Buying or Selling a Business? Why Early Legal Advice Makes the Difference

Whether you are looking to acquire a business or move on from one you have built, the process itself is fairly straightforward. What is not straightforward is the legal work underneath it, and the decisions you will need to make along the way.

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Many people come to us having already had extensive conversations with the other side. They know broadly what they want to do, but are unsure about the legal formalities. That is a perfectly normal position to be in, and it is a good point at which to get advice.

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If you are buying a business

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A business acquisition involves significant due diligence, reviewed both by your legal advisors and by your accountants. The purpose is to establish what you are actually acquiring, and to identify anything that ought to change the deal or the price before you commit.

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Alongside that, a suite of documents is prepared setting out the seller's responsibilities. This covers what they are warranting about the business, how they will help you get up and running after they leave, and what restrictions will apply to them going forward, such as whether they can set up in competition or approach the customers you have just bought.

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This is not work to take on without advice. There is a great deal to consider, and your attention is far better spent on getting the business running than on the legal mechanics of acquiring it.

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If you are selling

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You may be looking to retire, or simply ready for a new venture. Either way, it is worth taking legal advice early rather than once a deal is already in motion.

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Early advice helps in two ways. First, it tells you what you will need to gather for due diligence, which is usually more than sellers expect and takes longer than they anticipate. Second, it forces a useful conversation about what you actually want out of the sale, which is not always the same as the highest headline figure.

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Structuring the deal so you get what the business is worth

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One of the most important conversations to have early is how involved you want to remain after the sale.

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It is also worth thinking about how and when you will be paid. Where part of the consideration is to be paid at a later date, those arrangements need careful drafting. The calculations, the conditions attached to them, and what happens if circumstances change all require proper legal input. Sellers who agree to deferred payments without advice can find them harder to secure than they expected.

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Getting advice at the right time

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The common thread on both sides is timing. Legal advice is most useful before positions have hardened and before terms have been informally agreed. Once a deal is well advanced, your options narrow.

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If you are considering buying or selling a business, we would be glad to talk it through with you at an early stage.