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Selling or buying a business is always a well-considered process. Before arriving at a final decision, you will have had many thoughts in respect of the transaction. Whether it is your first business or one of many, you will almost certainly have several questions about the business, the party you are dealing with or the process itself. With all these considerations, you might overlook any property owned or occupied by the business or even its employees.
After making the decision to sell or buy, the next stage almost invariably involves negotiation. As part of the initial negotiation you may even agree heads of terms. However, it is unlikely that you will have obtained complete answers to all of your initial questions and the negotiation phase of the transaction is certainly not over at this stage.
A key exercise with any acquisition involves raising and answering enquires. For example, as a purchaser, you will need to obtain information in respect of its various facets- this will include finding out about the key stakeholders and customers, the value of any assets and debts and even the most basic agreements for services that are integral to its continuation. On the other hand, as a seller, you may be asked to provide and supply this information, this may include commercially sensitive or confidential documents. You will also be required to give warranties as a seller in respect of any information and documents you disclose. The process of making enquiries and disclosure can therefore have substantial commercial and legal implications and so it is imperative that both parties are properly advised from an early stage in the transaction.
Provided that both parties are content to go ahead, before any formal agreement can be reached, both parties also need to ensure that they are content with the terms that they have agreed to. Variation from the terms initially agreed may also be required following the due diligence process. No one-size-fits-all agreement exists and careful thought must be applied when it comes to drafting and negotiating the final agreement.
Any existing business owner will have various legal obligations imposed upon it, for instance obligations in respect of employees or data protection regulations. If you are considering buying or selling a business, our specialist corporate team at Ramsdens who have extensive experience handling both asset and share purchases will be happy to assist.