Business Sales, Purchases and Corporate Law Advice

I am David Hughes, a corporate solicitor advising business owners, shareholders and companies in Hemel Hempstead and across Hertfordshire.

I specialise in corporate transactions, particularly business and company sales and purchases, share purchase agreements, asset purchases, shareholder agreements and share reorganisations.

I qualified as a solicitor in 2004 and have more than 20 years’ experience advising businesses and their owners. I previously worked at Sherrards Solicitors in St Albans and have spent much of my career advising owner-managed businesses and SMEs.

If you are selling or buying a business in Hemel Hempstead, or need advice about the ownership or structure of a company, I can provide experienced, practical corporate legal advice throughout the transaction.

Selling a Business in Hemel Hempstead

Selling a company or business is often one of the largest financial transactions a business owner will undertake.

I advise shareholders and business owners throughout the sale process, from the initial heads of terms through to completion.

Depending on the transaction, this can include:

• reviewing and negotiating heads of terms;
• advising on the structure of the sale;
• dealing with legal due diligence;
• negotiating the share purchase agreement or business purchase agreement;
• advising on warranties and indemnities;
• preparing and negotiating the disclosure letter;
• advising on completion accounts and locked-box arrangements;
• dealing with earn-outs, retentions and deferred consideration;
• negotiating restrictive covenants;
• preparing ancillary and completion documents; and
• managing the legal completion of the transaction.

My aim is not simply to document the transaction. I help clients understand the commercial and legal risks involved and concentrate negotiations on the issues that actually matter.

Buying a Business or Company

I also advise individuals and companies acquiring businesses in Hemel Hempstead, St Albans and elsewhere in Hertfordshire.

A buyer will normally want to understand exactly what it is acquiring and identify potential liabilities before committing to the transaction.

I can advise on:

• heads of terms;
• legal due diligence;
• share and asset purchases;
• share purchase agreements;
• business purchase agreements;
• warranties and indemnities;
• disclosure;
• restrictive covenants;
• deferred consideration and earn-outs;
• security arrangements;
• completion documentation; and
• post-completion matters.

The appropriate approach depends heavily on the size, structure and circumstances of the transaction. For an owner-managed SME acquisition, proportionate due diligence and focused negotiation can often be more valuable than applying the same process used for a much larger corporate transaction.

Share Purchase Agreements

A share purchase agreement (SPA) is the principal agreement used when the shares in a private limited company are being bought and sold.

It normally deals with matters including:

• the shares being sold;
• the purchase price and how it is calculated;
• payment arrangements;
• completion;
• warranties given by the sellers;
• indemnities;
• limitations on the sellers’ liability;
• restrictive covenants;
• confidentiality; and
• post-completion obligations.

For sellers in particular, careful negotiation of the SPA is important because the agreement can determine the extent to which they remain exposed to claims after the business has been sold.

I regularly advise on and negotiate SPAs for owner-managed businesses and SMEs.

Share Sale or Asset Sale?

One of the first questions when buying or selling a business is whether the transaction should be structured as a share sale or an asset sale.

On a share sale, the buyer acquires the shares in the company. The company itself continues to own its business, assets and liabilities.

On an asset sale, the buyer acquires specified assets and liabilities from the company.

The distinction can have significant legal, commercial and tax consequences.

The appropriate structure will depend on the circumstances of the transaction, and tax advice should usually be obtained from the parties’ accountants or tax advisers alongside the legal advice.

Shareholder Agreements

I advise companies and shareholders in Hemel Hempstead and across Hertfordshire on shareholder agreements.

A well-drafted shareholder agreement can establish clear rules about how a company is owned, managed and ultimately sold.

Typical provisions include:

• decision-making and reserved matters;
• appointment and removal of directors;
• dividend policy;
• transfers of shares;
• pre-emption rights;
• compulsory transfers;
• good leaver and bad leaver provisions;
• drag-along and tag-along rights;
• deadlock provisions;
• restrictive covenants; and
• exit arrangements.

It is usually much easier to agree these rules when the shareholders’ relationship is good than to resolve uncertainty after a dispute has arisen.

Share Reorganisations

Companies sometimes need to reorganise their share capital as their ownership or commercial circumstances change.

I advise on corporate reorganisations including:

• creating different classes of shares;
• issuing new shares;
• share transfers;
• variations of share rights;
• share-for-share exchanges;
• capital reorganisations;
• inserting holding companies;
• management and employee share arrangements; and
• restructuring ownership between existing shareholders.

These transactions need to be considered carefully alongside the company’s articles of association, existing shareholder arrangements, the Companies Act 2006 and appropriate tax advice.

Management Buyouts

I also advise on management buyouts (MBOs), including situations where an existing management team acquires a business from its current shareholders.

An MBO can involve several interconnected arrangements, including the acquisition agreement, funding arrangements, deferred consideration, new shareholder arrangements and security.

I can advise the sellers, management team or acquiring company on the corporate aspects of the transaction.

Corporate Solicitor for Owner-Managed Businesses

Much of my work involves privately owned and owner-managed businesses.

These transactions can be very different from large corporate deals.

The legal documentation still needs to protect the client properly, but the advice also needs to be proportionate to the value and risk of the transaction.

I therefore focus on identifying the points that matter commercially, explaining them clearly and helping clients get the transaction completed.

Corporate Solicitor Serving Hemel Hempstead and Hertfordshire

I advise clients in Hemel Hempstead, St Albans and throughout Hertfordshire, as well as clients elsewhere in England and Wales.

Modern corporate transactions are largely conducted by email, telephone and video meetings, so it is not normally necessary for clients to make repeated visits to a solicitor’s office.

For clients in Hemel Hempstead, however, there is also value in instructing a solicitor who knows Hertfordshire and has spent a significant part of his career advising businesses in the area.

Why Instruct David Hughes?

Choosing the right solicitor for a business sale or purchase is about more than technical legal knowledge. Corporate transactions can move quickly, involve difficult commercial decisions and require close attention to the detail of the sale and purchase agreement, disclosure process and completion arrangements.

More than 20 years’ experience

I qualified as a solicitor in 2004 and have more than 20 years’ experience advising companies, shareholders and business owners. A significant part of my practice is focused on corporate law and transactions involving privately owned and owner-managed businesses.

Deal directly with the solicitor handling your transaction

I handle my clients’ corporate work personally. This means that you deal directly with the solicitor responsible for your transaction, rather than your matter being routinely passed between different members of a larger corporate team.

This also allows me to understand the commercial background to the deal and provide practical advice throughout the transaction.

A focus on owner-managed businesses

My practice is particularly focused on privately owned and owner-managed companies. I understand that, for many shareholders, selling a company is not simply another corporate transaction. It may represent the value created through many years of building the business and can be one of the most significant financial transactions they undertake.

My approach is therefore to identify the legal issues that genuinely matter, explain the risks clearly and help clients make informed commercial decisions without unnecessarily complicating the transaction.

Corporate law is a core part of my practice

Business sales and purchases form part of my wider corporate practice, which also includes shareholder agreements, company reorganisations and other transactions involving the ownership and structure of private companies.

This broader experience is particularly useful where a sale or acquisition involves issues concerning existing shareholders, different classes of shares, pre-completion reorganisations or changes to the ownership structure of the company.

Hertfordshire experience

I advise business owners in Hemel Hempstead and across Hertfordshire and have spent a significant part of my legal career working with businesses in the area, including previously practising with Sherrards Solicitors in St Albans.

Although modern corporate transactions can largely be handled electronically, instructing a solicitor with experience of the local business community can still be valuable, particularly where other Hertfordshire-based accountants, advisers or shareholders are involved.

Practical, commercial advice

My aim is not simply to identify every theoretical legal risk. It is to distinguish between issues that genuinely matter to the transaction and those that are unlikely to justify delaying or complicating the deal.

I explain legal issues in straightforward terms, give clients a clear view of the risks and, where appropriate, recommend a practical way forward. The objective is to protect your position while helping the transaction reach completion.

Frequently Asked Questions

Can you act for me when I sell my business in Hemel Hempstead?

Yes. I advise business owners and shareholders on the sale of companies and businesses in Hemel Hempstead, St Albans and throughout Hertfordshire.

I can advise from the heads of terms stage through due diligence, negotiation of the sale agreement and disclosure process to completion.

Do I need a solicitor to sell a limited company?

A sale of shares in a private company will normally involve a detailed share purchase agreement together with disclosure and various ancillary documents.

The agreement determines not only how the business is sold but also the seller’s potential liability after completion. Specialist corporate legal advice is therefore particularly important.

How long does selling a company take?

There is no fixed timetable.

The time required will depend on factors such as the complexity of the business, how quickly due diligence information can be provided, financing arrangements, regulatory requirements and negotiations over the sale agreement.

A well-prepared seller can often make the process considerably more efficient by assembling key legal, financial and commercial information before detailed due diligence begins.

What is legal due diligence?

Due diligence is the process through which a buyer investigates the company or business it proposes to acquire.

Legal due diligence can cover areas such as corporate records, contracts, employees, property, intellectual property, disputes, financing and regulatory matters.

The scope should generally be proportionate to the nature and value of the transaction.

What are warranties when selling a company?

Warranties are contractual statements made by the sellers about the company and its business.

They provide the buyer with information and, subject to the terms of the SPA, can potentially give the buyer a claim if a warranty proves to be incorrect.

Sellers therefore need to consider warranties carefully and make appropriate disclosures against them.

What is a disclosure letter?

A disclosure letter is an important document in many company sales.

It allows the sellers to disclose information against the warranties contained in the share purchase agreement.

Proper disclosure can protect a seller from a subsequent warranty claim relating to the matter disclosed, subject to the terms of the transaction documents.

What does cash-free, debt-free mean when selling a company?

Businesses are frequently valued on a cash-free, debt-free basis.

Broadly, this means the agreed enterprise value is adjusted to take account of items such as cash and debt when determining the amount ultimately payable for the shares.

The precise calculation can be considerably more complicated, particularly where the parties disagree about what constitutes cash, debt or normal working capital. The SPA should therefore set out the agreed mechanism clearly.

What is an earn-out?

An earn-out is an arrangement under which part of the purchase price depends on the performance of the business after completion.

For example, additional consideration might become payable if the company achieves specified financial targets.

Earn-outs can bridge a valuation gap between buyer and seller but need careful drafting because the parties may otherwise disagree about how the business is operated or how the earn-out is calculated.

How much does a solicitor charge to sell a business?

Legal costs depend on the size and complexity of the transaction.

Factors affecting costs can include the transaction value, whether it is a share or asset sale, the extent of due diligence, the complexity of the SPA, the number of sellers and the existence of matters such as earn-outs, completion accounts or substantial negotiations over warranties and indemnities.

Once I understand the proposed transaction, I can explain the likely scope of the legal work and the basis upon which fees will be charged.

Speak to a Corporate Solicitor in Hemel Hempstead

If you are selling or buying a business in Hemel Hempstead, require a shareholder agreement or are considering a share reorganisation or other corporate transaction, please contact me to discuss the matter.

David Hughes
Corporate Solicitor

Corporate law advice for businesses and shareholders in Hemel Hempstead, St Albans and across Hertfordshire.