Corporate Solicitors in Essex, Suffolk & London
Buying or Selling a Business or Company
Attwells Solicitors specialises in corporate law and provides a transparent, fixed-fee legal service to support you through every stage of buying or selling a business or company. Our expert lawyers will ensure you meet critical deadlines, conduct thorough due diligence, and understand all legal terminology in plain English so you can confidently move forward.
Advantages and Considerations When Buying
Purchasing an existing business or company can be a faster and more secure route than starting from scratch. With an established brand, a loyal client base, and proven income streams, buyers may find it easier to secure finance and benefit from existing marketing and operational plans. In some cases, valuable data and a team of trained staff further add to the appeal. However, buying an existing enterprise often comes at a higher cost, with additional expenses such as professional fees, insurance, warranties, and potential gaps in cash flow. It is essential to weigh these benefits against the risks, including the possibility of key employees leaving and the higher upfront investment.
Key Reasons for Selling
On the other side of the equation, selling a business or company is not merely a financial decision but often a personal one. Many choose to sell to improve their cash flow, capitalise on their success, or as a result of life-changing events such as retirement, divorce, or ill health. Others may find the day-to-day pressures of running a company overwhelming and decide it is time to move on to new challenges. Our commercial solicitors are experienced in tailoring legal advice to your specific circumstances, ensuring that every aspect – from negotiating heads of terms to finalising the purchase agreement – is handled with utmost professionalism and care.
Buying a Business or Company: Understanding the Process
Drafting the Heads of Terms
The first step in acquiring a business or company is drafting the heads of terms. This document sets out the fundamental terms and conditions of your purchase, including confidentiality agreements, timelines, and agenda. While this can be partially prepared by yourself, it is advisable to seek legal assistance to ensure it accurately reflects your interests. Once drafted, it is sent to the seller and forms the basis of the sales contract. You may also want to negotiate a period of exclusivity and an exclusivity agreement.
Reviewing the Sales Contract
Once the draft contract has been prepared, our lawyers can review and negotiate it with you in detail. This can be done in person, over the phone, or via Zoom. We will highlight any issues, potential risks, and clauses that could be amended to better protect your interests. At this stage, we will raise or deal with queries on your behalf and negotiate key terms.
Evaluating the Complexity of the Transaction
The level of complexity involved depends on the nature, size, and value of the acquisition. It also depends on how much risk you are willing to take. We will outline your options, discuss them with you, and follow up with written advice, giving you time to review and consider our recommendations.
Please watch our YouTube video for more information about buying or selling a business or company.
What is the Difference Between a Business and a Company?
A business is typically owned by an individual in their personal name or as individuals as a partnership, whereas a company is owned by shareholders. A company is a separate legal entity, meaning shareholders are not personally liable, and shares can be bought and sold without affecting the company’s legal status.
Buying via a Share Purchase vs. an Asset Purchase
When acquiring a company, you can choose between a share purchase or an asset purchase:
- Share Purchase: You acquire the existing shareholder’s shares, effectively taking ownership of the company. This approach ensures continuity, as all existing contracts, employees, and liabilities remain unchanged.
- Asset Purchase: You acquire specific assets of the business, such as goodwill, intellectual property, equipment, and customer databases. This option may allow for greater flexibility but can involve additional legal considerations, such as TUPE (Transfer of Undertakings Protection of Employment Regulations).
Liabilities and Responsibilities
Depending on the nature of the business, some purchases may include liabilities. For example, purchasing a construction business could mean inheriting responsibility for previous projects. Understanding these potential obligations is crucial before completing a transaction.
Employment Law Considerations When Buying a Business
If purchasing via share acquisition, all employment contracts remain unchanged. Any redundancies or contractual modifications will need to be negotiated with employees.
If purchasing via asset acquisition, TUPE regulations apply, as the legal entity of the employer changes. The seller is responsible for ensuring compliance with TUPE, but legal guidance is recommended to avoid employment law disputes.
Selling a Business or Company: Key Considerations
Preparing for the Sale
Before selling, you must evaluate your business’s value and prepare essential documentation, including financial statements, forecasts, and marketing strategies. Buyers will expect comprehensive records, so ensuring all contracts, HR policies, and internal processes are up to date will increase confidence in the purchase.
Reviewing Heads of Terms
At Attwells Solicitors, we support business owners during the negotiation phase by drafting and reviewing heads of terms. This ensures that key issues are addressed early, saving time and avoiding complications later in the process.
Employment Law Considerations When Selling
Selling a business (asset sale): TUPE regulations apply, and employees must be informed, with liability information provided to the buyer.
Selling a company (share sale): Since the company remains the employer, TUPE does not apply. However, communication with employees is advised to maintain morale.
Legal Obligations When Selling
It is essential to act in good faith during the sale process. Misrepresenting facts or withholding critical information could lead to legal disputes. Seeking expert legal advice will ensure compliance and smooth negotiations.
Why Choose Attwells Solicitors?
We specialise in commercial and business law, offering fixed-fee services tailored to SMEs. Whether buying or selling, we provide expert legal guidance to protect your interests and facilitate a seamless transaction.
Get in touch today to discuss your business sale or purchase with one of our experienced solicitors.
