Buying and selling legal guide

Pictons guide to things to think about when buying or selling a business

1. Fixed Assets – it is important to check ownership of fixed assets that are to be sold with the Business and to get any consents that are required for their transfer. That would include the Landlord’s Consent on the assignment of any leasehold premises.
2. Intellectual Property – it is important to be able to demonstrate ownership of all intellectual property owned by the Business and any licences that have been granted in connection with it.
3. Current Assets – stock, work-in-progress and debtors all need to be verified as being in existence and correctly valued.
4. Current Liabilities – important Agreements may need to be considered to ensure that liability under them can be transferred to the buyer and that the buyer has a clear and direct relationship with the creditor. As regards other creditors, arrangements obviously need to be made to clear indebtedness.
5. Banking Arrangements – banks need to be kept advised of business sales and arrangements made, either to keep the relationship with the buyer or to move the banking to a new bank.
6. Regulatory Authorities – consideration needs to be given as to what regulatory authorities (if any) need to be involved in connection with the transfer, and if notification or approval is necessary this needs to be handled at the right time.
7. Employees and Trade Unions – consultation needs to be carried out at the right time with employees and/or unions. Failure to observe the correct procedure will give rise to significant problems later on.
8. Contracts – consideration needs to be given at an early date as to whether these should be novated or assigned and, in particular, where there is a guarantee in place, steps need to be taken to mitigate the risk levels.
9. Insurance – steps need to be taken to ensure that existing insurance cover is cancelled and new insurance cover taken up by the Buyer.
10. Chargesand Mortgages – steps need to be taken to ensure any ongoing chargee’s consent to the arrangements that are proposed and for any other charges to be cancelled. Releases and Certificates of Non-crystallisation may be required.
11. Facilities and Licences – arrangements need to be made with utilities companies and for the transfer of licences (e.g. with regard to licensed premises).
12. Litigation – agreement needs to be reached as to who will deal with ongoing litigation and how the risk is apportioned between the buyer and the seller.
13. Corporate Issues – the buyer and seller need to ensure that they give (where needed) appropriate approvals in relation to the transaction.
14. Tax – issues of capital gains tax, corporation tax, stamp duty, stamp duty land tax, VAT and other relevant taxes need to be considered in relation to the documentation and the deal generally.
15. Government Grants – if any grants have been received by the business, consideration needs to be given as to whether these are repayable on the transfer.
16. Business Name & Related Issues – if the business is retaining its name, an issue will be whether the seller should change it’s name to avoid confusion. Stationery will have to be re-printed in any event.
17. Trade Associations – consideration will need to be given to notification of trade associations and membership transferred in appropriate situations.

All of these matters need to be considered over and above the preparation of legal documents in connection with the transaction. Buyers and sellers are strongly advised to make contact with their legal advisers ahead of draft Heads of Terms being agreed so that they can have an input into the process at an early date.

Abacus Business Sales have a close working relations with an effective team of business lawyers with knowledge, experience and acumen to help its Clients get the best out of a business sale or purchase. It is important that they are instructed early so as to advise on the structure of a deal before Heads of Terms are finalised as this will help reduce the chance of the deal not completing.

Once Heads of Terms are settled, they will work with the Clients and their other advisers in the preparation and completion of the legal documents and will advise in relation to all legal aspects of the transaction within the timescale envisaged. The recommend solicitors are noted for their practical and commercial approach to solving problems encountered during this process.

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