Core practice area
Mergers and acquisitions
A business transfer determines how risk, value and liability are allocated between buyer and seller – often for a long time after closing. We act for both buyers and sellers, from first contact and confidentiality agreement to signed purchase agreement and completed closing.
When is legal advice needed?
- You have received an approach from a potential buyer or are considering a sale.
- You have identified a target and want to understand the risks before committing.
- A letter of intent or term sheet is to be prepared or negotiated.
- The counterparty has presented a draft purchase agreement.
- Part of the price is to be deferred or contingent, or the seller will remain in the business.
- A generational transfer or management buy-out is planned.
What the engagement may include
The engagement is tailored to the size and complexity of the transaction. Typical elements:
Confidentiality agreements and letters of intent
The NDA protects information shared during the process. The letter of intent (LOI) records the key terms – price, structure, timetable and exclusivity – and states what is and is not binding.
Share deal or asset deal
In a share deal the company is acquired with all its assets, contracts and liabilities. In an asset deal selected assets and contracts are acquired. The choice affects risk, tax, transfer of contracts and employees.
Legal due diligence
A review of the company's contracts, corporate documents, permits, disputes and employment matters to identify risks to be addressed in price or contract terms.
Purchase price and other terms
We negotiate the price mechanism – such as a fixed price on a locked box basis or a price adjusted by completion accounts – together with payment terms and security.
Warranties, limitations of liability and indemnities
The seller's warranties describe what the buyer may rely on. Limitations set caps, thresholds and time limits. Indemnities address known risks on a pound-for-pound basis.
Earn-outs and the seller's continued involvement
An earn-out makes part of the price dependent on future performance. It requires clear definitions, accounting principles and rules on how the business may be run during the measurement period.
Conditions precedent and closing deliverables
Conditions that must be satisfied before closing – such as counterparty consents or regulatory approvals – together with the closing checklist and documents.
Legal terms with commercial consequences
A purchase agreement is essentially an allocation of risk. A lower price may be less favourable than it appears if the warranties are extensive and liability is uncapped.
- Price versus risk
- The warranty catalogue, liability cap and claims period determine how much of the price the seller may in practice have to pay back.
- Structure
- A share or asset deal affects which obligations transfer, which consents are needed and the tax treatment.
- Time between signing and closing
- The interim period needs rules on how the company may be operated and what happens if something material changes.
- Non-compete and non-solicitation
- Post-closing restrictions on the seller must be reasonable in scope and duration to be enforceable.
Questions and answers
When should a lawyer be brought into a business transfer?
Preferably before the letter of intent is signed. The key terms agreed there – price, structure and exclusivity – are difficult to change later.
Is a letter of intent binding?
It depends on the wording. Confidentiality, exclusivity and cost provisions are usually binding while the commercial terms are not. This should be stated expressly.
What is the difference between a warranty and an indemnity?
A warranty is a statement about the company's condition that may give rise to compensation if untrue, subject to the agreed limitations. An indemnity covers a specific, known risk that the seller compensates regardless of the buyer's knowledge.
Do you act for both buyers and sellers?
Yes, but never for both sides in the same transaction.
Related services
Buying a business
Review, negotiation and documentation when acquiring a company or business.
Selling a business
Preparation, negotiation and limited liability when selling your company.
Legal due diligence
Review of the company's legal position ahead of an acquisition or investment.
Business valuation
A basis for negotiation in sales, acquisitions and ownership changes.