What it usually looks like
It starts with a conversation between the two sides and a preliminary price. Then come the details: what exactly is being sold – shares or the business itself – what the buyer wants to check, how and when it will pay, and who is responsible for matters from the past. Each of these answers affects the others, including the tax on both sides.
The buyer wants to know what it is really buying: whether contracts with key business partners will survive the change of owner, whether the tax affairs are in order, whether there are surprises in the books. The seller wants to receive the agreed price and sleep soundly after the transaction – without claims that come back years later. A good agreement reconciles the two, because it divides the risk clearly.
A transaction usually takes longer than expected, and in the meantime the business has to keep running normally. It helps to keep things in order: one list of matters to clarify, one timetable and a clear division of who is responsible for what on each side.
Points to watch
Shares or the business
When you buy shares, you take over the company with its whole history – including what is not yet visible. When you buy a business, it is easier to define what passes to the buyer, but the transfer of contracts, employees and permits has to be handled separately. The two routes allocate tax and liability differently.
A review before signing
Reviewing contracts, tax, the books and employment matters is not about finding reasons to break off the talks. It shows what to ask, what to clarify and what to cover in the agreement. It pays for the seller to carry out such a review of its own before the buyer does.
Price is more than a figure
What also counts is when and how the price will be paid, whether part of it depends on future results and how the company’s debt and cash on the transfer date will be settled. These provisions can change the outcome of a transaction more than the figure from the first conversation.
Warranties and liability
In the agreement the seller makes statements about the condition of the company and is liable if they are untrue. It is worth agreeing what they cover, how long they apply and up to what amount liability extends. The more thoroughly the company has been reviewed, the more calmly this part can be discussed.
Confidentiality and people
Usually only a small circle knows about the talks. A confidentiality agreement, orderly access to documents and a well-chosen moment to inform employees and business partners protect the value of the business on both sides.
How we work – step by step
We agree the goal and plan
We talk about what you want to achieve, in what time frame and what matters most to you. On that basis we propose how to carry out the transaction and a timetable.
We prepare the ground
We prepare or review the confidentiality agreement and the letter of intent. We make sure the preliminary arrangements do not tie your hands more than necessary.
We review the company
On the buyer’s side we examine contracts, tax affairs, the books and employment matters. On the seller’s side we help prepare documents and answers. We describe the result briefly: what is in order, what needs clarifying and what must be covered in the agreement.
We compare routes and work out the consequences
We set out the possible ways of carrying out the transaction – a sale of shares or of the business – and show the tax consequences of each for both sides.
We draft and negotiate the agreement
We draft or give our opinion on the sale agreement and accompanying documents. In negotiations we keep an eye on the price, warranties, safeguards and the limits of liability. We say plainly what is worth agreeing to and what is not.
Closing and afterwards
We keep track of the conditions on which the transfer of ownership depends, the filings with the register and the settlement of the price. After the transaction we help put the company’s affairs in order under its new owner.