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Business Sale & Purchase

Business Sale & Purchase Solicitors — Share Sales, Asset Sales, Due Diligence, and Warranties

Buying or selling a business is one of the most significant transactions an individual or company will undertake. The legal documentation — sale and purchase agreement, disclosure letter, warranties and indemnities, tax deed, and ancillary documents — must accurately reflect the commercial deal and protect the buyer from hidden risks and the seller from open-ended liability. A specialist corporate transactions solicitor manages the full process: from heads of terms and due diligence through to completion and post-completion obligations.

Share sale vs asset sale Warranties & indemnities Due diligence TUPE — service provision changes
⚠️ Warranties and limitation periods — time-limit your liability as a seller. Warranty claims can be brought years after completion if the SPA does not include a warranty claims limitation period. A seller should insist on a limitation period of 12–18 months for general warranties and 4–6 years for tax warranties (matching the applicable HMRC enquiry window). A solicitor ensures the SPA includes these protections — uncapped, open-ended warranty liability is a common and avoidable risk for sellers who do not take specialist advice.

Business Transactions — Key Legal Stages

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Heads of terms — setting the framework — heads of terms set out the key commercial terms: price and payment mechanics (cash, deferred consideration, earn-out); the structure (share or asset sale); exclusivity period; conditions to completion; and key pre-conditions (landlord consent, lender approval). Generally non-binding, but exclusivity is usually binding. A solicitor reviews heads of terms before signature to ensure the commercial deal is accurately captured and any legal issues are identified at the outset.
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Legal due diligence — identifying the risks — a buyer's solicitor conducts legal due diligence on the target business: reviewing material contracts (including assignment and change of control provisions), employment contracts, property leases, IP ownership and licences, regulatory licences and permits, litigation and disputes, and environmental matters. Due diligence findings inform the buyer's decision to proceed, the price, the warranties sought, and the indemnities required for specific identified risks. A seller's solicitor manages the data room and the disclosure process.
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Share purchase agreement — warranties and indemnities — the SPA contains: representations and warranties given by the seller (concerning the state of the business — its accounts, contracts, employees, IP, tax position, and regulatory compliance); indemnities for specific identified risks (dollar-for-dollar recovery, not subject to materiality qualifications); limitations on warranty claims (aggregate and de minimis thresholds, limitation periods, recovery from the disclosure letter); and the tax deed (seller's obligations for pre-completion tax liabilities). A solicitor negotiates and drafts each provision from the perspective of the client — buyer or seller.
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Asset purchase agreement — selecting what you buy — in an asset sale, the buyer selects specific assets: goodwill, plant and equipment, stock, customer contracts, IP, trade name, and premises. The seller retains the liabilities unless expressly assumed by the buyer. TUPE applies where employees are associated with the transferred business. The buyer obtains warranties on each asset class: title (seller owns assets free of encumbrances), condition, and fitness for purpose. A solicitor ensures each asset is properly identified and transferred with good title.
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Earn-out and deferred consideration — where the parties cannot agree on the present value of the business, an earn-out structure is used: initial cash consideration supplemented by deferred payments contingent on the business meeting financial targets (typically EBITDA or revenue) in the post-completion period. Earn-out disputes — arguments about how the target was calculated and whether the buyer interfered with the business — are common and frequently litigated. A solicitor drafts earn-out provisions to be clear, unambiguous, and to include appropriate seller protections during the earn-out period.
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Restrictive covenants — protecting what you bought — a buyer acquires the business's goodwill and expects the seller not to set up in competition and solicit customers and employees immediately after completion. Post-completion non-compete, non-solicitation, and non-dealing restrictions are enforceable for longer periods and over wider geographic areas than employment non-competes (because the buyer paid for the goodwill the clause protects). Courts generally enforce business sale restrictions of 2–5 years for legitimate categories of clients and employees.

Frequently Asked Questions

Should I sell my business as a share sale or an asset sale?

Sellers typically prefer a share sale: proceeds are treated as capital gains (Business Asset Disposal Relief potentially available at 10%); no SDLT implications; and the seller is not responsible for retaining and then transferring individual assets. Buyers typically prefer an asset sale: they can cherry-pick assets and leave liabilities behind (including historic tax liabilities); they get a step-up in base cost for the assets acquired; and they avoid inheriting unknown liabilities. Where preferences cannot be reconciled, a share sale with appropriate warranties, indemnities, and tax protections is the most common SME compromise. A solicitor advises on the most appropriate structure.

What is a disclosure letter and why does it matter?

A disclosure letter is served by the seller alongside the SPA — it qualifies the seller's warranties by disclosing facts that might otherwise constitute warranty breaches, preventing the buyer from bringing a warranty claim for disclosed items. It is therefore the seller's most important document: it determines what the seller is and is not liable for post-completion. A solicitor advises the seller on what to disclose (general disclosure from disclosed documents vs specific disclosure) and drafts the disclosure letter to protect the seller from post-completion warranty claims.

How long does a business sale transaction take?

A typical SME business sale (£500k–£5m) takes 8–16 weeks from heads of terms to completion: 2–4 weeks for due diligence and disclosure; 4–8 weeks for SPA negotiation and ancillary document drafting; 2–4 weeks for resolution of outstanding issues and completion. The timeline depends on the complexity of the business, the responsiveness of the parties, and whether any pre-conditions (landlord consent, lender approval, regulatory consent) need to be satisfied before completion. A solicitor manages the timetable and keeps the transaction moving.

What is Warranty and Indemnity (W&I) insurance?

W&I insurance allows the buyer to bring warranty claims against an insurer rather than the seller, for a negotiated premium (typically 0.5–2% of the insured amount). Increasingly used in mid-market transactions (£5m+) to allow sellers a clean exit and buyers recourse beyond any seller escrow or cap. For smaller SME transactions (under £5m), generally not cost-effective. A solicitor advises on suitability and manages the insurer's underwriting process alongside SPA negotiation.

Do employees transfer automatically in a business sale?

In a share sale, employees remain employed by the same company — no transfer occurs. In an asset sale where the business (or a part capable of standing alone) is transferred, TUPE applies — employees transfer automatically to the buyer on their existing terms and conditions. The buyer inherits all employment liabilities for transferred employees including pre-completion claims. Dismissals connected to the transfer are automatically unfair unless for an ETO reason. A solicitor advises on TUPE obligations, employee liability information to be provided pre-completion, and TUPE management on both sides.

How It Works

One clear request. A corporate transactions solicitor manages your deal from heads of terms to completion.

No upfront cost. A specialist corporate transactions solicitor advises on deal structure, manages due diligence, negotiates the SPA, and ensures the deal completes on terms that protect your interests — as buyer or seller.

Submit Your Request
1

Tell us about the transaction

Describe the business, the proposed structure (share or asset sale), the approximate value, and your role (buyer or seller).

2

Matched to a specialist

We connect you with a specialist corporate transactions solicitor experienced in business sales of your size and type.

3

Deal completed

Your solicitor manages the full process — due diligence, SPA negotiation, disclosure, and completion — delivering a clean, well-documented transaction.

Business Sale & Purchase

Buying or selling a business? A specialist corporate solicitor makes sure the deal is done right.

From heads of terms and due diligence through to SPA negotiation, disclosure, warranties, and completion — a specialist corporate transactions solicitor protects your interests at every stage of a business sale or acquisition.

Submit Your Request

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