Selling a Business – Share Sale

Preparing Your Company for Sale

Preparing early can help the transaction progress smoothly and prevent avoidable delays. Before negotiations advance, it is sensible to ensure that the company’s statutory records, contracts, corporate documents and other important information are complete and up to date.

You may also need to identify any third-party consents, change-of-control provisions, personal guarantees or other arrangements that could affect the sale. Where commercially sensitive information will be shared with a potential buyer, an appropriate confidentiality agreement should be considered.

We can help you address these matters and review or negotiate heads of terms so that the principal commercial arrangements are understood before the detailed sale documents are prepared.

Due Diligence and Disclosure

The buyer will normally carry out legal, financial and commercial due diligence. This may involve extensive enquiries about the company’s ownership, finances, contracts, employees, intellectual property, data protection arrangements and potential liabilities.

We can help you organise the information required and prepare clear, accurate responses to the buyer’s enquiries.

You will also usually be asked to give warranties about the company and its business. The disclosure process allows you to identify relevant exceptions to those warranties. Preparing a thorough disclosure letter is therefore an important part of managing your potential liability following the sale.

Negotiating the Share Purchase Agreement

The buyer’s legal advisers will normally prepare the first draft of the share purchase agreement. We will review and negotiate the agreement on your behalf, paying particular attention to:

• the purchase price and payment arrangements;
• deferred consideration and earn-out provisions;
• warranties, indemnities and any tax covenant;financial and time limits applying to potential claims;
• restrictive covenants affecting your future activities;c
• onditions that must be satisfied before completion;
• any transitional or consultancy arrangements; and
• the release of personal guarantees or security given by you.

Our aim is to ensure that the agreement accurately reflects the commercial deal and that your ongoing obligations and potential liabilities are clearly defined and appropriately limited.

If you are considering selling selected assets rather than the company’s shares, please see our Selling a Business – Asset Sale service.