Running your business
Running your business
When you are running your business, you want to be focused on the things that make you money, and not worrying about non-core functions such as legal. That being said having an understanding is key.
This section covers a number of different legal matters that might come up while you are running your business.
Share Purchase AgreementWhat is it? A Share purchase agreement (SPA) is an agreement setting out the terms and conditions relating to the sale and purchase of shares in a company. Share purchase agreements are often complex documents which can become lengthy and create significant delay, friction and cost if not dealt with by experienced, business minded lawyers. Why is it important? There is often a choice and negotiation over whether it’s best for either or both parties to buy/sell assets rather than shares. This would depend on whether the current owner (seller) is a limited company. If not, there can be no share sale! Further, where a buyer wants to preserve as many customer relations as possible, they may elect to buy the shares as opposed to assets. The seller’s solicitor usually draws up the draft share purchase agreement. Risks While the buyer’s solicitor will try to protect the buyer the interest of the seller’s solicitor is to minimise this protection, in particular by limiting the seller’s liability for misrepresentation. However, in practice, where there is fraudulent misrepresentation the seller will still be liable so the buyer may accept such clauses since they are not valid if the seller can prove fraudulent misrepresentation. Please contact us if you require specialist commercial lawyers to review, draft, negotiate, amend or generally advise on a share purchase agreement.
Asset Purchase AgreementWhat is it? An asset purchase agreement is an agreement setting out the terms and conditions relating to the sale and purchase of assets of a business. In an asset purchase, the company itself will be selling the assets, whilst in a share sale, the individual shareholders will be the sellers. Occasionally a buyer will prefer to acquire certain assets of a business rather than acquire all of the shares in a company and therefore, both its assets and liabilities. A buyer will normally prefer to buy the assets of a business, while the seller will prefer to sell the shares. The main benefit of an asset purchase is that a buyer may selectively pick the assets and liabilities they want to acquire and there is generally less risk of hidden liabilities than with a share purchase. Risks The main disadvantage of an asset sale, as opposed to a share purchase agreement is that each item must be transferred in accordance with its proper rules and made enforceable against third parties (eg through consents and approvals). This is especially the case for customer contracts, as a third party may view the transaction as an opportunity to renegotiate their contract thereby adding delay and additional costs to the transaction. In addition, there may be other important contracts that are non-transferrable, or licences and consents unique to the seller which may not be transferrable. In an asset sale it is vital to identify what exactly is being purchased. Assets transferred as part of an Asset purchase agreement may include: Plant and machinery. Premises; Stock; Contracts; Know-how; and Goodwill. Please contact us if you require specialist commercial lawyers to review, draft, negotiate, amend or generally advise on a share purchase agreement.
Disclosure LetterWhat is it? A Non-Disclosure letter or Non-Disclosure Agreement, also called a Confidentiality Agreement, is a legal contract between two or more parties by which the parties agree not to disclose information (which is intended to be kept secret) that they have shared with each other during a business relationship to third parties. Why is it important? This Agreement may either be one-way (unilateral) or two-way (mutual), depending on whether both parties will be providing the secret information. If one party will be providing the secret information to the other, it is called a Unilateral Non-Disclosure Agreement. For example, where an inventor of an idea is sharing the idea with another person, the inventor is the disclosing party and the other party is the receiving party. If the two parties will share the secret information between themselves, it is called a Mutual Non-Disclosure Agreement. This Agreement can be used to share intellectual property, share commercial trading information or formalize a business relationship, for example, between an employer and an employee