If you are looking to buy a business, then we have a specialist team with the necessary skills to advise you on and to assist you with the legal aspects of that acquisition. This work is often referred to as “mergers and acquisitions” or “M&A” work.
What are the options for buying a company or business?
As most businesses are run as private limited companies, you would most typically be looking to purchase the shares of the target company from the incumbent shareholders as part of a share sale. You could, as an alternative, also purchase the business and assets from the target company subject to all or some of the liabilities of the target business. This is referred to as an “asset acquisition” or “business sale”.
In some cases, businesses are run by sole traders, partnerships, limited liability partnerships or other corporate vehicles. If you are targeting the acquisition of such an entity, then similar legal acquisition processes and principles apply and we are equally able to advise you on those.
The most appropriate deal structure will depend on the circumstances of the transaction, and the parties’ choice can be influenced by a number of legal, commercial, financial and tax considerations.
How can our lawyers help with a business purchase?
When buying a company or business, our solicitors will:
- conduct legal due diligence on your behalf and report to you on our findings;
- draft and advise you on the legal documents referred to above, together with all other ancillary legal documents required for the proposed transaction;
- assist you in determining the likely transaction timescale;
- liaise with you and your other advisers;
- liaise and advise you on the legal aspects related to any funding which you might require for the transaction;
- assist you and your advisers in negotiating the deal terms and the legal documents, such negotiations may be conducted over the telephone, in person or through correspondence;
- advise you on the disclosures the seller seeks to make as part of the deal;
- take the transaction through to exchange and completion and conduct a completion or closing meeting to ensure that all necessary items and documents are delivered on completion to ensure that you end up as the new owner of the target business;
- prepare a transaction bible to evidence your acquisition and to record the transaction documents, deal with post-closing filing requirements with Companies House and the payment on your behalf of stamp duty on the acquisition of shares (0.5% of the purchase price);
- if the transaction involves a completion accounts mechanism, assist you on agreeing the completion accounts with the sellers and the making of any adjusting payments as provided under the share purchase agreement.
If there is a multi-jurisdictional element to a proposed transaction, then we can also coordinate and project manage the instruction of advisers in the requisite jurisdictions via our membership of MSI Global Alliance, an international network of independent legal and accounting firms. .
If there are specific areas of legal expertise required in a transaction, such as advice on employment law or commercial property aspects, then we would also liaise with our colleagues in those departments on your behalf.
Advising on the legal aspects of a business purchase is normally only one part of the overall process. Financial, tax and accounting advice will in most cases also be required and so, depending upon the complexity of the proposed deal, you would normally also engage a corporate finance specialist, a tax adviser and an accountant and we would work with them as your team of advisers on the deal.
What is the process for buying a company or business?
The starting point is that you identify the acquisition target and that initial discussions are initiated to signal your interest in doing a deal. If the seller is agreeable then, normally and following a period of initial negotiations, heads of terms or a term sheet is prepared to summarise the non-binding key terms for the transaction and to serve as the skeleton summary of the deal structure. You and the seller might agree to keep your negotiations and business information confidential and this is recorded in a confidentiality or non-disclosure agreement. You could also require that the seller grant you a period of exclusivity during which the seller agrees not to negotiate with any other party for the sale of the target business. This is recorded in an exclusivity agreement.
Most buyers will carry out some degree of due diligence on the target company before entering into definitive transaction documents. Due diligence will assist you in properly understanding what it is that you are purchasing, to verify the value of the target and the purchase price and to assess any risks or liabilities that you could inherit in consequence of completing the purchase. We are able to co-ordinate and assist you in conducting legal due diligence and we would report to you on our findings in a due diligence report. We would also liaise with you and your other advisers who would similarly be responsible for conducting tax, accounting and commercial due diligence.
The results of due diligence form in integral part of the preparation of a share purchase agreement or a business acquisition agreement, which documents set out the terms and conditions regulating the sale and purchase, including such matters as the price to be paid and the legal protections granted to you by the seller, often referred to as warranties and indemnities. The seller would normally require the opportunity to disclose to you any exceptions to the warranties that are to be given by the seller under the share purchase agreement. These exceptions are normally recorded in a disclosure letter, which is prepared by the seller and reviewed by us.
Our experience & fees
We have a specialist team of solicitors at Lester Aldridge working on M&A matters who have significant experience in acting for both buyers and sellers.
We would normally work in teams on matters, with larger or more complicated transactional work being led by partners (having on average between 20 and 40 years’ experience each in such work). Smaller or less complicated transactions are in some cases led by our associates, but under partner supervision. In all cases appropriate elements of the work will be undertaken by assistant solicitors and trainee solicitors to ensure that costs are kept to a minimum.
The purchase price is often not the best indicator of the complexity of a transaction, and so our position is that we are open to acting in both smaller and larger transactions. In recent times we have advised on acquisitions which vary greatly in deal size and complexity.
In all cases fee estimates are agreed with the client at the outset of the matter. The extent of our fee will depend on such factors as the complexity of the matter, the requisite level of experience required to advise on the transaction, the extent of our role in the due diligence, the anticipated transaction timescale and the nature and complexity of the target business. In all cases we strive to ensure that our fees are proportionate.
While our M&A services are not sector specific, we do have sector-specific experience. This includes experience in the following sectors: Health & social care (care and nursing home acquisitions), IT, software development, manufacturing and export.
We act for a range of large multi-national corporations, as well as SME and owner-managed entrepreneurial clients.