Devon solicitors for buying a business
We are experienced Devon solicitors for buying a business and are familiar with all the risks that purchasers face. So if you are contemplating buying a business in Devon, or another part of the West Country, then it is important to appoint the right solicitor to ensure that your investment is fully protected.
Here are a few common issues that need to be considered when dealing with the legal process of buying a business. However, it is important to remember that this is just a general overview. Every transaction is different and it is vital that you take expert legal advice before going ahead with your acquisition.
Assets or shares?
When you buy a business you can either acquire the assets which form part of the business or buy shares in the company that owns the business.
If it’s an asset purchase then each of those assets needs to be clearly identified to avoid misunderstanding and a possible dispute.
Our commercial solicitors are experienced in dealing with both types of purchase.
Employees of the business
Where you are acquiring a business as a going concern you need to be aware of your legal obligations towards any employees. The solicitor will need to be familiar with TUPE regulations, which stands for Transfer of Undertakings (Protection of Employment).
You should also think about key personnel who will be central to the business’s performance. Will they be continuing to work for the business and will they need to be incentivised?
Consider what intellectual property thee business owns, such as trade marks and patents. Are these rights adequately protected? And are they included in the sale?
Consents and approvals
Does any aspect of the acquisition require a consent or approval of a third party? If so then you need to be certain that this will be obtained before you commit to the purchase.
It is also important to check the terms of any key contracts to ensure that a change of ownership does not trigger termination,
Confidentiality and non-disclosure agreements
It is generally good practice to enter into a NDA or confidentiality agreement before disclosing business sensitive information, particularly to a competitor.
Heads of agreement and lock out agreements
It is recommended that you seek legal input on any heads of agreement you reach. These should accurately summarise the main terms of the transaction without establishing any legally binding obligations.
You may also wish to tie the seller in by entering into a lock out agreement. These are used to protect both parties, but are particularly helpful to purchasers who are concerned about gazumping.
The due diligence process allows you are your solicitors to investigate the business’s assets and liabilities. It is a crucial part of the legal process of buying a business and allows the buyer to pull out or renegotiate if issues come to light.
Among the issues we would normally consider on a buyer’s behalf during the due diligence process are:
- key contracts and purchase orders;
- employees’ terms and conditions of employment;
- IT systems and apps;
- environmental issues;
- competition issues; and
- any live litigation.
Warranties and indemnities
Warranties are legally enforceable promises that are made by the seller about the business. They must be carefully worded and considered.
Indemnities are contractual terms that require the seller to compensate the buyer in the event that the buyer incurs specific financial liabilities.
A restrictive covenant can prevent a seller from competing with your business following completion of the transaction. Covenants can also be used to prevent the seller poaching customers or staff from you. Again these need to be carefully drafted by an experienced lawyer.
These are used by sellers to disclose issues that could be adverse to the business. Issues that are disclosed will prevent a buyer from making a warranty claim.
Slee Blackwell are experienced Devon solicitors for buying a business. For an initial informal chat about how we can help you acquire your new business, give us a call on 0333 888 0404 or send an email to us at [email protected]