roadways Ltd (Autotrak) for up to £21.3 million (acquisition) and its associated fundraising which raised gross proceeds for ADF of £10 million (the placing) and sell down by certain existing shareholders.

ADF is the leading provider of premium serviced production facilities to the UK film and high-end television industry (HETV). Its acquisition of Autotrak, one of the market-leading suppliers of portable roadway panels to the film and TV sector in the UK, is the next step in the delivery of ADF’s vision to be a one-stop shop for film and HETV production, operating across multiple businesses and run by talented local management. 

The placing, which was carried out by way of an accelerated bookbuild and retail offer through Cavendish Capital Markets Limited, was run alongside the acquisition process to raise funds for ADF to part fund the consideration payable pursuant to the acquisition. The placing was one of the largest fundraises carried out on the AIM Market this calendar year to date.

The Acuity team comprised corporate partners Beverley Jones and Andrew McGlashan, Property team partner Steve Morris and they were assisted by Chiara Howfield, Shawnee Evans, Swyn Llyr and Carys Griffith. Acuity partner Beverley Jones who led the team on the transaction said:

“We are delighted to have supported ADF in this latest strategic acquisition and look forward to seeing how this enhanced partnership contributes to the future growth and success of both companies.”

ADF CEO Marsden Proctor said:

“We are delighted to complete the acquisition of Autotrak, which marks a material step in our stated strategy of being the provider of choice for the HETV & film industry across a diversified product and service offering. We had the pleasure of working with the Acuity Law team who once again provided a superb service, and we couldn’t be more satisfied with the experience.”

ADF is an established client of Acuity, which advised on its 2022 acquisition of Location One, the UK’s largest integrated TV and film location service and equipment hire company.

What New Founders Need to Know About Fundraising

What New Founders Need to Know About Fundraising

Our Acuity Law start-up events can be a treasure trove of guidance drawn from lived experience – as well as a great opportunity to get to know other founders, investors and (of course!) our expert Acuity lawyers.

In summer 2024, start-up founders from incubator programmes run by UCL, King’s College London and Imperial, as well as accelerator programme Digital Health London, got together with some of our investor network to share knowledge and best practices.

Together, they came up with the following top tips for new founders.

  1. The first raise is the hardest

Having to prove yourself without revenue or traction can mean a small pool of potential investors – but have faith that the right investors are out there for you.

Top tip: Focus on finding people who believe in you as a founder.

Accelerators, family, friends, friends of friends, friends of friends of friends – you get it. Broadening your network will be key at this stage, and putting in the legwork now will give you the traction to attract more established investors at subsequent rounds.

In a slower market, investors are more cautious, targeting cash-savvy startups prioritising profits over revenues and demonstrating they can look after the bottom line and build even in a harsh economic environment. They might not be looking for profitability right now, but they will want to see profit before growth in today’s market.

  1. Always be fundraising

As a founder, you’re either in a fundraising process right now, or you’re thinking about what you need to achieve before the next fundraising process. If you have just closed a fundraising round, you may feel as though you have shelved that job for several months. But now is actually a great time to put the work into relationship building – building a rapport with recent investors and those investors that you recently spoke to, updating them on your progress and investing in your network.

Top tip: capitalise on all interest and expand your network.

If an investor is interested, ask them to connect you to others. Even if they are not the right fit for you, they might know someone who is – so be confident. Be bold and ask for access to their network. You can do the same with peers in your industry – for example asking approaching series B founders for introductions or even mentorship.

Top tip: Make sure you are EIS and SEIS assured to provide tax relief for investors as an additional incentive.

What New Founders Need to Know About Fundraising

  1. Get your pitch right

If you are pitching cold to an investor, work to build rapport in the first instance. You could begin communications by asking for advice, hooking them in as early adopters/testers and soliciting feedback, then follow up with communications that build traction and a relationship, telling the story of your business. Follow up regularly with news, creating anticipation and keeping them in the loop.

Top tip: Don’t attach your entire pitch deck in the first cold email outreach.

Let your story unfold over time. Follow ups can be more important than the first pitch or conversation.

Top tip: Research VCs.

Know their profile, their portfolios and their roles. If you’re pitching to an analysts or an associate rather than a partner, do the grandparent test: if you pitched it to your grandparents, would they understand what you’re talking about? More junior analysts and associates may lack to confidence to clarify your pitch – but their report will influence partner decisions.

Top tip: Get a CRM that you enjoy using and suits your needs.

Top tip: Have your data room ready so you can respond instantly to any expressions of interest.

  1. If you ever get the opportunity to raise more than you need, give serious consideration to taking it.

You may worry about the dilution you might take by taking on extra funding but, generally speaking given the current fundraising environment, if there is money on the table, it’s always a good idea to seriously consider taking it. The extra time and resources it will buy you could increase your valuation at the subsequent funding round.

If you need additional advice on fundraising rounds, or your corporate governance, our specialist Acuity start-up lawyers are on hand for further advice.

Corporate Due Diligence: A Bite-Sized Guide

Corporate Due Diligence: A Bite-Sized Guide

As anyone who has bought or sold a business will attest, there are myriad steps to the process. But the due diligence exercise is arguably the most important – and the most time-consuming. If you’re tempted to rush through this process, the oft-quoted Forbes statistic is worth bearing in mind: that around 50% of deals fall through at due diligence.

What is due diligence?

When a buyer is planning to purchase a business or the shares in a company, they need to understand the value and commercial potential of the target. Due diligence is the process by which the buyer investigates the potential acquisition in terms of its finances, operations, systems and processes, contracts, licences and IP rights, property assets, workforce, commercial position and regulatory compliance. The exercise allows the buyer to thoroughly investigate the target business, flagging any potential issues early in the transaction lifecycle.

It can be a lengthy process, but is absolutely essential to a potential buyer.

The target business will wish to avoid a situation where a buyer discovers unanticipated risks, liabilities or facts that lead them to try and reduce the purchase price. But equally, the process can protect the seller, because if any areas of concern are identified, they can take action to mitigate or resolve these risks before the transaction is completed.

Corporate Due Diligence: A Bite-Sized Guide

Due diligence: fast facts

How does the process work?

The nature and extent of due diligence can vary and depends on the circumstances of the transaction. For example, the number of due diligence questions asked will generally be a lot longer where the transaction is complex or of a high value. On the other hand, where the value is smaller or the buyer already has a good grasp of how the business operates, they may elect to issue a more streamlined due diligence process.

Considering the above, it is difficult to put an average timeframe on the due diligence, as it will very much depend on the nature of the deal. No due diligence questionnaire will be the same as another, and each will also be tailored to the industry of the business or company being acquired.

Risk mitigation

Thorough due diligence will identify liabilities and legal risks associated with a business. The buyer is relying on the due diligence process to ensure that risks are identified in good time.

Drafting contracts

Awareness of potential risks and liabilities associated with a business will help the legal team create contracts that safeguard the client’s interests. Specific warranties and indemnities will be placed into the sale agreement to protect the buyer against any risks identified in the due diligence.

Compliance

Detailed due diligence will uncover any gaps in legal and regulatory compliance and reduce any associated risks.

The onus is often on the buyer’s solicitors to initiate the process by providing the seller’s solicitors with a due diligence questionnaire.

The seller will begin to collate their documents and responses to the questionnaire, storing the information in a secure online “data room” only accessible by the parties and their advisers. The number of documents likely to be requested means that the seller must be well organised to avoid delaying the due diligence process.

Among the many documents the seller may be required to provide are:

  • accounts;
  • details and full copies of all commercial contracts relating to the business (these might include third-party supplier contracts);
  • employment contracts and agreements for any self-employed persons. These commonly outline details of salaries, years of service and working hours;
  • details of whether the property is owned or occupied;
  • copies of any leases, planning permissions and risk assessments in connection with a property (for example, fire risk assessments, legionella reports, asbestos, and so on);
  • an inventory of all fixtures and fittings included in the sale;
  • an inventory of all equipment, including details of any hire agreements and maintenance contacts;
  • details of any customer complaints, disputes, or litigation;
  • copies of all appropriate insurance policies relating to the business, including building, employer’s liability and public liability, as well as professional indemnity certificates for staff (if applicable); and
  • where applicable, a full copy and details of any registrations and certificates demonstrating compliance with the relevant regulatory bodies.

This list is certainly not exhaustive and will vary according to the sector and the buyer’s needs and the business or company being acquired.  

Following disclosure of the initial due diligence documents, a due diligence report is usually drafted by the buyer’s solicitors and sent exclusively to the buyer for review. Although these reports can be weighty, it is crucial for buyers to read them properly. The buyer’s solicitors will highlight any issues contained within, which often form the basis of any additional enquiries that are subsequently raised by the buyer and their legal team.

If the buyer finds any aspects of the provided material concerning, or if key issues are discovered during the due diligence review, they may pursue a reduction in the purchase price or seek to obtain further protection in the sale agreement in the form of warranties or indemnities. If these issues are extreme, the buyer may abandon the purchase altogether.

We have put together a list of top tips to help businesses on either side of the transaction to avoid this potentially costly worst-case scenario:

  1. For sellers: consider when the staff will be told about the proposed transaction and who will be on hand to assist with document collection.
  • For sellers: start collating or locating the various types of documents outlined above that will more likely than not be requested – accounts, employment agreements, etc.
  • For buyers: provide full responses to the due diligence. While it may be more work initially, it will mitigate the chances of follow-up questions from the buyer.
  • Documents should be redacted where appropriate to ensure compliance with data protection legislation.
  • Be prepared for follow-up due diligence questions to be asked by the buyer’s solicitors.
  • Line up your accountant in preparation, as their input will likely be required on the accounting and taxation questions.

If you are considering selling or buying a business, contact our Acuity Law Corporate team to ensure your business is fully prepared and protected.

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