Buying and selling notes

Get Your Business Into Shape

It is important from an early stage to get your business in shape. Many potential problems can be overcome early on to help the sale run smoothly. We know what the likely pitfalls will be, and can help steer you in the right direction. We understand that sometimes it is difficult to see the wood from the trees, and we see our role as guiding and assisting you to get the deal done as quickly and cost effectively as possible.

Asset –v- Share Sale

Whether you buy or sell your business in the form of shares or just its assets, the decision will be one we talk you through. Maybe you have already had an offer, or have an idea in mind. Either way we will be on hand should you want to talk through the pro's and cons of each, whether you are considering a business sale or purchase we will make sure you aware of all the implications and make sure your fully informed throughout.

Instructing Us

If you are thinking of selling your business then please contact us for a free initial interview. We will not embark on any hard sell of our services, but simply point you in the right direction. If you want us to act we can help you begin to get your business into shape, and discuss how much we think the work will cost. We will help you get things started by providing you with documents like our Due Diligence Questionnaire, and help you identify what needs to be done, as well as helping you organise the transaction, and setting an initial timescale.

Preliminary Matters

We look at an early stage at drafting heads of terms, this enables us to narrow down what areas are agreed, usually down to price, payment and other key issues that need to be agreed. We can help identify those areas that aren't agreed and help negotiate with either your buyer or seller to reach an understanding. We will explain the implications for you and your business of things like deferred payments of the purchase price, and help you factor those into your plans. If you are selling your business you will be expected to provide commercially sensitive information to the buyer, we can advise on the best way of protecting this information, through 'Confidentiality Agreements' and 'Exclusivity Agreements'.

Due Diligence

The process of Due Diligence is where a buyer learns more about the target business. The buyer may adjust the amount they are prepared to pay on the basis of the information they get. We will at an early stage provide you with a Due Diligence Questionnaire so you will be able to identify those areas you will need to supply information about if you are selling. We take the view that if you are selling more disclosure is better, and we will be on hand to talk through the sorts of things that you will need to disclose to your purchaser.

The Paperwork

The Sale/Purchase Agreement will be the key document. This will have a part dealing with the mechanical aspects of sale of the business and an indemnity and warranty section dealing with apportioning risk.

Warranties – these are written assurances given by the seller about various aspects of the business. A Buyer could have an action for breach of warranty if they are inaccurate.

Indemnity – these deal with expected liabilities. They are most commonly used to apportion tax liability.

Price – The purchase price may be paid in instalments which may be deferred until after completion with deductions being made in light of warranties or indemnities agreed. The price maybe subject to what are called ‘earn-out' provisions where the price paid depends on the performance of the business post completion.

Restrictive Covenants – These are in effect promises that a seller will not compete with the business sold or poach staff or customers after completion.

Disclosure Letter – This qualifies the warranties given and is divided into general disclosure (the sort of information that may readily be in the public domain) and specific disclosures which deal with particular areas or information of the business.

Consultancy Agreement – This may require the seller to provide certain services during the handover period

Service Agreements – these are employment contracts for certain key staff such as directors. We work with our employment team to ensure they properly benefit you.

Property Documents – see our Commercial Property team page.

Contract Assignments/Novations – these effectively transfer existing contracts the business may have to the buyer.

Security Documents – We can deal with the myriad of documents including debentures, floating charges, syndicated lending documents or personal guarantees.

Negotiations

We will only make a point of arguing those points you tell us are important to you. We will adopt the best style of negotiating to achieve this. We will hold face-to-face negotiations with the other side to cut to the chase. If you are buying a business you may have to renegotiate some of the existing contracts with customers and/or suppliers, and this is an area we can offer you advice and assistance with.

Tax

Whether you are planning to buy or sell a business there may be Capital Gains Tax and other tax implications, and we want to make sure you avoid any unexpected surprises. With this in mind we would suggest you contact your accountant at an early stage! We work closely with accountants and other professionals and will try to make the process as clear as possible.

Private Equity

We will help you make sure the target business is as attractive a proposition as is possible. Whether you are looking at early stage venture capital or so called ‘business angels' or longer term equity finance we will be able to liaise with potential investors and help present your business plan in the best possible light. One of the key things to bear in mind when looking to obtain equity finance is whether the business can offer a real prospect of increased turnover growth in the medium to short term, as potential financiers will in essence be potential business partners. Equally if you are thinking of investing we will help you identify potential risks, and make sure your investment is protected.

Closing the deal

Where possible we like all parties to attend the completion meeting because:

1) any outstanding points can be settled quicker,
2) it helps to ensure all completion requirements are properly dealt with; and
3) it allows us all to celebrate together!

We can assist with the movement of funds between buyers and sellers, as well as liaising with third party banks or financiers.

Post-Closing Support

This will depend on the type of business that has been bought or sold. We can assist with legal requirements on share transfers and calculate any stamp duty payable. We can advise on new terms of business, shareholders agreements and employment contracts.