Company Purchase and Sale

Solicitors have a professional duty to keep the affairs of their current and former clients confidential, unless disclosure is required or permitted by law, or it is consented to by the client. The duty of confidentiality in mergers and acquisitions is also buttressed by Confidentiality and Non-Disclosure Agreements, which protect the secrecy of deals and information disclosed between the parties. The requirement for solicitors to uphold their duty of confidentiality is one of fundamental importance to the profession.

These can be complex transactions with a large number of documents, which can be lengthy and technical.  The knowledge and experience of a commercial solicitor is therefore essential to protect the parties to a merger or an acquisition, regardless of whether you are the buying, or the selling party. Our commercial solicitors will also conduct legal due diligence to investigate the target’s affairs and make sure that any risks associated with the target are fairly allocated between the parties.

It is difficult to estimate a timeframe for completion on transactions relating to mergers and acquisitions. It depends on a number of factors, such as the progress of negotiations, the extent of due diligence required, if any consents are required and if conditions have to be satisfied. For this reason, it is difficult to estimate a completion date at the outset and it will often become clearer as the transaction progresses. However, if there is a preferred date in mind, our commercial team will be happy to work towards a reasonable and realistic timeframe.

There are various post-completion matters a commercial solicitor instructed on behalf of the buyer can deal with. These may include arranging payment of stamp duty, making any constitutional changes, updating Companies House records and facilitating payment of any deferred consideration.

It is possible to structure payment for a business in various ways, subject to the agreement of the parties. Payment can be by instalments, and part of the consideration can be paid conditionally, based on the performance of the target post-completion, by way of an earn-out if the sellers are to continue to work for the target. Loan notes can also be used to enable the sellers to roll over part of any capital gain.  There can also be adjustments to the purchase price, which must again, be agreed by the parties, on production of an agreed set of completion accounts. However, it is worth noting that the adjustment to completion accounts works both ways, so a buyer may end up having to pay more than initially agreed.