36 BUYING A BUSINESS
BUYING THE ENTIRE SHARES OF A COMPANY by Paul Matthews
If you need a nationally renowned law firm for your next deal, call WHN Solicitors.
We have been helping Lancashire clients start, buy, sell and merge businesses for over 200 years.
Our corporate and commercial team is led by lawyer who has experience with share and asset sales and acquisitions, shareholder and partnership agreements, and company reconstructions.
If you’re running a business and planning a deal, please get in touch find out how we can help you make it a commercial success.
MERGERS AND ACQUISITIONS EXPERTS
− Acquisitions − Mergers − Business sales
− Management buy-outs − Shareholder and partnership agreements − Company restructures
NEED EXPERT ADVICE? Contact Paul:
If you’re running a business and planning a deal, please call Paul to find out how we can help you make it a commercial success.
whnsolicitors.co.uk
paul.matthews@
whnsolicitors.co.uk 01254 272640
Authorised and regulated by the Solicitors Regulation Authority. SRA No. 646807. Authorised and regulated by the Financial Conduct Authority. FCA No. 811803
Head of WHN Corporate and Commercial Team
You’ve seen a company which looks a great fit for your business. You’ve crunched numbers, made an offer to buy the entire issued share capital of the company and it has been accepted.
What could possibly go wrong?
Buying the entire issued share capital of a company means buying it lock, stock and barrel. The value of what you are buying is impacted not only by the value of its assets but also the extent of its liabilities.
Issues with assets may make them less valuable than expected, for example, land and buildings may be subject to restrictions.
There may be liabilities you weren’t aware of or are greater than you anticipated.
In short, the risk any buyer purchasing company shares faces is the value of the company may not be as expected.
How to mitigate risk These risks can be mitigated in two
ways. The first is to carry out proper due diligence for both legal and financial issues.
This involves asking extensive questions, analysing the responses and documents provided and asking follow-up questions as needed.
The second is to seek warranties. Warranties are a series of statements of fact about the affairs of the company.
The objective is you can claim compensation for breach of warranty if it turns out any warranty is incorrect.
The sellers can disclose any exceptions to the warranties in a disclosure letter provided before contracts are exchanged. Where the seller fairly discloses an exception, there is no claim.
This process both helps flush out what you need to know before you commit and gives you the recourse you need in relation to issues you are not told about.
BUYING A INSOLVENCY WE
Practical insolvency advice for directors & business owners
DISTRESSED BUSINESS by Natalie Hughes
Director, Simply Corporate
The fact a business is distressed or facing insolvency should not be a reason to discount it.
A business can be distressed for a variety of reasons; debts, loss of contracts or poor management.
However, that does not mean it is not fundamentally profitable and could be a great opportunity for investors and entrepreneurs.
The two most common options when buying a distressed business are either to buy the assets, often from the insolvency practitioner, or to purchase the shares of the company.
There are advantages and disadvantages to both, it depends on the buyer’s appetite for risk.
Asset purchase is often considered for a quicker financial return and share purchase for a buyer willing to commit to a longer-term involvement in the business.
01282 222420
www.simplycorporate.co.uk
When buying assets and goodwill of a distressed business, time is of
the essence and often deals are completed in a matter of days.
It is unlikely that you will have time to carry out all the due diligence that would normally be conducted.
A few key points to consider:
• Purpose – are you looking to take the competitor out of market or expand operations?
• Budget – biggest opportunities are often pre-insolvency in terms of discounts on valuation
• Practicalities – consider the skills gaps if owners leave
After surviving the pandemic many businesses are still facing uncertain times due to a faltering UK economy and therefore purchase opportunities will arise, but make sure you understand the risk!
Only buy a struggling business if you understand exactly why the business is currently in trouble and you have a clear strategy on how to turn it around. Expert advice is a must.
Page 1 |
Page 2 |
Page 3 |
Page 4 |
Page 5 |
Page 6 |
Page 7 |
Page 8 |
Page 9 |
Page 10 |
Page 11 |
Page 12 |
Page 13 |
Page 14 |
Page 15 |
Page 16 |
Page 17 |
Page 18 |
Page 19 |
Page 20 |
Page 21 |
Page 22 |
Page 23 |
Page 24 |
Page 25 |
Page 26 |
Page 27 |
Page 28 |
Page 29 |
Page 30 |
Page 31 |
Page 32 |
Page 33 |
Page 34 |
Page 35 |
Page 36 |
Page 37 |
Page 38 |
Page 39 |
Page 40 |
Page 41 |
Page 42 |
Page 43 |
Page 44 |
Page 45 |
Page 46 |
Page 47 |
Page 48 |
Page 49 |
Page 50 |
Page 51 |
Page 52 |
Page 53 |
Page 54 |
Page 55 |
Page 56 |
Page 57 |
Page 58 |
Page 59 |
Page 60 |
Page 61 |
Page 62 |
Page 63 |
Page 64 |
Page 65 |
Page 66 |
Page 67 |
Page 68 |
Page 69 |
Page 70 |
Page 71 |
Page 72 |
Page 73 |
Page 74 |
Page 75 |
Page 76 |
Page 77 |
Page 78 |
Page 79 |
Page 80
