Asset sales - selling or buying a business

If you are thinking of selling or buying a business an option available would be to conduct this through an asset sale.

When commencing an asset sale the buyer acquires the agreed areas of a business which is sometimes referred to as the target business. For example, a larger corporation could opt to only buy the operations of a business, without the purchase of the company as a whole or the individual shares. The sale can include the target’s contracts and good will or a defined portion of each.

It is a relatively flexible approach for buyers, allowing them to select particular assets instead of acquiring the business as a whole via the share sale route. For the buyer, this type of sale is sometimes seen as less risky, making the contract and transaction simpler.

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In an asset sale the seller is the business as a whole (whether this is a limited company, LLP, individual or a partnership) rather than the individuals of that entity. Although an assets sale can be seen as simpler due diligence is still required followed by the negotiating and drafting of the asset sale agreement.  

The aforementioned outlines the consideration agreed for the target including any agreed staged payments or retention amounts. Warranties and indemnities will be included in the agreement also and will address the level of risk and protection for both the buyer and seller.

Both the seller and buyer need to ensure that the target property, employees and contracts are legally transferred to the buyer and correctly documented. The tax liabilities of an asset sale will also impact upon the drafting of the agreement, we at Stephensons will therefore ensure you have the best tax advice available when undergoing the legal transaction.

Asset sale - affect on employees

An asset sale will also affect any existing employees as they will need to transfer to new employment. The employees are protected by the Transfer of Undertakings (Protection of Employment) Regulations 1981 (TUPE). The complex legalities around the transfer of staff make it vital for anyone to consult a specialist before completing an asset sale.  Alongside our corporate team are experienced with working alongside the employment lawyers to advise you on any employment law issues which may arise.

Our corporate lawyers have a strong track record of successfully assisting both buyers and sellers with all aspects of asset sales transactions. Stephensons will assist you in securing the outcome you desire. If you would like to speak with one of our experienced corporate lawyers please call us on 0203 816 9303

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