How can I prevent the seller setting up in competition after the sale? Restrictive covenants can be inserted into the sale agreement. These normally specify that: the seller will not be involved in a competing business. the seller will not [...]
Asset Sale You will be left with the liabilities, including tax. Additionally there may be warranties that will not expire for say 2-years. Share sale It is easier, in one sense, to achieve a clean break in so much as you [...]
As a Buyer can I defer some of the purchase price? It is possible to negotiate deferred payments. This mechanism is used where the buyer is uncertain that targets can be achieved, for example, turnover for the purposes of an [...]
Completion accounts are accounts that are produced at an agreed time after the formal completion date. They can be a useful tool in situations where the initial purchase price was produced by use of “old” Profit and Loss and Balance Sheet [...]
A Disclosure Letter is a method of limiting / qualifying the warranties made by the seller. If a disclosure is made against a warranty then it means that the buyer will generally (subject to whether disclosure was sufficiently full and accurate [...]
The purpose of the Asset Purchase Agreement (APA) or Business Purchase Agreement is to set out the assets that are being bought and sold and the price payable for each asset class, that is, the total purchase price is “apportioned” [...]
If it is a BSA or APA then normally the seller’s solicitor will produce the draft (although there is no set rule on this). If it is an SPA then, by convention, the buyer’s solicitor produces the agreement, but again, there [...]
Let’s deal with the SPA first, because it is a completely different transaction. Here, the individual shareholders are selling their company, whether the company runs a small coffee bar or a large engineering business. It has to be a share [...]
As you sell the company, “warts and all”, share sales are likely to take more time and effort to complete and so are likely to be more expensive than business sales. On the other hand, there are definite tax advantages [...]
Buying Shares Advantages You step into the seller’s shoes. There is no third party involvement so it is more low key Warranties and indemnities are given by the seller personally Disadvantages You take over the company’s problems, “warts and all” [...]
