Sale and Purchase of Businesses and Companies

The sale and purchase of businesses can occur either by way of the legal entity by which that business is carried out or by way of the sale of the assets of the business itself.  The choice of the method and structure of the transaction frequently depends on risks and liabilities attached to the business, including:

  • taxation liabilities of the business;
  • debts owed to third parties by the business such as suppliers, financiers and employees;
  • the benefits derived from continuity from the perspective of suppliers and customers;
  • taxation effects of the sale and purchase, such as any duties payable or retaining taxation losses to be used by the purchaser;
  • value of the goodwill in the business;
  • the purchaser’s existing business structure and objectives with respect to the purchase; and
  • difficulties in effecting a sale and purchase due to the terms of shareholder agreements etc.

For example, a sale of shares in a company may be preferable to the purchase of its assets to avoid duties payable upon sale of land.  Conversely, a purchaser may prefer to purchase the underlying assets of a company instead of the company itself to avoid the third party liabilities of the company.  At other times, the taxation losses of a company may represent an asset to a purchaser if the purchaser is able to reduce its own taxation liabilities by reason of the purchase.

Rowe Bristol Lawyers is experienced in advising clients with respect to the sale and purchase of various business structures, including:

  • assisting clients in negotiating with the seller or purchaser;
  • liaising with the parties’ advisers such as accountants and auditors;
  • advising as to the legal advantages and disadvantages of various sale and purchase structures;
  • drafting sale and purchase documents and lodgment of those documents with the appropriate government authorities when necessary;
  • advising clients as to continuing and non-continuing employees (if applicable) and their entitlements;
  • advising clients as to the apportionment of risks associated with the sale and purchase, such as obtaining appropriate warranties and indemnities;
  • advising clients as to the necessary due diligence requirements required by the sale process such as necessary searches of government records and audit of inventories; and
  • advising and representing clients with respect to any disputes that may arise as a result of the sale and purchase of the business, such as in relation to breaches of warranties or misleading or deceptive conduct by a party as to customer base or net profit levels.

If you require legal advice in relation to the sale or purchase of a business or company, please do not hesitate to contact us to arrange a meeting so that we may consider your specific circumstances.

The above information is provided as general information only and should not be relied upon as legal advice.  The accuracy of this information may have changed from the date when it was published.