Selling a business

We are a specialist law 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 fast and as cost effectively as possible. Our experience covers many industries, business sectors types and ownership issues on sale. 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 obtain an optimal valuation and/or other pre-sale considerations. We plan carefully to avoid unexpected taxation charges, which often arise with asset transfers.

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

We limit your exposure, protect your position and safeguard your business if the buyer walks away. Our confidentiality agreements fit your circumstances, and define appropriate timescales for selling your business.

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.

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 teh confidence of the buyer. 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 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 a minority shareholder cannot hold up 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/or draft the terms for selling your business, and explain what the agreement means, flag key risks, negotiate: as appropriate, on your behalf and ring-fence your future exposure: warranties and indemnities form part of the terms of sale.  Our disclosure letters minimise future problems.
• Warranties and indemnities –  usually we will negotiate these for you. To understand the commercials you need to understand the difference between a warranty and an indemnity. A warranty is a statement about a particular aspect of the business. An indemnity is a promise to reimburse the buyer for all losses if a particular event or set of circumstances arise. This means that a buyer claiming for breach of contract under a warranty has to show loss, mitigate that loss, and usually can only claim for direct loss which flows naturally from the breach, or is in the reasonable contemplation of the parties.

What will happen to Employees?

Employees are usually important to the business’s success.  We have the expertise to manage employment law issues and changes to employment contracts.

Tax on business sale

Our expertise encompasses capital gains tax on the consideration for your business. Usually our top concern is to ensure your eligibility for Business Assets Disposal Relief (entrepreneurs’ relief) which offers:

• 10% capital gains tax for qualifying shareholders; rather than
• 20% the usual capital gains tax rate on a share sale.

Not every shareholder qualifies for Business Assets Disposal Relief (entrepreneurs’ relief). There is a HMRC clearance process for the tricky cases relating to your trade – we can advise.

Another area where our expertise saves you money is on the negotiation of tax covenants and warranties under the share purchase agreement. We deal with this as part of our service in managing the transaction which avoids the need for you to engage separate tax specialists.

Recent experience on business sales

Advising clients selling their businesses is a core area of practice for us and we deal with a significant number of business sale transactions each year. A few examples of recent woerk include :-

• Sale of an IFA business
• Case study on selling of a tech business
• Sale of a brand for a celebrity chef
• Summary of a variety of different sales of business matters

We’re specialist solicitors for business sales – get in contact to discuss selling your business and how our lawyers can help.