Solicitors for selling or buying a business

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Solicitors in London for buying or selling a business

We have a specialist, highly experienced team of commercial lawyers to advise on buying or selling businesses and are known for a practical, commercial yet thorough approach which is cost proportionate and effective. We handle transactions ranging from sales of £100,000.00 or less up to multi-million pound deals.

Whilst a number of the issues remain the same regardless of the sale price, we fully understand that with small businesses, legal and other costs must be proportionate.

In many cases, we are instructed from the outset, including the negotiations, due diligence and heads of terms and we advise clients who are buying on how to find out at the earliest stage whether there are issues which they should consider as deal breakers. Our lawyers general approach however is always to facilitate a deal happening rather than finding reasons to advise clients not to proceed.

Key legal documents when buying a business

  • Heads of terms
  • Share sale or asset sale agreement
  • Property leases or title documents
  • Tax deed
  • Service contracts (where seller is retained after business sold)
  • Assignments and/or novations of contracts with 3rd parties
  • Bank related documents such as releases from guarantees and debentures
  • Employment contracts

Selling or buying a business requires careful planning and good advice well in advance to make it as painless as possible. It is extremely important to keep the business running whilst the negotiations take place. Speak to our solicitors for further advice.

Warranties

A difficult area and one of the areas in the contract where disputes, delays and costs can, if a commercial and practical approach is not adopted by both parties and their lawyers, mushroom. Warranties are factual assertions about the business, it’s performance, assets, liabilities and litigation, given by the sellers to the purchasers in order to give the purchaser comfort that matters relating to the business are as stated.

Restrictive covenants or seller staying on

Typically with a small business, that business will have revolved largely around the owners, who have been fundamental to it’s success. Buyers may well need some assistance from the seller for a period post sale to get to grips with the business and to transition staff and external relationships.

It is therefore common for sellers to be required to stay on post completion. The flip side of the situation where the seller has been instrumental in the business success is that the buyer may require the selling parties to covenant not to compete with the business for a set period post-sale. This may also include restrictions on poaching customers or staff. Care is always needed with drafting covenants since if they are too wide they may be found by a court to be unenforceable, in whole or in part.

Timing of payments, possible earn out or deferred payment

A lot of time, cost and friction is spent on warranties, especially where the full purchase price is paid on completion. Whilst a seller will naturally want to resist any form of deferred payment, a compromise may be available in the form of an earn-out, whereby the seller receives some of the business sale funds at post completion, based on set criteria which may be performance based part of the purchase price is deferred for a period of time to ensure that certain unclear issues have not proved problematic.

Speak to our lawyers

In our experience, negotiating a company sale will take at least a month, and in most cases 2 to 6 months. There are likely to be at least one or two weeks where key personnel in the seller business will need to be available either by telephone or attending meetings in order to ensure that matters are dealt with and that negotiations run effectively. It is therefore important that you plan your resources carefully to ensure that the continuity of the business is not affected.

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