Business Sales

Asset Sale

Initial discussions – We will involve an overview of the transaction; a discussion about the structure and an introduction to the team who will be progressing your matter.

Confidentiality Agreement – Once we have details of the buyer’s solicitors, we will make initial introductions and issue a Confidentiality Agreement for their approval. This ensures that the information provided to the buyer during the sale transaction is protected and legally prohibits the buyer from sharing certain information they have become privy to throughout the transaction.

Due diligence and information request – This is a key element of the sale process. You will need to gather key documentation relevant to the operation of your business to provide the buyer with an insight into the day-to-day running, for example, staff information, client information, property, finances/accounts or general business.

The due diligence you provide will be added to an electronic password-protected data room which will be released to the buyer and their solicitor during the transaction. The buyer’s solicitors will forward an Information Request raising general enquiries about your business. The due diligence documents you gather will assist you in responding to any enquiries raised. The buyer and their solicitors will review the due diligence and information request responses and raise any further enquiries they consider relevant.

Asset Purchase Agreement (APA) – This is the central legal contract between you and the buyer which details the terms of the sale. The APA will detail the structure of the deal; including the sale price, apportionments of any advanced receipts/pre-payments, restrictive covenants on what you can do the following completion and include warranties (statements the buyer is asking you 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 Property Contract, Assignment of Lease, Deed of Assignment of Goodwill, Deed of Surrender of Lease etc.

Disclosure letter – Where you are unable to give the warranties contained in the APA without qualification you will need to make a ‘specific disclosure’. Unless specific disclosures are made to the contrary the buyer will take it that all the warranties in the APA are agreed. This is an integral part of the sale transaction as making accurate and detailed disclosures can reduce your exposure to potential claims by the buyer following completion.

Bank accounts – We will liaise with your bank to obtain redemption figures for any charges against the property and/or business and to arrange your release from any personal guarantees that you may have given in respect of the business.

Completing the transaction – We deal with the redemption of any charges against the property and account to you for the net sale proceeds.

FURTHER POINTS TO CONSIDER

TUPE – Transfer of Undertakings (Protection of Employment). The employment of your staff will in the majority of cases 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 your business is part of a regulated sector you should consider who holds the main registration (i.e. company/individual etc), who is the registered manager/individual status and any change of control provisions that may be applicable.

Property – Do you own the property that you operate the business out of or is it leased? Is the property held by you personally or within your company?

Tax advice – Our retainer will not extend to tax advice. You will need to discuss all tax and accountancy implications of the deal with your accountant and we will need to work alongside them throughout the transaction.

Share Sale

Prerequisite – you must 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 buyer which details the terms of the sale. The SPA will detail the structure of the deal; including restrictive covenants on what you can do the following completion and include 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 as tax efficient as possible for you.

Ancillary documents – including Companies House documentation

Disclosure letter – as above

Bank accounts – We will liaise with your bank to obtain redemption figures for any charges against the property, debentures against the company and/or to arrange your release from any personal guarantees that you may have entered into.

Completing the transaction – Here we deal with the redemption of any charges against the Property and accounting to you for the net proceeds of the sale.

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. We will work alongside 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 will not extend to tax advice and so it will be important to work closely with your accountants on the transaction.

FURTHER POINTS TO CONSIDER

Regulated Sector Requirements – If your business is part of a regulated sector you should consider who holds the registration, who is the registered manager/individual status and any change of control provisions that may be applicable.

Property – Do you own the property that you operate the business out of or is it leased? Is the property held by you personally and so is held outside of your company?
If the property is held by the company this will automatically transfer to the buyer on the completion of the share sale.

Tax advice – Our retainer does not extend to tax advice. You will need to discuss all tax implication actions 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 your bank’s relationship manager to provide the required bank mandates adding the buyer to the company bank account in readiness for completion. This should only be processed once the transaction is ready to exchange/complete.

Need some more advice?

For more advice on a business sale, please email: Matthew.scott@coupe-bradbury.com or call a member of the Corporate and Commercial Team on 01253 922777.