M&A Paying Agents

An M&A Paying Agent is an independent service used to receive and distribute sale proceeds in a corporate transaction involving multiple shareholders.

Instead of the buyer paying each shareholder directly, the purchase price is paid to a single paying agent. The paying agent then carries out the necessary checks and distributes funds to the selling shareholders in accordance with the sale documentation.

This approach is commonly used where there are large numbers of shareholders, complex payment mechanics, or post-completion holdbacks.

An M&A Paying Agent service is suitable for buyers and sellers involved in transactions with dispersed or international shareholder bases.

It is particularly relevant where a company has dozens or hundreds of selling shareholders, including individuals, trusts, nominees or corporate entities.

Advisors often recommend a paying agent where centralised compliance, orderly payment and clean discharge of the buyer’s payment obligation are important.

This service is typically used where the buyer wants to make a single payment on completion and be released from further payment responsibility.

It is also used where shareholder payments need to be sequenced, verified or split between completion consideration and later distributions.

Paying agents are particularly useful where part of the consideration is subject to escrow, earn-out, warranty or indemnity mechanics under the share purchase agreement.

Paying shareholders directly can be operationally complex and risky, particularly where compliance checks are required on a large number of recipients.

Using a paying agent allows the buyer to make a single payment that constitutes good discharge of the purchase price obligation. The paying agent then assumes responsibility for compliance checks and distribution.

This reduces execution risk and avoids last-minute delays caused by incomplete shareholder information.

Large shareholder populations create practical challenges at completion.

Buyers may not have the infrastructure to conduct KYC checks on every shareholder. Sellers may struggle to coordinate bank details, tax information and confirmations across a large group.

There is also risk where funds are paid incorrectly, late or without proper verification. An M&A Paying Agent addresses these challenges by centralising receipt, verification and payment.

The primary benefit of using an M&A Paying Agent is clean, compliant and centralised distribution of sale proceeds.

Funds are received once, verified properly and paid out in an orderly and auditable way.

Benefits for the buyer

The buyer makes a single payment and is discharged from further payment obligations.

This reduces completion risk and avoids dealing directly with multiple shareholders.

Benefits for selling shareholders

Selling shareholders receive funds through a structured process with proper verification.

Payments are made once checks are complete, reducing the risk of error or delay.

Benefits for advisors and stakeholders

For legal, tax and corporate advisors, a paying agent provides a defensible and auditable mechanism.

This simplifies completion mechanics and reduces post-completion queries and disputes.

M&A Paying Agent services can be structured in different ways depending on the transaction.

In some cases, the paying agent distributes all consideration at completion. In others, part of the funds are held back and released later in accordance with the share purchase agreement.

The paying agent may also be responsible for handling tax withholdings or specific shareholder classes, where agreed in advance.

Yes. M&A Paying Agent arrangements are commonly tailored to reflect the structure of the deal.

The paying agent can join the share purchase agreement for the limited purpose of receiving funds as trustee for the shareholders. Payment to the paying agent can constitute good discharge of the buyer’s payment obligation.

The service can also be combined with escrow arrangements, where part of the consideration is held back and released later on joint instructions from the buyer and a seller representative.

In practice, all TPMA's work by separating payment from approvals rules.

These approvals may be given in advance (say, where a transaction is taking place, or a dispute has been settled, and a known amount of money needs to be paid to identified parties), or on an ad-hoc basis (where a procurement agent, house manager, interior designer, lawyer or trusted advisor is given permission to spend the paying party's funds.

A specific bank account is opened for each payment scenario, and the funds are held there until (a) a payment request is made; and (b) the approvals conditions are satisfied. Once those two conditions have been met, we carry out our compliance checks and then make the payment(s).

If those conditions are not met, the funds remain held in accordance with the account documents.

We follow the agreed approvals matrix and we do not exercise any discretion beyond ensuring that the approvals conditions have been satisfied.

1. The paying agent is appointed and, where required, joins the share purchase agreement as a limited-purpose party.
2. The buyer pays the purchase price to the paying agent’s account.
3. The paying agent carries out KYC and confirmation-of-payee checks on the selling shareholders.
4. Completion distributions are made to shareholders in accordance with the agreed allocation.
5. Any escrow or holdback amounts remain held by the paying agent.
6. Further distributions are made later on joint instructions once the relevant conditions are met.

Only parties authorised under the account documents can make a payment request. This is agreed at the outset and documented clearly, together with any specific approvals that might be needed, say, for payments in excess of a specific threshold, or for payments to certain beneficiaries.

Instructions are usually tied to specific documents, such as a purchase order, pro-forma invoice, invoice, payment certificate, settlement agreement, sale and purchase agreement, court order or other legal document.

We check that the instruction matches the agreed conditions before acting.

This approach ensures that payments are controlled, predictable and not dependent on informal requests or unilateral decisions by one party.

1. Funds are paid into the TPMA.
2. Payment requests are made and approvals requirements are checked.
3. Payments are made.
4. The balance remains in the account.

This simple structure is what makes TPMA's reliable across many different use cases.

We do not provide pooled TPMA's for law firms, estate agents or other professional advisors - instead, a new account is opened for each individual client or matter - this ensures that every client's funds are in their own specific account and that we are able to carry out our required screening, monitoring and ongoing compliance requirements in respect of every individual matter.

When a professional advisor wishes to open a TPMA for their client to deposit funds with us, we onboard the paying party (the client), carry out our mandatory compliance checks, agree the account mechanics (pricing, who can make payment requests, and who can authorise them) and then open the account and provide the unique account details.

Timing depends on the complexity of the parties and the arrangement.

For straightforward structures, account opening can usually be completed within a short period (even on the same day) once information is provided.

Delays are usually caused by missing onboarding information rather than the account opening process itself.

Standard onboarding checks are required.

This includes confirming identity, ownership and control of any entities involved, and the source of funds.

We also need a clear description of the purpose of the account and those parties who will be authorised to make payment requests or authorise payment releases.

In order to open an escrow account, what is typically required is:

• Details of the parties
• Identification information
• Ownership and control details
• Source of funds information
• Summary of the underlying transactions or obligations, and a copy of the contract/agreements
• Agreed payment request and authorisation conditions

If we require any other information, we'll let you know when we give you your quote.

Accounts are funded by the party providing the funds under the agreement. Each arrangement has a uniquely addressable bank account with its own account number and sort code combination, and we are able to accept BACS/CHAPS/Faster Payments and international SWIFT payments.

Funds may be paid in a single amount or in stages, depending on the arrangement.

Once paid in, funds are ring-fenced for the agreed purpose.

We are not able to accept cryptocurrencies, cheques or cash.

Funds are released only when the agreed conditions are met.

The TPMA account opening form specifies what evidence is required and who may make payment requests or authorise releases.

When conditions are satisfied, funds are released promptly and in accordance with the agreement.

If instructions are disputed or unclear, we will not release the funds without the paying party's consent.

Instead, the funds remain held safely in the escrow account while we seek the paying party's authorisation to make the payment.

This approach protects all parties. It ensures that money is not released prematurely and that funds remain available once the position is resolved.

We hold the balance of a TPMA on trust for the paying party. What that means is that if the paying party becomes insolvent, their administrators are likely to make a claim on the contents of the TPMA as constituting funds that belong to that paying party.

What happens if DOS & Co. becomes insolvent?

All TPMA funds are segregated (kept separate from our own funds), safeguarded (protected by law from our own creditors) and kept liquid and unencumbered at the Bank of England. In the event of our insolvency, we have set aside regulatory capital that will be used by our administrators to 'unwind' our affairs - this will usually involve returning the funds directly to the paying party.

Funds paid into an escrow account are held separately from the money of any other parties and separately from our own funds. They are not mixed with operational accounts.

All of our TPMA funds are held liquid and unencumbered at the Bank of England. This means that there is no counterparty risk (the bank does not lend out funds, so a 'run on the bank' is not possible).

The TPMA account is set up specifically for the purposes agreed in the TPMA Account Opening agreement. Funds can only be used in line with that agreement and cannot be applied for any other purpose.

We are regulated by the Financial Conduct Authority for the provision of payment services. This means we are required to meet regulatory standards around governance, systems, controls and the handling of client funds.

Where TPMA arrangements involve regulated payment activity, those activities are carried out within that regulatory framework.

In practical terms, this combination of regulation and contract provides structure and oversight, while still allowing arrangements to be tailored to the needs of a specific matter or project.

Third-Party Managed Payments are designed to follow agreed payment rules, not to make judgments or resolve disputes.

We do not decide whether a payment should be made beyond checking that the agreed approval conditions have been satisfied.

We do not interpret contracts, assess performance, verify the quality of goods or services, or exercise discretion over how funds are spent.

If approval conditions are not met, or if instructions fall outside the agreed rules, payments are not made and the funds remain held in accordance with the account documents.

Pricing for Third-Party Managed Payments is usually based on the complexity of the arrangement and the level of activity on the account.

This typically covers account set-up, safeguarding of funds, ongoing operation of the account, processing of payment requests, compliance checks and reporting. Where payment volumes are higher or approval structures are more complex, pricing reflects the additional administration involved.

All pricing is agreed in advance, so parties have clarity on costs before funds are paid into the account.

If a payment request does not meet the agreed approval conditions, the payment is not made. The funds remain held in the account in accordance with the account documents.

If there is uncertainty, dispute or missing information, we pause processing and seek clarification from the paying party. We do not release funds unless the agreed conditions are satisfied.

This approach ensures that errors, informal requests or unilateral instructions do not result in unintended payments.

dospay provides a specialist, escrow-first approach to managing payments neutrally and transparently. We are structured to hold and move funds strictly in accordance with agreed rules, without exercising discretion or commercial judgment.

Our digital platform provides visibility, auditability and control over payment flows, while keeping funds segregated and protected. This makes it easier for parties and advisors to manage complex payment arrangements with confidence.

Using dospay allows parties to separate payment mechanics from decision-making, reduce operational risk and avoid the need for one party or advisor to hold and control funds directly.