Buying a business

We have handled many transactions and have the experience required to run private company acquisitions.

We provide realistic fee estimates - we may not be the cheapest, but we aim to provide a high-quality service, drawing on our years of experience. Our skills extend to payment terms, tax, commercial contracts and equity arrangements.

Why choose us when buying a privately owned business?

• As a specialist firm, our focus is on private companies and shareholders.
• We understand the importance of delivering on time.
• Our team is small and skilled, helping to keep your costs down.

Preparing to buy a business

Before you get to the legal agreement stage, a well-planned transaction will start with heads of terms setting out the basics and confidentiality requirements.  This can be a short, concise document, but it is important, as it sets the agenda and timescales.  We will help you to ensure that it covers everything you will need.

The buyer usually controls the document production and prepares the first draft of the share purchase agreement. What goes into the sale documentation depends very much on the nature of the acquisition, the parties' appetite for risk, and the purchase price.  Using our experience, we guide you on what is reasonable.

Key negotiating points for buyers of a business

• Warranties - as to the state of the business.  For example, if you are buying a trading platform, you want to be able to take steps and recover some or all of the consideration if it turns out the sellers do not own what they have sold.
• Indemnities - in relation to known business liabilities.  For example, if a supplier has not been paid substantial sums owed to it by the sellers, you need to know about this before you complete.
• Withholding part of purchase price - retaining part of the purchase price during the warranty period - known as deferred consideration or earn out.
• Price reduction - it is not unusual with business acquisitions that, as the seller discloses details of the business, there is an opportunity to renegotiate the purchase price.
• Practicalities - for an outright purchase, e.g. the mechanics of handovers, access to bank accounts, websites, client databases, and customer review platforms etc.
• Restrictive covenants - to prevent the seller from setting up a competing business. Without such covenants the seller, and those connected with the seller, are not restricted – potentially damaging the value of 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.

Assets or shares?

Commonly, there are two types of business acquisitions:

• Share purchase - the buyer buys all the shares of the company 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.
• Asset purchase - where you may want some but not all of the business. Under an asset purchase agreement, the buyer takes the assets 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 will reflect the buyer’s risk.

If you are buying a business, whether through a share purchase or an asset purchase, get in touch with us to discuss the transaction and how we can help.