Business Sale & Purchase Solicitors
Buying or selling a business is one of the most significant transactions a business owner will undertake. What the legal documents say — on warranties, liabilities, and post-completion obligations — determines whether it goes well or expensively wrong.
Business acquisitions and disposals are structured either as asset sales (the buyer acquires specific assets and liabilities of the business) or share sales (the buyer acquires the entire company with all its history and liabilities). Each structure has different tax, commercial, and legal implications. A solicitor will advise on the most appropriate structure, manage the due diligence process, draft and negotiate the sale agreement, and identify the risks — including the warranties and indemnities that protect the buyer against undisclosed liabilities, and the limitations that protect the seller against unlimited post-completion exposure.
Business Sale & Purchase — Key Issues
Business transactions — what a solicitor addresses at each stage of the deal.
A business transaction has multiple legal dimensions — structure, due diligence, documentation, employment, property, and post-completion risk. A solicitor will manage all of them, protecting the client's position throughout.
Asset sale vs share sale — choosing the right structure
An asset sale transfers specified assets (goodwill, contracts, equipment, IP, stock) and leaves specified liabilities behind — the buyer typically does not inherit the target company's pre-existing liabilities. A share sale transfers the entire company — with all its assets and all its historical liabilities. Buyers prefer asset sales for the cleaner liability position; sellers often prefer share sales for the capital gains tax treatment. Employment obligations under TUPE transfer automatically on an asset sale (employees follow the business). A solicitor will advise on the most appropriate structure, considering tax, commercial risk, and the nature of the business being sold.
Due diligence — identifying what you are buying
Due diligence is the buyer's investigation of the target business — reviewing its legal, commercial, financial, and tax position before committing to the acquisition. Legal due diligence covers: the ownership and condition of key assets; the status of key contracts (change of control provisions that may be triggered by the sale); employment obligations and any outstanding claims; IP ownership; property leases; regulatory licences and permissions; litigation history; and historical compliance. A solicitor will manage the legal due diligence process, raise due diligence enquiries, identify material risks, and advise on how those risks should be addressed — through price adjustment, additional warranties, indemnities, or deal structure changes.
Warranties and indemnities — protecting the buyer
Warranties are contractual representations by the seller about the condition of the business at completion — that the accounts are accurate, that key contracts are in force, that there is no material litigation, that the IP is owned and not infringed, and that employment and tax obligations are up to date. A warranty that proves to be false gives the buyer a damages claim for the loss caused by the breach. An indemnity is a pound-for-pound recovery mechanism for specific identified risks — the seller agrees to reimburse the buyer for any loss arising from a specific liability. A solicitor will negotiate the scope of the warranties and indemnities — maximising protection for the buyer and limiting the seller's exposure.
Seller limitations — protecting the seller post-completion
Sellers need to limit the duration and amount of their post-completion liability under the warranties. Typical limitations include: a time limit for bringing warranty claims (often 18–24 months, or longer for tax warranties); a minimum claim threshold (a "de minimis" below which individual claims cannot be brought); an aggregate cap (a maximum total liability, often linked to the purchase price); and a requirement that the buyer mitigates its loss. Without robust limitations, a seller can face significant post-completion exposure years after they have spent the proceeds. A solicitor will negotiate the limitations on the seller's behalf — protecting the seller's ability to enjoy the sale proceeds with certainty.
Employment and TUPE
On an asset sale, the Transfer of Undertakings (Protection of Employment) Regulations 2006 (TUPE) applies automatically where there is a transfer of a going concern — employees transfer to the buyer on their existing terms and conditions, and dismissal in connection with the transfer is automatically unfair. The buyer inherits all employment claims that arose before completion. A solicitor will advise on the TUPE obligations, manage the information and consultation requirements (failure to inform and consult results in a penalty of up to 13 weeks' pay per employee), and ensure the seller and buyer's warranties and indemnities correctly allocate pre- and post-completion employment liabilities.
Post-completion claims — warranty claims and earn-out disputes
Post-completion disputes are common — warranty claims by buyers who discover undisclosed liabilities after completion, earn-out disputes where the consideration is contingent on the target's future performance, and restrictive covenant disputes where the seller sets up a competing business. A solicitor will advise on whether a warranty claim is supported by the evidence, draft and issue the warranty claim within the applicable time limit, and manage the claim through to settlement or litigation. For earn-out disputes, a solicitor will assess whether the earn-out metrics have been correctly calculated and pursue a claim where the seller believes the earn-out is being undermined.