Buying and Selling Businesses

Buying or selling a business can be achieved through buying or selling shares in a company, or through buying or selling the trade and assets of the company. Sometimes the determining factor is taxation treatment, sometimes it will be practical or legal considerations. Whilst both types have common features, there are some significant differences.

Legal Advice for Buying and Selling Businesses

Both types of transaction involve due diligence by the buyer and a sale and purchase contract involving the seller giving warranties to the buyer about the shares or trade and assets sold, together with amongst other things compliance with all relevant laws and regulations, and payment of all taxes when due. If any of these warranties are shown to be untrue, the buyer will have a right to recover from the seller certain losses suffered by the buyer.

Specialist advice should be taken as the seller will have a chance to “disclose” to the buyer any matter which is inconsistent with the warranties and provided such disclosure is fair and accurate the buyer will have no remedy against the seller for the matter disclosed. The sale and purchase contract will also set out the price to be paid, how it’s calculated; when the price is payable and will place restrictive covenants on the Seller for a period of years post deal.

Two major points for any business sale transaction (rather than a share sale) relate to employees and the transfer of assets/contracts. On a sale of a business, TUPE will normally apply to employees of the business.  This may mean consultation and election of employee representatives which can often create issues in terms of timetable and confidentiality. Specialist advice should be taken at an early stage to determine the extent to which TUPE will apply.

Secondly, the seller will be transferring the assets and contracts of the business to the buyer. In a share purchase these stay with the target company – only ownership of shares in it is transferred. This means specific due diligence needs carrying out to understand what third party contracts need to be transferred, if indeed they can be transferred.  In particular any transfer of leasehold premises will need the landlord’s consent, most finance/HP agreements are not transferable and some commercial contracts may prohibit any transfer of the agreement, especially if the agreement is of critical importance.

Talk to Tollers

Buying or selling a business can be exciting but stressful. At Tollers, we have the knowledge and experience to help you through the process. Whatever your circumstances and objectives, our team is pro-active and energetic from start to finish to ensure the process is as smooth as it can be. Get in touch with our specialist corporate team today.

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Our Buying and Selling Businesses Experts

Hasin Ali
Hasin is a newly qualified corporate and commercial solicitor in Tollers commercial services unit having joined the firm in November 2023.
Brian Auld
Partner and Head of Corporate and Commercial Law
Brian Auld is a welcome addition to Tollers family, having been a company commercial lawyer for over 30 years, he joined the firm in 2022.
Duncan Nicholson
Chief Executive Officer
Duncan joined Tollers as a Partner in 2006 in order to provide specialist advice on Corporate Recovery and Insolvency matters...
Hasin Ali
Brian Auld
Partner and Head of Corporate and Commercial Law
Duncan Nicholson
Chief Executive Officer
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