Selling a business

We are a commercial firm focused on private companies and their owners. Our sweet spot is managing private company business sales at proportionate cost.

We advise numerous business sellers every year and are adept at getting the sale completed as quickly and cost-effectively as possible. Our experience covers a wide range of industries, business sectors types and ownership structures. Transaction values vary but a typical transaction size for us is between £1 million  and £30 million.

Structuring the deal

Will your business sale be a sale of assets or shares? This is a crucial consideration.

Prior to selling a business, it is important to consider the structure of the deal. We can advise on the best structure to achieve an optimal valuation and address other important pre-sale considerations. We plan carefully to avoid unexpected tax charges, which can often arise with asset transfers.

Prospective buyers will request confidential information about your business, e.g. your customer list, financial information and product information.  Clearly you do not want to share this information without legal protection in place.

We help limit your exposure, protect your position and safeguard your business if the buyer walks away. Our confidentiality agreements can be tailored to your circumstances and set out appropriate protections and timescales during the sale process.

Purchasers often expect exclusive rights, i.e. a lock-out period during the costly due-diligence process. However, a lock-out can strengthen the purchaser’s negotiating position. We’ll tell you what is reasonable and help you assess whether agreeing to one is in your interests.

Key aspects of a business sale

Generally, the earlier and more thoroughly you prepare the better. Agreeing the price is just the start. To be confident of completing the sale, it's key to keep momentum and maintain the buyer's confidence. Delays cost deals. Instructing lawyers at an early stage is strongly recommended to deal with :

• Due diligence  - the buyer uses the due diligence process to flush out weaknesses, potential liabilities, and other issues which may affect the transaction, and perhaps try to negotiate price reductions, deferred consideration or an earn-out. We manage this process.  The buyer will ask to inspect your financial and business records and documents. We prepare you, organise your documents, and respond to enquiries raised by the buyer’s solicitors.
• Consent of all shareholders - you will need to ensure all shareholders can be reached and that a minority shareholder cannot unnecessarily delay or prevent the sale. Drag-along provisions and powers of attorney signed in advance of sale can be very helpful and provide assurance to a buyer that the sale will proceed without any unnecessary delays.
• Business sale contract -  the sale agreement and associated legal documentation is the last piece of the jigsaw. This is when our clients most need our expertise to limit their potential liabilities and risks. We review and draft the terms for selling your business, explain what the agreement means, flag key risks, negotiate, as appropriate, on your behalf, and help manage your future exposure under warranties and indemnities. Our disclosure letters can help reduce the risk of future claims by setting out matters which would otherwise give rise to liability under the warranties.
• Warranties and indemnities -  usually we will negotiate these for you. Warranties and indemnities are key in UK business sales as they allocate risk, but often cause negotiation disputes over scope, wording, time limits, caps on liability and seller disclosures.

What will happen to employees?

Employees are an important factor in most business sales.  We have the expertise to advise on and manage employment law issues, including changes to employment contracts and issues arising from the transfer of a business.

Tax on business sale

Our expertise encompasses the tax considerations arising on the sale of a business, including capital gains tax on the consideration received. Usually our top concern is to ensure your eligibility for Business Assets Disposal Relief (BADR, formerly known as Entrepreneurs' Relief), where available. BADR offers:

• 18% capital gains tax for qualifying shareholders; rather than
• the usual capital gains tax rate of 18-24% (depending on tax band) on a share sale.

Not every shareholder qualifies for BADR. There are specific conditions which must be satisfied. In more complex cases, we can advise on the relevant conditions and, where appropriate, the availability of HMRC clearance.

We are specialists in business sales. Get in contact to discuss selling your business and how our lawyers can help.