STRUCTURING THE SALE OF YOUR BUSINESS

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SHARE SALE

AGREE STRUCTURE AT THE OUTSET

ASSET SALE

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SHARE SALE – COMPANIES ONLY

• Change of Ownership but no change in Business Identity

• Contracts with suppliers/clients remain unaltered – but beware change of ownership clauses.

• Tax Liabilities

• Employees

• Disputes – Past, Present and Future!

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SHARE SALE – DUE DILIGENCE

• Employees– Contracts– Problems/Disputes/Disciplinary Action– Salaries/Bonuses/Benefits– Holidays

• Accounts• Tax• Disputes - Past, Present and Future• Contracts• Assets

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SHARE SALE – STATUTORY BOOKS

• Companies Act 2006• Articles of Association• Minutes

– AGM’s – if required– Board Meetings – Authorising Director Conflicts!

• Registers– Directors – General and Private– Secretary (if any)– Members

• Companies House Filings

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SHARE SALE – SALE/PURCHASE PRICE

• One lump sum• Deferred element – Payment by instalments

– Security: Charges, Guarantees etc• Earn Out element – linked to future performance

– Control– Ability to manipulate figures

• Retention – for unknowns or potential breaches• Reduction in Consideration

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Finance Documents

Compromise Agreement

Resignation of Directors/

SecretaryStock Transfer

Tax Deed

Share Purchase Agreement

DOCUMENTATION

SHARE SALE - DOCUMENTATION

Disclosure Letter

ASSET SALE - ALL BUSINESSES

• Change in business identity

• Contracts may need renegotiation

• Tax liabilities

• Employees– TUPE

• Disputes – beware of implication by association.

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ASSET SALE – DUE DILIGENCE

• Account history – form part of valuation

• Ownership of Assets

• Employees – full details– Contracts– Problems/Disputes/Disciplinary Action– Salaries/Bonuses/Benefits– Holidays

• Disputes

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Assignment Lease/Transfer

ContractDOCUMENTATION

Assignment of Goodwill

ASSET SALE - DOCUMENTS

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SHARE SALE v ASSET SALE

Share Sale• Expensive• Time• Paperwork• Tax Liabilities• Disputes

BUT• Tax Efficient• Stamp Duty• Clean Transfer of Contracts

Asset Sale• Cheaper• Completed Quickly• Simpler Documents• No Transfer of Tax Liabilities• No Liability for Disputes

BUT• Tax on Disposals• SDLT on Property Transfer• Contracts need renegotiating

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