Deal structuring and negotiating a transaction in a regulated sector requires specialist input from the outset. The choice of deal structure, the allocation of regulatory risk between the parties, and the drafting of completion mechanics all depend on the regulatory framework that governs the target business or asset. We advise buyers, sellers, investors and joint venture partners on the deal structuring, negotiation and documentation of transactions across UK telecoms, data protection and payments regulation.

What should a shareholders’ agreement cover for a regulated business?

A shareholders’ agreement for a business regulated by the FCA, Ofcom or the ICO must address matters that a standard SHA would not. These include reserved matters covering regulatory applications and material compliance decisions, information rights sufficient for the parties to meet their own regulatory reporting obligations, change of control provisions that align with the regulator’s approval requirements, and deadlock or exit mechanisms that account for the time needed to obtain regulatory clearance. We draft and negotiate SHAs that reflect the regulatory position of the business, not just the commercial deal.

How does a locked box work in a telecoms or payments acquisition?

A locked box mechanism fixes the economic value of the target at a specified date before completion, with the buyer taking the benefit and risk of the business from that date. In a regulated acquisition, the locked box must account for ring-fenced funds. A payments institution must maintain safeguarding of relevant funds under regulation 23 of the Payment Services Regulations 2017. Safeguarded funds cannot form part of the locked box consideration. The locked box date, the definition of leakage and the permitted leakage carve-outs all need to reflect the regulatory position.

When do I need regulatory clearance to complete a deal?

Whether a transaction requires prior regulatory clearance depends on the sector. An acquisition of a qualifying holding in an FCA-authorised firm requires prior approval under section 178 Financial Services and Markets Act 2000. Ofcom does not operate a merger control regime for telecoms, but competition clearance under the Enterprise Act 2002 may apply if the target meets the turnover or share of supply thresholds. The National Security and Investment Act 2021 applies a mandatory notification regime to acquisitions in specified sectors including communications.

Who deal structuring and negotiation advice is for

This service is for businesses and investors involved in a transaction touching a regulated telecoms, data or payments business. Typical clients include:

• PE funds acquiring regulated assets or investing in telecoms infrastructure
• Telecoms operators entering joint ventures with infrastructure investors
• Fintech founders structuring investment rounds involving FCA-authorised entities
• Infrastructure investors negotiating network-sharing or build-to-suit arrangements
• Corporate acquirers needing regulatory risk assessment alongside commercial deal advice
• Law firms running deals in regulated sectors who need specialist co-counsel input on regulatory provisions

Typical triggers

• You are structuring a joint venture between a telecoms operator and an infrastructure investor and need advice on how regulatory obligations flow through the JV structure
• You are negotiating a shareholders’ agreement for a payments business and need to address FCA change of control requirements, safeguarding obligations and regulatory capital
• You are acquiring a business that holds an FCA authorisation or operates under UK General Conditions, and the deal team needs regulatory input on the locked box, the disclosure letter and the completion conditions
• You have agreed heads of terms on a telecoms infrastructure deal and need the transaction documented, including contribution agreements, shareholder loans and a shareholders’ agreement
• Your board needs advice on whether a proposed transaction requires regulatory clearance or notification, and what conditions a regulator is likely to impose
• You are a law firm running a deal in a regulated sector and need specialist co-counsel input on the regulatory aspects of the transaction documentation

What we deliver for deal structuring and negotiation

JV structuring advice. We advise on how to structure a joint venture so that regulatory obligations, authorisations and compliance responsibilities are allocated correctly between the parties. This includes advising on whether the JV entity itself requires separate authorisation, for example FCA authorisation under the Payment Services Regulations 2017 or compliance with General Conditions as a telecoms provider.

Shareholders’ agreement drafting and negotiation. We draft and negotiate SHAs that address the regulatory dimension of the business: reserved matters covering regulatory applications, change of control provisions aligned with FCA or Ofcom requirements, information rights necessary for regulatory reporting, and deadlock mechanisms that account for regulatory constraints on exit.

Deal documentation with regulatory input. We draft or review contribution agreements, shareholder loan agreements, locked box mechanisms and disclosure letters, ensuring that regulatory risks are properly allocated and that warranties and indemnities reflect the actual regulatory position of the target business.

Regulatory risk input during live transactions. Distinct from pre-deal regulatory due diligence, this is real-time regulatory input during the negotiation and documentation phase. We advise on how regulatory requirements affect deal mechanics, completion conditions and post-completion integration.

Change of control and regulatory clearance. We advise on whether a transaction triggers a change of control obligation under FCA rules (section 178 FSMA 2000), Ofcom ownership reporting requirements, or data protection transfer obligations under the UK GDPR. We prepare the necessary applications and manage the regulatory engagement.

Board-level strategic transaction support. We provide regulatory input to boards considering transformative transactions, including advice on regulatory feasibility, likely conditions, timetable implications and competition and regulatory interaction.

Post-completion regulatory integration. We advise on merging compliance frameworks, updating authorisations and integrating data processing operations following completion.

Representative experience

Advised a PE-backed infrastructure investor on the structuring and documentation of a fibre network joint venture, including regulatory analysis of General Conditions compliance for the JV entity.

Provided regulatory input on the shareholders’ agreement and contribution arrangements for a joint venture between a UK telecoms operator and an international infrastructure fund, addressing Ofcom reporting obligations and spectrum transfer requirements.

Advised a fintech on the regulatory aspects of a Series B investment round, including FCA change of control analysis and amendments to the SHA to reflect safeguarding obligations.

Acted as regulatory co-counsel to a City law firm on the acquisition of a payments institution, advising on FCA change of control, locked box adjustments for safeguarding funds, and disclosure letter schedules covering regulatory correspondence.

Frequently asked questions

Can you provide regulatory input during negotiations without running the whole deal?

Yes. We frequently act as specialist regulatory co-counsel alongside a corporate law firm that is running the transaction. In that role, we provide regulatory input on deal structure, review and mark up regulatory provisions in the transaction documents, advise on completion conditions and regulatory clearance, and handle any regulatory applications. This is one of our three engagement models: Specialist Co-counsel.

How does your deal structuring differ from a corporate law firm’s approach?

A corporate law firm structures a deal around commercial and tax objectives. We add the regulatory dimension: whether the proposed structure works under the applicable regulatory framework, how regulatory obligations flow between the parties, and what regulatory approvals are needed to implement the structure. In telecoms, for example, a proposed JV structure may determine whether the JV entity must comply with General Conditions in its own right, whether spectrum licences can be shared, and whether interconnection agreements need to be novated.

How early in a transaction should I involve a regulatory specialist?

At the structuring stage, before heads of terms are agreed. Regulatory constraints can affect the fundamental deal structure, for example whether an asset purchase or share purchase is more appropriate given the target’s regulatory authorisations. Involving a regulatory specialist after the structure has been agreed can result in costly restructuring or conditions that delay completion. For M&A and PE transactions in regulated sectors, regulatory input at the heads of terms stage is standard practice.

Related direct legal advice pages

See also our other direct legal advice pages:

• Do I need regulatory authorisation before offering my product in the UK?
• What should I do if a regulator is investigating my business?
• What regulatory risks should I check before buying a regulated business?
• Payments Product, Safeguarding and Scheme Governance Advice
• Commercial and Technology Contract Support
• AI, Data and Governance Advice
• Telecoms Product Launch Advice
• Direct Legal Advice (overview)

For pre-deal regulatory risk assessment, see What regulatory risks should I check before buying a regulated business?. For the substantive law on telecoms, data and payments transactions, see the Transactions practice area page.