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What is involved in company/business sale/purchase?

Company/business purchases and sales potentially involve a number of different elements.  The initial process is agreeing the Heads of Terms between the parties.  These basically outline the agreed key areas of the transaction.  Whilst they are not legally binding, they do show a party’s intent. 

It may well be at the outset of a transaction that the parties agree that any work undertaken relating to the transaction should remain confidential and therefore a non disclosure  agreement may be appropriate. 

Following agreement of the Heads of Terms, the buyer will want to undertake due diligence on the company/business.  This is an information gathering process whereby the buyer asks a variety of different questions and seeks disclosure of relevant documents in order for them to establish a view or confirm their view of the company.  At times this allows the buyer the opportunity to walk away from a deal, to seek a variation in the purchase price or if all is well, to continue on the basis of the agreed terms. 

The terms of any acquisition/sale will be detailed in a Share Purchase Agreement (if it’s a company sale) or an Asset Purchase Agreement (if only the assets of the business are to be sold). 

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