61, Chobham Road,

Sunningdale, Berks. SL5 0DT

tel: 01344 876633

Appointments at...

121 Albert Street, Fleet,

Hampshire GU51 3SR

tel: 01252 623565

Business sales

 

Whether you are looking to expand your business by buying another company, or you are selling an existing business, we can provide you with expert legal help to guide you through the process.

 

A business sale will usually comprise the following stages...

• A Lock-out or Exclusivity Agreement - the Seller may be willing to negotiate exclusively with the Buyer for a period of time so the Buyer can carry out due diligence, take professional advice and negotiate the terms of sale with the Seller without the worry that the Seller will during that period negotiate with other interested parties.
• A Confidentiality Agreement - the Seller may be reluctant to give the Buyer access to confidential information, such as customer lists and technical know-how without the buyer agreeing not to use the information received (other than to assist the buyer in deciding whether to making an offer to purchase) nor to disclose the information to third parties.
• Asset purchase and share purchase agreements.
• Due Diligence - this is a crucial fact finding exercise described below. It will usually be undertaken by us with your accountant and other professional advisers such as surveyors or other experts with specialist knowledge of the
• A Letter of Intent or Term Sheet.

 

Due Diligence - Buying

If you are buying it's important to establish that the business you are buying is worth the money you have agreed to pay the Seller. If the target business has problems in any area or there are factors which may affect its future profits you need to identify these before you buy - this process is known as Due Diligence. The aim of the due diligence process is also to establish that the Seller can give you good title to what you are buying.

 

The scope of the due diligence exercise will depend on whether you are buying the Seller's shares in a target company with business assets or you are just buying the business assets themselves i.e. is the transaction a share purchase or an asset purchase? We can advise you on which form would suit your requirements best.

 

Typically we will be examining...

• The Seller's title to any freehold or leasehold premises included in the sale.
• The Seller's title to the Intellectual Property Rights (such as registered trademarks or design rights) needed by you.
• Key Contracts with third parts - such as Agency, Distribution or Franchise Agreements as well as Terms & Conditions of Sale - the enforceability of which may be vital to the future success of the business.
• The Employment Contracts and Directors Service Contracts - don't forget that even if you are only intending to purchase business assets if you are not careful you may end up being forced to take on the Seller's employees under the Transfer of Undertakings (Protection of Employment) Regulations (TUPE) or facing claims in the Employment Tribunal for not doing so - let us make sure that you can proceed without falling foul of TUPE.
• Insurance Policies.
• Records filed with Companies House.
• Reports from other professionals e.g. a Surveyor's Report on the condition of the seller's freehold or leasehold property, an Accountant's Report on the target company's tax liabilities - if you are buying shares you will often acquire the company with tax liabilities and these need to be identified precisely and often a Tax Deed will need to be obtained from the Seller - so that you are indemnified against unforeseen or unexpected tax demands after completion of your purchase).

 

In addition to the document checking aspect of the process, we will usually raise enquiries specific to concerns that you may about the business, such as...

Is the business a party to any litigation or has litigation been threatened or contemplated or are there any pending disputes which may lead to litigation with a customer or supplier or third party?

 

We will review the Seller's replies with you and suggest whether all or any of these replies should form the basis of the Seller's warranties in the Share Purchase or Asset Purchase Agreement.

 

However, if the Seller's replies are unsatisfactory, then at this stage we can advise you if you should withdraw, proceed only with an adjustment in the price and/or only on special conditions e.g. if you are buying a company which is involved in ongoing litigation you might withdraw if you consider the litigation is too risky, defer proceeding until it is resolved or if that is not viable proceed on the basis that the price is reduced by the Seller to reflect the risk or on the basis that part of the price is held back by you to be released only upon a satisfactory outcome.

 

It is quite common for unforeseen problems to come to light when you embark upon due diligence. It must not be forgotten that whilst many Sellers put their businesses on the market for genuine reasons, such as retirement or to pursue other interests, some will be in a hurry to sell as they know something you don't!

 

Think "Caution" - think Due Diligence !

 

 Due Diligence - Selling - Obtain our Pre-sale Health Check!