Business Purchases

Asset Purchase

Initial discussions – First we would create an overview of the transaction; discussing the structure and an introduction to the solicitors who will be dealing with your purchase.

Confidentiality Agreement – The seller’s solicitor will issue us with a Confidentiality Agreement for approval. This ensures that the information provided to you during the sale transaction is protected and legally prohibits you from sharing certain information you have become privy to throughout the transaction.

Due diligence and information request – We will issue an information request to the seller for their comments and they will gather key documentation relevant to the operation of the target to provide you with an insight into the day-to-day running of the business e.g. staff information, client information, property and finances/accounts. We will then review the due diligence and raise any outstanding enquiries.

Asset Purchase Agreement (APA) – This is the central legal contract between you and the seller which details the terms of the sale. The APA will detail the structure of the deal; including the purchase price, apportionments of any advanced receipts/pre-payments, restrictive covenants on what the seller can do the following completion and include warranties (statements that you are asking the seller to make as to the current position of the business).

Within the APA the sale price will be apportioned between the goodwill of the business, fixtures and fittings and the property amongst other things. We will need to work closely with your accountant to ensure that the drafting of the APA is tax-efficient for you.

Ancillary documents – These are supplementary documents to the APA and can include where applicable a Property Contract, Assignment of Lease, Deed of Assignment of Goodwill, Deed of Surrender, etc.

Disclosure letter – Where the seller is unable to give the warranties contained in the Asset Purchase Agreement without qualification they will make ‘specific disclosures’. Unless specific disclosures are made to the contrary, you will take it that all the warranties in the APA are agreed upon. If specific disclosures are made by the seller you will need to consider these and whether they materially affect your ability to proceed.

Completing the transaction –Dealing with a drawdown of any loans and balance to complete in order to send the purchase price across to the seller’s solicitors. Following completion, we will deal with any registration formalities required at Land Registry, HMRC, Companies House etc.

FURTHER POINTS FOR CONSIDERATION

TUPE – Transfer of Undertakings (Protection of Employment). In the majority of transactions, the employment of existing staff will need to be TUPE transferred to the buyer on completion. This process transfers the continuous employment and current terms of employment to the buyer on completion.

Regulated Sector Requirements – If the business is part of a regulated sector you should consider who holds the registration, who holds the registered manager/individual status and any change of control provisions that may be applicable. This will determine the applications you need to make to the regulator (OFSTED, CQC for example) and the local authority.

Property – Does the seller own the property that you operate the business out of or is it leased? If they own the property and you are acquiring it as part of the deal then a valuation and or survey should be obtained – stamp duty land tax considerations should also be reviewed.

Tax advice – Our retainer will not extend to tax advice. You should discuss all tax implications of the deal with your accountant.

Share Purchase

Prerequisite – you must hold operate your business through a company registered at Companies House for England and Wales

Initial discussions – as above

Confidentiality Agreement  – as above

Due Diligence and Information Request – as above

Share Purchase Agreement (SPA) – This is the central legal contract between you and the Seller which details the terms of the sale. The SPA will detail the structure of the deal; including the purchase price, including restrictive covenants on what you can do following completion and warranties (statements the buyer is asking you to make as to the current position of the business).

The SPA will specify the sale price for the shares of the company, which may or may not include the property sale price (depending on whether the property is held within the company or separately). We will need to work closely with your accountant to ensure that the drafting of the SPA is tax-efficient for you.

Ancillary documents – We will gather information including Companies House documentation

Disclosure letter – as above

Bank accounts – You will need to liaise with the seller in respect of any mandates that need to be signed with the existing bank on the basis you will be acquiring the company on completion and so you will require access and control of the existing company bank account.

Completing the transaction – Drawdown of loan funds and balance to complete and pay the purchase price across to the seller’s solicitors. We will then deal with any registration formalities including Land Registry, HMRC and Companies House.

Completion Accounts – Within the SPA there will be a section dealing with the calculation of the purchase price and how the completion accounts will be dealt with by the respective accountants. Again, we would need to work hand in hand with your accountant to ensure that all parties are clear as to the mechanism to be adopted to produce the completion accounts amongst other tax-related issues. Our retainer does not extend to tax advice and so it will be important to work closely with your accountant on the transaction.

FURTHER POINTS FOR CONSIDERATION

Regulated Sector Requirements – If the business is part of a regulated sector you should consider who holds the registration, who holds the registered manager/individual status and any change of control provisions that may be applicable. This will determine the applications you need to make to the regulator (OFSTED, CQC for example) and the local authority.

Property – Does the seller own the property that you operate the business out of or is it leased? If they own the property and you are acquiring it as part of the deal then a valuation and or survey should be obtained – stamp duty land tax considerations should also be reviewed. If the company you are acquiring already owns the property then you will acquire this as part of the deal by virtue of the share purchase unless it has been agreed to the contrary.

Tax advice – Our retainer will not extend to tax advice. You should discuss all tax implications of the deal with your accountant.

Liabilities – Outstanding directors loan accounts, debentures with third parties including the bank, any grants or loan monies outstanding will need to be dealt with as part of the transaction.

Banking facilities – The buyers will usually take over the company bank account on completion and you will need to liaise with the seller and their relationship manager to provide the required bank mandates adding you to the company bank account in readiness for completion. These should only be processed once the transaction is ready to exchange/complete.

Coupe Bradbury are here to help

For further assistance with a business purchase, email: matthew.scott@coupe-bradbury.com or call a member of the Corporate and Commercial Team on 01253 922777.

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We would like to thank the Corporate & Commercial Department for completing our company sale and dealing with all of the complexities that arose. It was reassuring to have such a professional team representing us.
Mr & Mrs R
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