Buying a business

Solicitors for buying a business

If you are thinking of buying a business we can make it happen and reduce risks. Your position will be protected as far as possible with us.

A flexible team means that we can manage small and large transactions for deal values starting at around £150,000.00. There is a team of specialists in the background able to help with due diligence enquiries, intellectual property, employment and tax issues.

We provide fee estimates for all work to leave you in control of legal cost.

Why pick us to buy your business

We are a specialist law firm focused on private companies and their owners.  We work on big and small transactions.

  • We stick to agreed time-frames and appreciate urgency. We have the resources to be flexible.
  • We can review or prepare the sale documentation.  We are able to deal with all aspects from commercial property through to tax and technology.
  • We are confident in our approach meaning we will never present choices leaving you unsure of what to do.

Based on issues we see we have summarised how you can achieve a good deal on a business acquisition.

Our suggestions and experience adds value, especially in the ways to spread the risk and payment terms. For example:

  • Warranties: as to the state of the business.
  • Indemnities: in relation to known business liabilities.
  • Withholding: retaining part of the purchase price during the warranty period.
  • Price reduction: the more the seller discloses, the weaker the buyer’s warranties become.
  • Practicalities: for an outright purchase, e.g. the mechanics of handovers, access to the banking, websites, client databases, and customer review platforms etc.
  • Restrictive covenants: to prevent the seller setting up again in competition. Without such covenants the seller, and those connected with the seller, are not restricted – damaging the investment. The restrictive covenants will need to be tailored to the industry, location of the target business, and plans for growth. For example, if you’re buying a business with plans for expansion in the EU, then the restrictive covenants should cover that territory to prevent the seller from taking a slice of the market, in turn, damaging your investment.

How to buy a business

Commonly, there are two types of business acquisitions:

  • Share purchase; or
  • Asset purchase.

Share purchase

Here the buyer acquires an entity complete with its assets, rights and liabilities, both past and present. There may be change of control provisions in the business contracts, particularly with customers. Otherwise, the change of ownership should not affect trading.

As a buyer, if you do not secure warranties from the seller you will be exposed. The exposure under UK law stems from the principle of caveat emptor, i.e. buyer beware, which applies when purchasing a company’s shares or assets.. The precise warranties the buyer needs vary from business to business but typically include warranties on the targets:

  • Accounts;
  • Finance & banking;
  • Property;
  • Employees;
  • Commercial contracts;
  • IP;
  • IT; and
  • Tax.

Asset purchase

The buyer may want some but not all of the business. Under an asset purchase agreement the buyer takes the assets and liabilities it wants and leaves behind parts of the trade not required. As with a share purchase agreement, you should secure warranties on an asset purchase to protect the buyer from inheriting more than it plans to inherit. In some cases warranties are not practical and the acquisition price reflects the buyer’s risk.


The general principal under English law is “caveat emptor” or “buyer beware”. This means a buyer accepts the business’s risks. Warranties are statements about the business, given by the seller to the buyer. These statements comfort the buyer as to what they are purchasing. Warranties typically cover the business’s:-

  • Assets, e.g. intellectual property;
  • Liabilities;
  • Performance;
  • Employees;
  • Litigation.

Warranties are usually limited to:

  • Facts: within the seller’s knowledge, not disclosed to the buyer;
  • Caps: on the amount buyers can claim under the warranties; and
  • Time: to give notice of warranty claims and/or initiate legal proceedings in relation to those claims.

If the warranties do not turn out to be true, the buyer can claim for breach of warranty, i.e. sue for the damage suffered. Selling shareholders usually have personal liability for a breach of warranty. You could see warranties acting as a form of retrospective price adjustment in a business sale.

Sellers avoid giving warranties. Sellers argue that warranties are redundant if the buyer and their advisors undertake adequate due diligence. If forced, sellers try to limit the warranties’ scope and cap their liability. Sellers usually retain the opportunity to remedy, i.e. fix, any breaches of warranties, providing they can do so within a specified time.

The use of warranties in practice

The seller’s liability under the warranties is invariably limited to the extent that problems were properly disclosed. So sellers use disclosure letters to limit warranties. This letter defines the warranties that are incorrect. Clearly, the disclosure letter is an important document.

Tactically, warranties encourage the seller to disclose known problems. Thus, warranties often flush out potential problems.

Employment law issues when buying a business

If you want to retain employees and/or avoid claims then you will need to deal with employment law issues arising on the purchase. We will report to you on the position and enable you to make decisions. For example we can:

  • Review existing employment contracts: and highlight any onerous terms which may impede you, such as variations to the terms and bonus entitlements;
  • Review restrictive covenants: to ensure they match business requirements and you can enforce them;
  • Manage re-organisations or redundancies: which may flow from buying the business and the review of the current employees’ restrictive covenants; and
  • Implement employee incentives: to encourage the newly acquired workforce.

If you are buying a business, whether the entire shares or assets of a business, get in touch with us for a discussion and a fee quote.

Helen Curtis

Dual-qualified in the UK and USA and a qualified solicitor since 1998, Helen is a partner and heads up the corporate team, advising start-ups, SME companies, partnerships, entrepreneurs, investors and shareholders.

Let us take it from here

Call us on 020 7438 1060 or complete the form and one of our team will be in touch.