BUSINESS LAW

BUYING & SELLING A BUSINESS

Plain English Law can help you to:

  • Negotiate new joint ventures and renegotiate existing ones
  • Buy or sell company shares or business assets
  • Establish and manage foreign subsidiaries
  • Merge (amalgamate) companies after purchase

We have experience advising on and negotiating company purchases and joint ventures in Scotland, England, Canada, USA, Germany, Poland, Ireland, Denmark, Sweden, Finland, Switzerland, Spain, the Netherlands, India, Australia, Singapore, and South Africa.

Thinking of buying a business?

There are two ways most of us buy an existing business:

  • You can buy the company, or
  • You can buy the assets and transfer them into a different company.

There isn’t a single ‘right’ approach — both have their advantages and disadvantages for buyers and sellers alike. Buyers often like to buy assets instead of companies, as it leaves more of the historical legal risks in the seller’s hands. However, buying the assets can mean more disruption: the seller must hold TUPE consultations with transferring staff, and the buyer and seller will need to ask customers and suppliers for permission to ‘novate’ (in plain English: transfer) the contracts over to the buyer.

It’s your lawyer’s job to help you choose the approach that’s right for you. Either way, you’ll want to identify and manage the legal risks you’ll be taking on.

What looks at first to be a great deal can have hidden commercial and legal risks. We can help you do your due diligence with the right commercial, financial, and legal advice at every stage. Then we can help you negotiate a deal that accounts for those risks.

What exactly is due diligence?

You’ve probably heard the expression ‘buyer beware’. It means once you buy something, it’s usually your problem if there’s something wrong with it. So you need to inspect it closely before you buy it, to avoid nasty surprises. 

Due diligence is the process of inspecting a business very carefully before you buy it. You can do as much or as little of it as you like. It all depends on your risk appetite.

Most business purchases involve some amount of financial and legal due diligence. Your accountant should check all the figures are in order. Your solicitor should check for unexpected legal issues.

Legal due diligence usually involves…

  • Reviewing contracts the business has in place — with customers, suppliers, and employees
  • Checking the business owns (or has licences to use) any intellectual property it relies on
  • Finding out about any existing or possible lawsuits.

Take a look at our due diligence FAQ for more about what’s involved.

Armed with this information, you can make better decisions about how much you’re willing to pay for the business. We can help you negotiate the deal, including warranties and indemnities to protect you against risks we uncover during due diligence. Finally, we draft the contracts to seal the deal.

Selling a business instead?

When you sell your business, you need to expect that prospective buyers will dig around the same way you would if you were the buyer. 

At Plain English Law, we know what your prospective buyers are likely to look for as they carry out their due diligence. We can help you answer their queries and find solutions to problems. And if they ask you to give them concessions or warranties, we’ll advise whether their requests are reasonable and, as needed, help you negotiate reasonable compromises.