Business Sale and Purchase

The commercial lawyers in MKB Law advise business buyers and sellers of all sizes. We will work with you from the inception of the transaction through to completion and post-completion matters. The twists and turns of buying or selling a business are complex and it is important to use lawyers who are genuinely commercial. Too often we have seen professional advisors creating obstacles to transactions rather than finding solutions. We are solutions-driven and see our objective as making a transaction happen.

Share Sale

Where the target business is owned by a Company this is often the first issue to be addressed. In simple terms a seller will frequently want to sell the shares in a company whereas, in many cases, the buyer wants to avoid historic legacies and would prefer an asset sale. Of course this may change, for example, if there are assets that a seller wants to retain or the company holds licences or authorisations that the buyer will need to carry on the business.

Legal Documentation

The key document is a share sale agreement in the case of a company or an asset sale agreement if the transaction relates to the assets. A buyer will be concerned about:

Ownership of shares or assets
Power and authority to make the sale
Possible liabilities
Employee issues
Intellectual Property
Indemnities and warranties
tax implications of the deal immediately and in the future


In simple terms ‘Warranties’ are statements made by the Seller that the Buyer relies upon when buying the business. The simplest and most obvious is that the Seller owns the assets or shares and has the right to sell them. If the Warranty is incorrect then the Seller has the right to sue the Buyer for breach of Warranty after completion. Warranties serve a dual purpose: firstly they provide a remedy for breach of contract; perhaps more usually, they assist in the due diligence process by flushing out information before a contract is signed.

Warranties are a difficult area and one of the areas in the contract where disputes, delays and costs can grow like topsy, if a commercial and practical approach is not adopted by both parties and their lawyers. The Warranties consist of a series of factual assertions about the business, its performance, assets and liabilities.

If the transaction is a Company selling its assets the buyer will usually want the directors or the shareholders of the Company to stand over the warranties. The intention is that the buyers should have the comfort of knowing that the business is as stated and described to them.

Sellers, of course, will resist giving Warranties and will impose restrictions on the circumstances in which claims under the Warranties can be made. For example, Warranty claims must be made within a certain period following completion and may be subject to caps on the claims. There is usually an attempt to define Warranty claims that are so small that they ought to be disregarded. The Seller is given an opportunity to disclose any potential breaches of the Warranties before completion so that the Buyer takes the business with knowledge of all things disclosed. This disclosure process can be detailed and complicated and requires the application of commercial sense.

Payment Arrangements

The value of a business can be a moving target. There are often adjustments to be made for changes between the date of contract, last set of accounts, and completion. Preparing these clauses requires solicitors who have a practical understanding of the issues involved.

Sometimes the price can be related to the future performance of the business. In such cases the sale agreement will include earn-out provisions so that if the business continues to perform for the period of the earn-out, the seller receives further money, but at the same time the purchaser is protected in that if the business fails to perform he ultimately pays less for it.

Deferred consideration or escrow arrangements are other mechanisms that buyers often use to protect themselves. The buyer may be concerned, if all the consideration is paid at completion, that he will later find the seller is hard to trace, leaving the buyer to deal with anything that he sought to protect himself against in the Warranties.


With an owner managed business a purchaser will often want to tie the seller into the business in an advisory capacity for a year, two years, and in some cases longer. This is often needed to enable a handover period to ensure the seamless transfer and growth of the business. It can be difficult to be clear and specific about the basis on which the Seller will remain involved in the business.

Other Documents

While the transaction is based on the Sale and Purchase Agreement, there are other documents to consider and prepare, including:

Leases and property related documents
Tax Deed
Disclosure Letter
Assignments of contracts, goodwill, intellectual property rights
Board minutes for companies (possibly buyer as well as seller)
Company resolutions
Service agreements (if seller staying on in the business)
Compromise agreements where some employees might be leaving the business
Releases from guarantees and debentures
Bank guarantees
Funding and security


In cases where the shares are being sold the employee issues are limited. This is because the Company remains the employer and there is no change whatsoever so far as the legal position of the employees is concerned.

Assets sales are entirely different. The seller’s contract of employment with the employees is theoretically terminated and a new contract is put in place with the buyer. This area of law is now covered by detailed statutory provisions under the Transfer of Undertakings (Protection of Employment) Regulations 2006 and The Service Provision Change (Protection of Employment) Regulations (Northern Ireland) 2006, usually referred to as TUPE.

The TUPE Regulations are very complicated and even a technical breach can give employees the right to bring extensive claims against the buyer or the seller. This tends to be one of the more difficult aspects of any business purchase or sale that needs to be considered with specialist advice to make sure there are no traps for the unwary.

Gordon McElroy
028 9099 3111

Lynsey Henderson
Associate Director
028 9099 3117

Jose Lazaro
028 9099 3114

Shane Colton
Trainee Solicitor
028 9024 2450


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