Tom Gray

Partner

Corporate Law


The main legal stumbling blocks in Corporate Transactions and how to avoid the pitfalls

Tom Gray

It is essential in any proposed corporate sale to ensure that every “box is ticked” as far as good governance of the company and legal compliance is concerned to ensure the sale passes off as smoothly as possible.

Putting in place a good legal and accountancy team ahead of any sale or acquisition are key. Some sensible preparatory steps can take months, even years, and it is therefore useful to have a team working with proposed vendors to support this in good time.

The corporate market is much more buoyant than in past years and many companies continue to look for good sale propositions.

However, it remains true that buyers (as well as the banks and others who are funding acquisitions) remain sensitive to any ‘issues’ that may emerge as part of the ‘due diligence’ process undertaken on completion of a sale or purchase transaction.

Increased regulatory and compliance burdens on companies mean they need to be better managed than ever, to avoid the dreaded ‘price chip’. Unexpected liabilities will be a dead weight on a seller’s valuation.

Any number of issues may ‘spook’ the acquisitions team, from poor HR management and employment law breaches, to poor accounting provision, sloppy contracting processes or ‘sexy’ tax schemes that may remain open to HMRC investigation.

Basic issues such as good contracting and ensuring the paperwork is in order are all important and can maximise valuation on a pending sale. There are often many ‘quick wins’ ahead of a sale that can be secured by simply auditing and improving processes within the business. Updating employment documents and office manuals, ensuring all latest policies, such as anti-bribery policies, are in place and similar updates help reassure a possible buyer that the company is well managed and well placed to deal with any issues that may hit the business.

In addition, routine tax planning steps can often be taken ahead of a sale to ensure personal reliefs and annual allowances are maximised on any sale transaction, but often need to be thought about often more than a year in advance to ensure full benefit is received.

The Corporate Team at Fraser Brown are always willing to work with business owners to help them plan ahead and structure fees appropriately to fit the likely timescale for any proposed sale of the business. Please telephone us on 0115 9888 777 and speak to either Gavin White or Tom Gray to find out more.

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