Acquisitions and disposals

Supporting the buying or selling of companies and business operations

Acquisitions and disposals require close collaboration between a client and their advisors. We have often acted for clients for many years prior to such a transaction and this relationship certainly helps. It means that we have a good understanding of the business, the issues and the opportunities which makes it easier to achieve the desired outcome.

We support the business with financial and tax due diligence and we advise on the related sections in the legal agreements. The other advisors will include solicitors (who handle legal due diligence and negotiating the agreements) and perhaps a corporate finance advisor or business sale agent (who is brokering the deal). Commercial and operational due diligence is usually done in-house.

Acting for purchasers

When helping a client to acquire a company or business there can be dozens of pages of enquiries but broadly the tasks can include:

• Reviewing the historic accounts and work done by the auditors to identify old accounting, tax or commercial issues

• Understanding the current financial position, trading performance and overheads to ensure the purchaser knows what assets and liabilities are being acquired, what drives the performance and can assess whether any of the anticipated synergies will be achieved

• Reviewing financial projections to assess whether they are properly prepared, consider the sensitivity of key assumptions and whether the output matches the purchaser’s plan for the business

• Reviewing tax returns, supporting documentation, tax enquiries and internal processes to identify additional risks or liabilities

• Considering the terms in the sale and purchase agreement to ensure that the purchaser has adequate protection from liabilities, that the amount being paid and the terms of payment are correct and that the arrangements for any completion accounts (which may impact the amount being paid) are clearly defined.

Acting for vendors

When helping a client who is selling a business the aim is to ensure that the transaction proceeds smoothly and completes at the desired price. The tasks can include:

• Putting information into a ‘data room’. Normally a digital collaboration space into which we upload financial, tax and company secretarial information

• Helping the vendor to answer queries and provide explanations to ensure that the purchaser understands the business that they are acquiring, the opportunities and risks involved, and that they want to complete the deal

• Ensuring that budgets, forecasts and business plans incorporate accurate financial information, have reasonable assumptions and stand technical scrutiny regarding their design and execution

• Considering the terms of the sale and purchase agreement to ensure that the interests of the vendor are protected, that they are not exposed to unnecessary claims especially arising from accounting or tax issues, and that they sale proceeds they will receive, terms (including completion accounting matters) and timescale are all acceptable.

Our long-standing relationships and deep understanding of our clients mean that we can focus on the most important issues. In supporting business purchase or sale transactions we have the right people on hand and can involve specialists from all parts of our practice.

“We understand that all major transactions carry a degree of risk for any client, and we seek to provide assurance through our comprehensive due diligence work.”

Keith Mitchell

Partner at Lewis Golden