Mergers, Sales & Acquisitions
With offices across Lincolnshire and East Yorkshire, including Lincoln, Grimsby and Hull, our professional and caring solicitors can help.
Mergers, Sales & Acquisitions Solicitors
Bridge McFarland LLP provides specialist legal guidance on buying and selling both companies and businesses.
Our corporate lawyers have considerable legal knowledge and expertise in this field and – often working closely with your accountants and other professional advisers – can deal with complicated and often confusing transactions in an approachable and helpful manner. Which includes providing an up front and honest assessment of likely costs and timescales.
We assist buyers and sellers with all stages of a transaction. From the initial negotiations and heads of terms; through due diligence; to drafting and negotiating the sale documents and then completion.
Our team advises on many aspects of deals, including finance/banking, employment, commercial property and intellectual property. Ensuring you receive a seamless and comprehensive service, which helps maximise value & opportunities and reducing risk.
A corporate transaction can be a stressful and time-consuming process. We look to take that burden from you, keeping you fully up to date throughout. Our team takes pride in making our clients’ process as stress-free as possible.
Mergers, Sales & Acquisitions Expertise
Regardless of the complexity of your situation, our lawyers can assist you across all areas of mergers, sales and acquisitions. Our clients include sole traders, partnerships, SMEs and national organisations.
Typically, we are instructed to advise and provide guidance on:
- Share sales and acquisitions.
- The sale or purchase of businesses and assets.
- Refinances.
- Management Buy-Outs (MBOs).
- Earn-outs, deferred consideration and security.
- Shareholder exits.
- Succession planning.
M&A Lawyers
Bridge McFarland LLP, based in Anlaby, Brigg, Hull, Grimsby, Market Rasen, Lincoln, Louth, and Scarborough, has decades of experience supporting businesses and their owners through mergers, sales and acquisitions.
We always recommend contacting us at an early stage of the process, so that we can help you fully understand the process and giving us the best opportunity to help you fulfil your aims.
Share Sales
Advising the owners of a Lincolnshire based business who sold their company to a US-based buyer with a turnover of over $4 billion USD. Which include their ongoing engagement with the buyer, including entry into a new partnership.
The deal value was in excess of £10m and included complicated earn-out provisions.
Company Purchase
Acted for a business with a turnover in excess of £28m on the multi-million pound purchase of a company that provides engineering services for the chemical and biochemical sectors, allowing our client to diversify their operations.
Including the retention of the existing management team.
Purchase Of An Estate Agency
Advised the owners of an established sales and lettings agency on the purchase of the business and certain assets of a small East Yorkshire based agency. Including dealing with the transfer of the existing workforce and all TUPE related issues.
The deal included payments made over time, contingent on future revenues.
Succession Plan For a Family Business
Advising on the succession plan of a family owned business, including a £4m purchase of own shares and the setting up of a family investment company.
Frequently Asked Questions
The purchaser is likely to want to restrict what you can do following completion of the sale. The sale agreement will therefore contain “restrictive covenants” which prevent you from competing with the business you have sold for a specific period and within a specific geographical area. How much you are restricted is a matter for negotiation and can have an impact on the sale price.
Heads of terms generally set out the headline terms of the transaction and do not commit either seller or purchaser to the deal. Either party will usually be able to withdraw after signing heads of terms.
However, it possible to include commitments in the heads of terms which require the withdrawing party to cover the costs of the other party if they have withdrawn without good cause. You will appreciate that the purchaser will want to withdraw if, having carried out due diligence, he finds unexpected information about the business.
In the majority of business sales (as opposed to share sales), it is possible to avoid having to charge VAT on the sale price. If the sale can be treated as the transfer of a going concern (“TOGC”) no VAT would be payable.
The transfer of a business as a going concern will not usually be regarded as a taxable supply of goods or of services for the purposes of value added tax. However, for this exemption to apply, it is essential that the business or part of it is transferred as a going concern and that the assets are to be used by the purchaser in carrying on the same kind of business as that carried on by the seller. If the sale relates to part only of a business, it must be a part which can be operated on its own. There must be no break in trade. Furthermore the purchaser must already be a registered person for VAT purposes or someone who will be immediately registerable as a result of the transfer.
This is often a concern for sellers when providing potential purchasers with sensitive information about their business. Any prospective purchaser will need to see information about your business so as to make an informed decision as to whether to proceed and at what price.
However, you need to ensure that the purchaser cannot walk away from the deal and use the information you have provided for their own benefit. You can therefore enter into a “confidentiality agreement” or “non-disclosure” agreement with the purchaser. These documents contain details of what information will be regarded as “confidential” and to whom it can be disclosed (for instance, professional advisors). They will also deal with what happens if the purchaser breaches your confidentiality.
The seller should make “disclosures” against the warranties. The disclosures are usually made in the form of a letter (often call “the disclosure letter”) from seller to purchaser. The disclosure letter will fulfil three functions:
- the seller will provide information requested by the ‘information seeking’ warranties;
- the seller will seek to impute certain knowledge (particularly matters of public record)to the purchaser; and
- the seller will disclose specific information which might render one or more warranties untrue, again on the basis that the purchaser has agreed to proceed with the transaction despite having that knowledge and cannot therefore subsequently claim compensation under the warranties relying on that information.
As with any matter, this depends on a number of factors, some of which will be outside of your control. Preparation for the sale can begin months before the actual transaction takes place. You can start to gather together information about the business for the purchaser to inspect (see comments regarding “What is due diligence”).
Ideally, you should be paid the full purchase price on completion of the sale. However, some purchasers may want to defer (i.e. delay) part of the payment. This is often done for legitimate reasons, such as cash flow, etc.
By accepting a deferred payment, you are at risk of the purchaser becoming insolvent during the interim period. It is therefore common for the overall price to be increased when the payment is deferred (or for interest to be paid on the deferred element until payment is received).
Before agreeing to accept a deferred payment, you should ensure that you have carried out your own checks on the financial standing of the purchaser. You should also seek suitable security from the purchaser. This can include personal guarantees, legal charges over property, etc.
These are usually non binding documents which set out the key points which have been agreed about the sale. They will include details of the price, the business assets to be sold, the proposed timetable and any specific conditions to which the sale is subject.
They are the starting point for the deal and will enable your legal advisors to prepare drafting the sale documentation.
Having satisfied himself that the transaction is commercially viable, the purchaser will seek warranties in the business sale agreement. For practical purpose, there are three reasons why a purchaser will seek warranties:
- to reserve the right to recover damages for breach of warranty;
- to require the disclosure of information; and
- to ‘force’ the seller into disclosing full and accurate details of particular matters.
The warranties are in effect promises by the seller about the state of the business. For instance, the seller might warrant that the business is not in dispute with any employees. If that warranty proved to be untrue, the purchaser would have a financial claim against the seller.
In a business sale (as opposed to a share sale) the rights of employees are protected when the business is sold as a going concern. This is by virtue of the Transfer of Undertakings (Protection of Employment) Regulations 1981 (“TUPE”). Under TUPE, all employment rights of employees are automatically transferred to the purchaser, so that continuity of employment is preserved.
The purchaser may want you to trim down your workforce before the sale takes place. If any employee who is dismissed ‘for a reason connected with the sale’ is deemed to have been unfairly dismissed, they may have a claim against the business for compensation. If this is not done for the right reasons and following the right procedures, this could lead to a claim for unfair dismissal against you. It is vital that you take professional employment law advice before you dismiss any employees or alter their terms and conditions in these circumstances.
This is another form of deferred payment. When an earn out is used, part of the sale price will be based on the future performance of the business. This will usually involve a cash payment on completion of the sale, with further payments based on annual profits of the business for fixed periods following completion.
As with any deferred payment, there is a risk of non payment. Moreover, if the business underperforms after completion, you may not receive any further payments. For this reason, it is common for the seller to continue running the business (or part of it) as part of any earn out arrangement. This will provide the seller with an element of control in anticipation that they can achieve the earn out targets.
This is the process by which the prospective purchaser carries out investigations into your business. Much like when buying a property, the purchaser needs to be satisfied that what he is buying is worth what they are paying for it and that there are no ‘skeletons in the closet’.
Ordinarily, this will involve the seller providing replies to detailed written enquiries. The enquiries will cover a number of issues, ranging from employee information to disputes with customers. It is important that the information is provided at an early stage so as to avoid a delay in the sale.
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