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Whether you’re selling your business - in which case you’ll need an asset sale agreement, or selling shares in your company - in which case it will be a share purchase agreement (SPA), the basic format of the agreement is broadly identical although the detail varies considerably.
 
The structure of either an asset sale agreement or a share purchase agreement will be along the following lines:-
  • Definitions section  - often overlooked but can be very useful in keeping the bulk of the contract simpler
  • Details of the deal – the purchase price, whether stock is included or additional, how the purchase price is paid and, for asset sale agreements, how the purchase price is broken down between the different parts of the business (goodwill, fixtures and fittings, contracts etc)
  • Conditions precedent – anything that has to be done before the contract can be performed
  • The warranties and any limitations to those warranties
  • The operative clauses dealing with other parts of the business, e.g.
    • transferring over contracts held by the business;
    • transferring over the employees;
    • dividing / apportioning pre-payments, deposits and book debts between the seller and the buyer
  • Remedies and Boiler plate clauses or what we at Lawson-West call ‘the legals’ which are the standard clauses dealing with the mechanics of how the agreement is to operate, for example clauses dealing with applicable law, how or where to serve notices or jurisdiction clauses.

Why do you need Lawson-West Commercial?

With any contract, but especially a contract for selling or purchasing a business, the detail is crucial. Where disputes arise, the court will often exercise its power by ‘interpreting’ the contract and we can guarantee that at least one party will not be happy with the interpretation!
We know that there is no such thing as a standard contract and that different businesses have different priorities. We could write pages about each and every contract section but a single example from our own experience might be easier to read:-
  • Lawson-West have acted in the sale and purchase of several businesses which are regulated  - post offices, day nurseries and care homes to give just some examples. For these businesses the timing and mechanics of the deal are crucial. Neither the seller nor the buyer wants to be in a position where they enter into a contract they can’t get out of only to find that legally required approvals are not available. We therefore look to include clauses to protect both seller and buyer in the event that the crucial consent (something which is completely outside either party’s control) is not forthcoming.
  • Conversely we acted in the sale of a business which relied heavily on a single contract with a third party. In this case, the mechanics of completion were straightforward but what was crucial to the deal was ensuring that the third party was willing to allow their contract with the business to transfer to the new owners.
I hope this gives you an idea of what we at Lawson-West Commercial can do for you. For more information please contact David Heys on 0116 212 1000.