Company Sales, Purchases & Partnerships

A sale is two transactions under one name. There is the commercial deal, which is usually settled before we are instructed, and there is the allocation of risk, which is what the documents are for. Most of what becomes contentious in a business sale is an argument about which party carries an unknown liability that has not yet materialised.

Shares or assets

The first decision is structural. A share purchase takes the company as it stands, with its history, its contracts and its liabilities intact. An asset purchase takes only what is listed, and in Scotland that carries consequences a buyer should price in. Heritable property does not move with a signature; it requires a disposition and registration in the Land Register.

Contracts do not transfer automatically. They are transferred by assignation, and many of them will require the counterparty's consent. Employees may transfer automatically whether or not either party intended it.

Due diligence and disclosure

We run legal due diligence proportionately. On a smaller transaction an exhaustive review of every contract costs more than the risk it uncovers. We concentrate on title to the shares or assets, on the contracts the business actually depends on, and on property, employment, intellectual property ownership and any litigation or regulatory exposure.

For a seller the disclosure letter matters more than the warranties. A warranty that has been properly disclosed against is not a claim, and we spend real time on disclosure because it is the least expensive protection available.

Partnerships

Partnership work is a distinct strand, and Scots law differs here in a way that matters. A Scottish partnership is a legal person separate from the partners who compose it, which is not the position in England and Wales, and it affects how the firm holds property, how it contracts and how it is sued.

We advise on partnership and LLP agreements, on the admission and retiral of partners, on the treatment of capital and goodwill, and on dissolution. A great many professional firms operate on an agreement drafted for a previous generation of partners, or on no written agreement at all, in which case the default statutory rules apply and are seldom what anyone would have chosen.

Cross-border transactions

Many of the businesses we sell are bought from outside Scotland, and many of the buyers we act for are acquiring a Scottish company into a wider group. Those transactions raise questions of foreign ownership and control, of funding and security across jurisdictions, and of how Scots law interacts with the buyer's own documents. We advise on the Scots law elements, instruct lawyers qualified in the relevant country for the remainder, and co-ordinate the two.

After completion

Restrictive covenants given by a seller are enforced more readily than those given by an employee, because the buyer has paid for the goodwill they protect. They must still be drawn no wider than the interest being protected, and we draft them on that basis and not as boilerplate.