The Importance of a Solicitor When Transferring Business Ownership
18th August 2020
Buying or selling a business is one of the most monumental moments for any business owners’ career, often presenting itself as a once-in-a-lifetime experience. Whether you are an experienced acquirer looking to exact your acquisition strategy, a first-time market entrant looking for a strong start into the industry, or conversely a business owners with aspirations of retirement, the decision to seek a transfer of ownership for a business can be a stressful and anxious time.
Time Kills Deals
The legal and financial implications of a transfer of business ownership are substantial, requiring an extensive amount of research to fully comprehend. For many businesspersons, time is at a significant premium. As such, the vast majority of aspiring buyers and sellers designate a solicitor to conduct their financial and legal compliance, at the strong recommendation of most advisors and business brokers. The number one reason that a business sale will fail to complete is time, if either the buyer or seller occur delays at every stage of the sale as a result of an inexperienced solicitor, or in the absence of any legal assistance, the likelihood of an aborted sale increases exponentially.
In a business sale, the largest legal burden is placed onto the buyer throughout the due diligence process. It is down to a prospective purchaser, and their solicitor, to ensure they are satisfied with the contents of the sale. What equipment and premises are contained in the sale; if these are leased then what must you do to transfer over the lease agreements? What debts and liabilities does the business possess and are you responsible for taking these on? If the staff are retained within the business sale, what are the terms of their contract and what rights do they have? What is the business’ tax position, and what are you now liable for paying?
However, the role of the seller’s solicitor remains equally as important. Working alongside the current business owner, the solicitor must prepare all the required documentation that the buyer will be requesting over the course of due diligence. In addition, they must be on hand to review and evaluate the Heads of Agreement document to ensure the sellers best interests are protected, as well as create the final Sales and Purchases Agreement and a disclosure letter.
If you are considering the sale of your business and would like to learn more about your market exit options, or are a prospective buyer looking for your next acquisition target, the experienced team at Redwoods Dowling Kerr will be delighted to assist you. We have a panel of independent legal solicitors that we can recommend who are experienced in transacting business sales and acquisitions. With over 30 years of experience successfully negotiating deals to completion, we can ensure the smooth and succinct realisation of your business strategy.