Selling a Company
Sale of Business
Selling a Business can be an exciting and stressful time.
We have acted as business sale solicitors and business purchase solicitors in numerous industries, including (to name just a few):
- Health care
- for optometrists, dentists and doctors;
- Professional services
- for accountants, financial advisers and estate agents;
- Boutique purchases
- For example the purchase of a business for the contents of safe;
- River Thames events boat business;
- IT for IT support companies and e-commerce mail order businesses;
There are many similarities involved when selling businesses in different sectors. Equally, there can also be many differences. No one company sale is guaranteed to run identical to the next.
Legal Stages when Selling a Company
The main legal and commercial stages when selling a company include the following:
- The seller appoints an agent to find a buyer.
- An interested buyer decides makes an offer to buy the business, subject to contract. If accepted, then the parties appoint their specialist business acquisition solicitor.
- We recommend sellers require all prospective buyers to execute a confidentiality agreement.
- Determine any condition precedents, for example obtaining landlord licence to assign the business lease, or funding requirements.
- Consider any internal house-keeping. On the basis a prudent buyer will find any skeletons in the cupboard in the due diligence process, it may be better to consider and resolve these in advance.
- Due diligence. If significant liabilities are discovered then the buyer may negotiate a reduction to the purchase price, or ultimately walk away from the transaction. Typically due diligence can run from a few weeks to a number of months.
- Business purchase agreement and other purchase documentation are prepared and negotiated. Typically this process can also take a few weeks to a number of months.
- The deal is completed.
Company sale – due diligence
When selling a business, the law will provide very few protections as standard. The old legal saying ‘buyer beware’ is still very relevant in this area of the law.
Depending on whether it is a company sale (buying shares from the shareholders) or a business purchase (buying the assets from the company), and the type of business, will determine the nature and extent of the due diligence process.
Whilst from the perspective of a seller of a business, there is nothing more irritating then having to respond to a string of irrelevant due diligence questions, without understanding what questions are relevant to ask, a purchaser of a business may unwittingly inherit unwanted and unknown liabilities.
When retaining our services, we can assist with responding to due diligence questionnaires, and ensure questions are relevant and not fishing expeditions.
Company sale – typical legal issues
Some of the typical legal issues to consider when selling a company include:
- How has the purchase price been set? Do we need to consider a price adjustment clause?
- Is all of the purchase price being paid at completion? If not how do we secure payment for deferred payments?
- What actually happens on completion of the purchase in addition to ownership transferring? Consider all the practical transfer steps from IT integration, any changes to workforce or staff working practices, changing bank mandates, notices to customers and suppliers.
- What sort of non-compete restrictive covenants are appropriate to require the seller to enter into?
- Are there any consents required from third parties such as a landlord of the business premises, a bank providing funding for the purchase, or assets used in the business but owned by third parties?
- Level of legal financial and accountancy due diligence to conduct.
- Consideration of appropriate limitation of liability provisions to combat buyer’s requirements for warranties and indemnities.
Solicitor for business sale
Where we are appointed as the lawyer to act on the sale of a business we have three key roles:
- First to assist with the due diligence exercise.
- Second, prepare and/or negotiate the relevant business sale agreement.
- Third, attend to the completion of the business sale.
For specialist business law advice contact us by telephone on (020) 8275 0336 or by email at email@example.com.