Checklist for sale of company or group, purchase of company or group, sale of business, purchase of business

Structure

• Has the company or business been marketed; should it be marketed
• Can a competitive sale (auction) be arranged; is a bilateral sale more prudent
• Do we wish to sell or buy assets or a company or both
• Do we wish to sell or buy an entire business or part only
• Will separating or selecting assets and liabilities be practicable
• Are we selling or buying all the assets or rights we will need
• Are there key contracts or relationships that might end prematurely on sale?Is the seller retiring or continuing in business
• Are there any tax losses to secure; or arrears of tax to be paid
• What degrouping charges might there be
• Where does the capital gains disposal and acquisition cost fall and is this the best available place?
• What international dimensions, EU and non EU require special consideration

Consideration monies

• Has the buyer or seller had advice as to valuation
• Is a pre sale dividend possible in company law and within cash flow parameters
• Is the price freely negotiated to reflect good market value
• Will buyer be able to pay on the day
• Should the buyer’s purchase obligations be guaranteed/secured
• Should the seller’s obligation to sell be guaranteed/secured
• Is cash on completion required or will issue of shares or loan notes be possible
• Is paper consideration to be admitted to listing
• If paper consideration is in use, how and when is it convertible to cash?
• Should buyer require special rights under articles of association, pending conversion of shares
• Is part of the consideration to be deferred; if so how/ when does it become payable
• Does the amount payable depend upon completion accounts or post completion performance (earn out)
• Is the target company to be used as security for purchaser borrowings
• Is there an intermediary requiring payment; if so who’s responsible

Other

• What key searches, surveys and investigations might be carried out before instructing solicitors
• Where do the parties stand if ultimately they fail to enter contract to sell/ buy?(market reputation, preservation of assets, employees, confidential information)
• Are there any conflicts of interest or breach of trust?If a PLC or listed, are consents required from shareholders
• Are any parties insolvent or in the twilight
• What are the principal and secondary areas for investigation/ due diligence.
• When and how should sensitive matters be disclosed
• How detailed should the disclosure letter be
• How are employee termination arrangements to be handled and who pays.
• What security for seller payment under warranties and indemnities is required?
• Does seller require protection from embarrassment if buyer to sell on
• Are there any international dimensions, EU and non EU

Many firms we observe, fail to give transaction diligence due regard. For us, commercial due diligence and full disclosure exploit are absolutely crucial to transaction work. The time when, and the manner in which, a disclosure is made can affect whether a transaction proceeds to contract and, if it does, the rights of the parties for a long time afterwards. We carry out acquisition due diligence for own client transactions and will provide professional due diligence services to accountants, solicitors and others.

Please do get in touch to discuss your requirements.