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Corporate Transactions

Corporate transactions

We regularly advise start-ups and SME clients who may be buying and/or selling businesses or who require carefully constructed shareholder agreements and articles of association.

Our clients tend to be very varied but whatever your business, you can expect the same attention to detail and care from us.  Our role is to give you peace of mind that your documentation protects you and there are no nasty surprises.   We prepare you well for the process ahead, we’ll explain due diligence and you’ll know what documents you need to produce and when.  We’re always seeking to reduce the chance of last minute surprises which could scupper the deal.

Start-ups

Good corporate documents at start-up stage allow shareholders to avoid or resolve conflicts which may later come up within their business.  Whilst it may be tempting to forego such formal documents, these help avoid costly mistakes later.

Shareholder disagreements are more common than you may think and ‘off the shelf’ Articles of Association are unsuitable for most businesses.  A Shareholder Agreement can be used to prepare for those ‘what happens if?’ events.  It can manage situations where one shareholder acts in ways the other(s) don’t like.  Typical examples are;

  • a shareholder not pulling his/her weight in the business
  • fallings-out between shareholders
  • unacceptable behaviour on the part of a shareholder
  • non-compliance such as failure to some comply with regulatory requirements
  • A very common issue is where one is bringing in way more revenue than the other (or generally seen as not performing).

Without amended documents you cannot get a shareholder out of the business.  The above examples can be managed by amending Articles of Association and provisions within the Shareholder Agreement.  We can add good and bad leaver terms, extend pre-emption rights to create your rules for how your business is run and define what happens if a shareholder dies or is incapacitated.  Even sole traders need to consider if the off the shelf articles protect them adequately (they so often do not).

Our skill is in discussing these issues pragmatically and then drafting robust amendments/additions.

Buying and Selling

When you are selling a business you are intent on gaining a long awaited financial reward after often years of hard work and sacrifices.  Buyers of course want to acquire on the right terms.   Clarity on how you are going to be paid and any ‘deferred’ consideration is especially important.

If you are buying, understanding the commercial arrangements your seller has in place with their own clients is vital – after all, you may inherit these contracts.  If venture capital or private equity is involved in your purchase, there will be additional documents requiring scrutiny.

There are two key documents which sit at the heart of the buying and selling process;

  • The share purchase agreement / asset purchase agreement containing the warranties and indemnities. Buyers will want these, sellers will want to resist these of course.  There is little protection post-completion so getting these right is utmost in our minds.  For example, sellers often find themselves on the end of poorly drafted clauses around deferred consideration, the total monies they had anticipated do not materialise.
  • The disclosure letter, qualifying those warranties.  If you are buyer disclosure is key – you want to know exactly what you’re buying.  If you are selling you must make sure disclosure is precise so that you don’t find later that you are liable for something.  One vital area of disclosure is tax liabilities.  We’ve come across buyers who have inherited hefty tax bills after their purchase which weren’t covered at disclosure.

Our expertise is in detailed drafting of these documents for buyers – and interrogating these documents when acting for sellers.

Getting the deal over the line

We recognise that such corporate transactions are not always straightforward.  Deals can be challenging to get across the line (for all manner of reasons).  Our role is to focus on the end result whilst navigating whatever is thrown at you (and us) along the way.   Ultimately, we want to achieve the sale or purchase of the business in a way which best protects you. We work closely with your accountant as tax considerations need to be addressed from the start and financial matters sit at the heart of such transactions.

Employment law elements

Sales and purchases do sometimes throw up employment law issues in the form of redundancies, TUPE and restructures/reorganisations.  We can provide a seamless process where employment advice is concerned, bringing in our excellent senior employment law experts Luke Menzies or Anne-Marie Boyle as and when the time is right.

Speak to us about how we can help  whatever your corporate transaction.

Contact Menzies Law

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