Business Purchase Solicitors

We can advise and guide you through each stage of the process from start to finish, including:

Discussing your objectives at the outset

Understanding what you want to achieve from the purchase and your timescales for completing the acquisition are key to a successful transaction. We will listen to what you want to achieve and guide you through the purchase process from the outset.

We will discuss with you the structure that the purchase takes including:

• Whether it will be an asset purchase or (in the case of a limited company) a share purchase.
• The risks and benefits of each approach.
• Key areas of risk (for example onerous contracts, pensions or employee issues).
• Whether there are any contractual or regulatory issues that need to be dealt with in advance of a purchase.
• Funder’s requirements for borrowing.

Heads of Terms and Exclusivity Agreements

Once a purchase is agreed it is usual for the parties to enter into a set of ‘heads of terms’ to record key commercial terms in advance of legally binding documentation being prepared.

Heads of terms are used make clear the parties’ expectations around key commercial terms. We will prepare a detailed set of heads and negotiate their terms with the seller and its advisers. We will consider with you they key issues that need to be agreed at this stage, including:

• Price – how much is payable and what form of consideration does the price take (e.g. cash, shares in the buyer, loan notes, an earn-out based on future profits or turnover or a combination of different forms of payment)?
• When is the price payable? It is less usual for a seller to receive their payment in full, in cash and upfront. A well advised buyer may wish to hold some of the consideration back for a period of time as security against warranty or indemnity claims under the sale and purchase agreement (referred to as a ‘retention’) or made conditional upon the business’ future performance.
• Exclusivity – sometimes included within the heads of terms and sometimes dealt with under a separate exclusivity agreement. Many buyers will want to ensure that they have a period of time where they and they alone can exclusively negotiate the purchase of a business from a seller. Exclusivity provisions are often backed up with costs protection so that if a seller does commence negotiations with another party you may be able to recover your wasted costs.

Confidentiality Agreements

Most sellers will require you to enter into a ‘confidentiality agreement’ or ‘non-disclosure agreement’ (NDA) prior to them providing you with any sensitive commercial information (and sometimes event before engaging in any discussions). We will advise you on the terms of any confidentiality agreement/NDA and in particular whether any restrictions contained in the agreement are appropriate.

Due Diligence

An effective due diligence exercise conducted by an experienced professional is a buyer’s best form of protection when purchasing a business.

Due diligence will generally encompass financial, legal and commercial due diligence. We will agree with you in advance a tailored due diligence process in order to determine key areas of risk and opportunity presented by the target business.

A thorough due diligence exercise conducted at an early stage can:

• Identify any issues which the seller will need to remedy before the transaction can complete.
• Allow you to renegotiate the price if there are any issues identified which have a material impact on the businesses value.
• Identify any potential ‘show stoppers’ which would prevent the deal from proceeding further.
• Allow us to consider with you whether any enhanced protections need to be included within the sale and purchase agreement.
• Identify whether there are any contractual or regulatory issues that need to be dealt with in advance of a purchase. These could include consideration of the need to transfer permits/licences, whether landlord’s permission is required to assign a lease to premises or whether there are change of control provisions in key commercial contracts.

We will generally provide you with a detailed report on the findings of our due diligence exercise.

Sale and purchase agreement

The sale and purchase agreement is a legally binding document which will set out in detail the terms of the sale. Typically this would be prepared by us as the buyer’s solicitors and will cover in detail:

• What is being sold (assets or shares).
• The price payable and how and when it is payable e.g. the detail of any deferred consideration or earn out mechanisms.
• Any retentions against warranty or indemnity claims.
• Post completion restrictions placed on sellers preventing them from competing with the business you acquire after completion or interfering with the business’ affairs and trade.
• Warranties and indemnities to be provided by the seller to the buyer in relation to the business being sold. Warranties and indemnities provide a buyer with contractual rights of recourse against the seller in some circumstances if there is a problem with the business arising out of how it was run prior to completion. Warranties and indemnities are often the most heavily negotiated part of a sale and purchase agreement. We will prepare the warranties and indemnities taking account of the findings of the due diligence exercise and in conjunction with your other professional advisers.
• Tax protection in the form of a tax deed or tax covenant (in the case of a company purchase).
• Other obligations of the parties in relation to the sale e.g. post completion assistance to be provided by the seller, ongoing confidentiality obligations, etc.

Reviewing the seller’s disclosure letter

Most sellers will prepare a ‘disclosure letter’ in which they provide details of any matters which may potentially breach the warranties in the sale and purchase agreement. To the extent that a seller makes proper disclosure it will generally qualify their liability under the warranties in the sale and purchase agreement. We will review the terms of any proposed disclosures with you to ensure that they are sufficiently clear and understandable.

Funder’s requirements

If you are obtaining funding from a 3^rd party to finance the acquisition we will assist you in dealing with your funder’s requirements. This can include:

• advice on facility agreements and security requirements;
• reporting to funders on the findings of our due diligence exercise;
• advising on the terms of any personal security required from you (such as personal guarantees)

Dealing with completion

We will help guide the process from start to finish and execution of all necessary documentation for the transaction

Speak to our Business Solicitors in South Wales

To speak to our expert solicitors for buying and selling businesses in South Wales, please contact your local JCP Solicitors office:

• Swansea 
• Caerphilly
• Cardiff
• Carmarthen
• Cowbridge
• Haverfordwest
• St Davids

To ask a quick question or arrange a call back, use our simple contact form to make an enquiry.