Ask the Expert: Final considerations in a deal
Abigail Owen, corporate partner at Rawlison Butler, explains the key issues to completing a sale or purchase of a business.
All answers are for general guidance only. Each case must be handled on the individual facts.
Q: What are the key points to keep in mind when completing the sale or purchase of a business?
A transaction is never completed until the final document is signed. However a number of issues need to be ‘signed off’ in both a buyer’s and seller’s mind before you actually sign the final legal documents. These are:
1. Emotions: This will usually be the largest transaction anybody does and often individuals have been longer with their businesses than in their current homes. I see deals fail because emotionally timing was not right, there is no real appetite to sell or the children working in the business become more important than the proceeds. Make sure that you understand these and they are ‘signed off’ well in advance of completion.
2. Commercial: Many clients sign heads of agreement and think the deal is done, but commercial issues will constantly come up. The Buyer will look to use these to reduce the price or improve the deal and the Seller needs to ensure that they are ready to repel any unreasonable ‘changes’. Something will come up at completion for sure. You should understand what this could be, how you would deal with it or even what your ‘walk away’ position is. A strong corporate finance adviser is vital - keeping everyone at the table at the same time and ensuring you only complete on a deal you are happy with.
3. Legal Issues: The lawyer’s job is to ensure that the legal documents reflect the deal that you have done and protect you and the transaction throughout an agreed future period. The documents are often lengthy and involved and it is vital that you have considered and understood them and have an experienced corporate transactional lawyer to guide you through them. Consider whether your usual family lawyer truly has the experience to protect you in this process. It is useful to have a full pre-completion meeting to go through and understand all the documents and prepare yourself for the contentious points.
At the end, the completion meeting will be long, detailed and often frustrating but, if you are well prepared and have good advice, it will be successful. Hopefully then you will be ready for that glass of champagne.
Contact Details
Abigail Owen
Partner in the Corporate Team
Direct telephone: +44 (0)1293 558534
Email: aowen@rawlisonbutler.com
What are the key points to keep in mind when completing the sale or purchase of a business?
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