Business Sales and Purchase
Overview
Our team have extensive experience dealing with both asset and share sales and purchases. The corporate department work closely with the commercial property department if necessary to deliver the deals our clients need when they need them.
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Asset Sales vs Share Sales
There are two ways in which to sell a company. Both have pros and cons and the choice of which one to use in any particular deal will depend on the deal structure as well as the bargaining of the power of the parties.
The two ways are referred to as Asset Sales or Share Sales.
Asset sales
When speaking about the structure of an acquisition it is sometimes helpful to visualise a container (the company) filled with all the bits and pieces the company needs in order to function such as premises, intellectual property, staff, software and desks and computers.
The container is a legal person and it is with the container that contracts are made. The container is liable for taxes and any litigation will be directed against the container. The container turns out to be a fairly risky object.
An asset sale will take place when all the bits and pieces inside the container are sold to a new container (the acquisition vehicle) leaving the old container behind with all its potential liabilities.
Asset sales are generally preferred by buyers as it reduces the risk of purchasing a company with too many liabilities. It also allows a buyer to cherry pick the assets they are particularly interested in and which will fit in nicely with the buyer’s company.
Asset sales are not always favoured by sellers as they are left with a company that retains the main liabilities. When an asset sale takes place the purchase price is paid into the company selling the assets. The shareholders of the company are then facing the difficulty of taking the sale price out of the company without attracting high tax charges. A seller is also not able to benefit from entrepreneurs’ relief if he or she qualifies which would mean that the purchase price would only be taxed at 10% instead of a dividend rate of 17% in the case of an asset sale.
Share Sale
A share sale takes place when the entire container and the bit and pieces inside it are sold. In this case the purchase price is paid to the shareholders. A share sale allows a buyer to ensure that they take ownership of all aspects of a company. The sellers may qualify for entrepreneurs relief if they were shareholders as well as officers of the company being sold. However, a share sale carries with it a risk for the buyer of unpaid tax liability, litigation liability, debt liability. Because of TUPE, employment liabilities will carry over to the buyer whether the deal is structured as an asset deal or a share deal.
In order to deal with risk lawyers have come up with various tools to apportion risk to the parties of a contract. The basic principle being that if there is a potential risk, the seller is required to warrant or promise that no such risk exists. If the promise turns out not to be true the buyer will then have a action in court against the seller for a breach of warranty. This is a stronger action that a simple breach of contract. Furthermore, a buyer may insist that the identifiable areas of risk are covered through the use of indemnities given by the seller. An indemnity if easier and faster to enforce than a breach of warranty.
Despite the marked differences between the two approaches to the sale of a business, the tools lawyers have developed over the centuries allow us to find an even ground so that the interests of both parties are protected as much as possible.
Our services include the following:
Business Sales and Purchases
Commercial Finance
Company Law
Share Issues (Private)
Equity Capital Markets (AIM listings)
Joint Ventures
Shareholder Agreements
Blockchain and Cryptocurrency
Drafting business agreements and contracts
Speak to an expert
Aaron Menuhin LLM
Partner | Commercial Law
Aaron Menuhin is the Commercial Partner at Fairhurst Menuhin & Co. He works between the UK and Germany and is qualified in international management with an M.Sc. from SOAS and holds an LLM with a specialty in fintech.
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He has expertise in commercial property, company acquisitions, and cross border contracts. Aaron has particular experience working in the insurance and health sectors. His international expertise brings to his clients a broad vision and pragmatic approach. He speaks French and German.
Aaron is a freeman of the Tallow Chandlers city livery company and a trustee of the Menuhin Competition Trust.
In his free time, Aaron enjoys being with his family, painting and working on classic cars.
Tel: +44 (0)1799 526 849
Mobile: +44 (0)7926 763 056
Email: aaron.menuhin@fmc-solicitors.com
Aaron Menuhin LLM
Partner | Commercial Law
Aaron Menuhin is the Commercial Partner at Fairhurst Menuhin & Co. He works between the UK and Germany and is qualified in international management with an M.Sc. from SOAS and holds an LLM with a specialty in fintech.
SHOW MORE
He has expertise in commercial property, company acquisitions, and cross border contracts. Aaron has particular experience working in the insurance and health sectors. His international expertise brings to his clients a broad vision and pragmatic approach. He speaks French and German.
Aaron is a freeman of the Tallow Chandlers city livery company and a trustee of the Menuhin Competition Trust.
In his free time, Aaron enjoys being with his family, painting and working on classic cars.
Get in touch with Aaron
Tel: +44 (0)1799 526 849
Mobile: +44 (0)7926 763 056
Email: aaron.menuhin@fmc-solicitors.com
Tim Piper
Senior Consultant | Commercial and Company Law
Tim Piper brings to bear 50 years of commercial experience to FM&C. Tim read law at Lincoln College, Oxford before qualifying as a solicitor. He has spent his professional career involved in all the main aspects of corporate and business law both in the City of London and the West End, including takeovers, mergers, flotations, joint ventures, partnerships, agency and distribution agreements and general private and public company work.
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He also takes an interest in copyright, trade marks and other intellectual property rights.
Tim is a former member of the Council of The Law Society and was President of his local Law Society. He was Master of his City Livery Company-the Tallow Chandlers in 2006/7,where he remains on the Court. He is currently Deputy Chairman of The Incorporated Council of Law Reporting for England and Wales, which publishes the definitive Law Reports.
Tim’s outside interests include horse racing and rowing; being a member of The Royal Enclosure at Ascot and The Stewards Enclosure at Henley, as well as cricket and Rugby Union football. He also enjoys classical music and collecting antiques.
Tim Piper
Senior Consultant | Commercial and Company Law
Tim Piper brings to bear 50 years of commercial experience to FM&C. Tim read law at Lincoln College, Oxford before qualifying as a solicitor. He has spent his professional career involved in all the main aspects of corporate and business law both in the City of London and the West End, including takeovers, mergers, flotations, joint ventures, partnerships, agency and distribution agreements and general private and public company work.
SHOW MORE
He also takes an interest in copyright, trade marks and other intellectual property rights.
Tim is a former member of the Council of The Law Society and was President of his local Law Society. He was Master of his City Livery Company-the Tallow Chandlers in 2006/7,where he remains on the Court. He is currently Deputy Chairman of The Incorporated Council of Law Reporting for England and Wales, which publishes the definitive Law Reports.
Tim’s outside interests include horse racing and rowing; being a member of The Royal Enclosure at Ascot and The Stewards Enclosure at Henley, as well as cricket and Rugby Union football. He also enjoys classical music and collecting antiques.