Approach to costs
Solicitors at Humphreys & Co. always aim to approach
legal work in a financially-disciplined way. We offer
competitive rates. Our charging approach is both transparent
and geared to the options open to our clients. Our
solicitors generally charge by reference to time spent but
we can often agree fixed fees for specific work or in some
cases risk-adjusted funding structures.
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employment

Company sales
& purchases
Solicitors bringing
legal documentation, representation
& business acumen to
corporate sales & acquisitions
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When it comes to company mergers and acquisitions, solicitors at
Humphreys & Co. understand that everything hangs on getting to the
point of completion. This means that where necessary we can roll up our
sleeves, order in a takeaway and just get on with it.
By ensuring that the legal work is handled
proficiently and that any problems are solved at the earliest
opportunity, we can keep your deal on track and in your interests. In short we offer an efficient service that does not feel mass-produced.
Our team can assist with the full range of corporate work including:
- Company mergers & acquisitions
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Share purchases & disposals
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Asset purchases & disposals
- Management buy-outs and buy-ins
- Restructuring
For expert advice on
the sale or acquisition of a business, please
contact one of our commercial lawyers, who will be
pleased to get back to you with proposed costings
and next steps:
Shares or
assets?
There are two methods of acquiring a
business. One is to buy shares of the company
that owns the assets, the other is to buy the
assets which make up the business, in some
cases together with certain liabilities of the
business.
The two are fundamentally different. If shares
in a company are purchased, all its assets,
liabilities and obligations are acquired (even
those that the buyer does not know about). If
assets are purchased, only the assets (and
liabilities) which the buyer agrees to obtain
and which are identified are acquired.
An asset purchase is often more complex than a
share purchase due to the need to transfer
each of the separate assets constituting the
business. More consents and approvals are
likely to be required than on a share
purchase; for example, the consent of
customers and suppliers to the assignment or
novation of existing contracts.
There is,
however, a greater amount of flexibility on an
asset purchase. If, for example, a target
company has liabilities which cannot be easily
quantified or identified, or if only part of
the business of the target company is to be
acquired, then an asset purchase may be the
favoured option.
The other key commercial difference between
the two transactions is in the nature of what
the buyer acquires: on a share purchase it
acquires a company owning a business and
running it as a going concern (subject to any
change of control provisions).
In contrast, an
asset purchase will not automatically transfer
contracts (other than employment contracts in
a relevant transfer) or existing trading
arrangements to the buyer. Whether this is an
advantage or a disadvantage will obviously
depend on the attitudes of third party
customers and suppliers, the buyer's strategy
for the acquisition and how it intends to
integrate the new business.
As well as the commercial considerations,
there are important tax considerations to be
taken into account when structuring an
acquisition.
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Commercially focused and fully transparent costings
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Seller's preparatory steps
Ideally,
a seller will be in a position to prepare for
a sale and maintain control of the sale
process. Whatever the reason, a seller should
be sure of its objectives and plan to achieve
them.
One of the issues for a seller, assuming a
sale is voluntary and has no particular time
pressures, will be to decide whether to market
the target business actively and openly,
perhaps by holding a sale by auction, or
whether to approach potential buyers
individually. A company may already be aware
of interested parties such as competitors,
suppliers or distributors or the business' own
management. Otherwise, professional advisers
can help unearth a wider field of buyers.
There are a variety of steps that a corporate
seller can take in order to prepare a business
for sale, particularly if the seller is part
of a group:
- Effect a
pre-sale reorganisation by transferring
assets intra-group. For example,
the assets to be sold could be transferred
into a newly-incorporated subsidiary as
part of a hive down. It is no longer
necessary, in the light of the capital
losses rules, to transfer the asset to be
sold into the group company which has
capital losses; the losses will generally
be available against capital gains of
other group companies. Stamp duty, SDLT
and other tax reliefs are generally
available on transfers between UK group
companies, although both reliefs may be
lost on a subsequent disposal to a third
party buyer.
- Identify
and consider how to deal with assets
which are shared by the business to be
sold and other businesses within the
group. These may include, for
example, intellectual property and
employees.
- Ensure
that information which the buyer is
likely to require as part of its due
diligence exercise is readily available
and up-to-date. This will
include, for example, information about
properties, financial information, key
contracts, actual or pending litigation
and so on.
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Commercially focused and fully transparent costings
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Preliminary agreements
Before
the seller and buyer get as far as negotiating
the asset purchase agreement, there are a
variety of agreements which they might sign:
- Confidentiality
agreement. Most sales will
involve the buyer having access to
significant information about the target
business, some of which may be
confidential. It is therefore standard
practice for a seller to ask any
prospective buyer to enter into a
confidentiality agreement before making
any information available.
- Exclusivity
agreement. Embarking on a
prospective purchase will usually involve
a buyer in a substantial investment of
time, effort and money. Buyers will often
therefore seek protection against
"gazumping" by requiring the seller to
agree not to negotiate with other parties
for a given period - often referred to as
a "lock-out".
- Heads of
terms. Parties to a proposed
acquisition will often reach agreement in
principle on the key terms of the
acquisition before beginning the process
of due diligence, disclosure and drafting
the asset purchase agreement. It is common
practice to record these terms in writing
as heads of terms.
The basic rule is that heads of terms
should cover "deal" points rather than
drafting points and important deal points
rather than routine points. Heads of terms
are usually not intended to create any
binding legal obligation on the parties,
although they may contain individually
binding provisions, such as
confidentiality and exclusivity clauses,
if these are not set out in separate
agreements (see above). The clauses which
are to be binding should be clearly
identified.
Although heads of
terms may not be legally binding, most
company executives consider them to be
morally binding, at least in the absence
of a significant new development. They
should therefore be approached with
caution and preferably with the
involvement of professional advisers.
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Due Diligence
Before
the seller and buyer get as far as negotiating
the asset purchase agreement, there are a
variety of agreements which they might sign:
- Property:
for example, a hotel where the key
asset is the building itself
- Employees:
for example, a computer consultancy
business or modelling agency
- Intellectual
property: for example, a
computer software company, record company
or literary agency where the business is
composed of copyright, or a pharmaceutical
company whose patents are likely to be
crucial.
- Customers:
for example, a manufacturer for a
large retail outlet.
- License
from an authority: for example,
a television or radio company with an area
or channel franchise.
The information-gathering
process will aim to find out information on a
number of "specialist" areas which may impact
on the negotiation process and, in particular,
on the price the buyer is prepared to pay and
the protection the buyer will seek from the
seller in the form of warranties and
indemnities.
Although the seller will usually give
warranties which will give the buyer some
comfort if a problem arises after completion,
most buyers would prefer to find out about
serious problems before the purchase and be
able to negotiate an appropriate reduction in
purchase price or, in extreme cases, pull out
of the acquisition. However, the extent to
which a due diligence investigation is
possible may depend on the nature of the
purchase. In certain circumstances, for
example, where the potential buyer is a
competitor, the seller may be reluctant to
make sensitive commercial information, such as
customer lists, available until a later stage
in the negotiation process.
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Accessibility
We take instructions from UK & international clients. Our independent lawyers are available by email, telephone & fax. With central Bristol offices we are just 90 minutes from London by road or rail and 15 minutes from Bristol International Airport. We can travel to meetings if required.
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Independent approach
We are an independent professional law firm here, not a legal factory turning out mass-produced products. In our experience, determined case-handling is more likely to produce effective results.
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Turnaround time
Solicitors at Humphreys & Co. look to input not only
careful legal work and precision but also the determination
to keep matters moving. They aim to work in clients' real
interests with energy and pragmatism.
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Communication skills
Solicitors at Humphreys & Co. always try to open up the
legal process by giving advice and explaining options to
clients in a concise and straightforward way, identifying
clear courses of action whatever the technical or legal
complexities of the subject. |
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