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In this informative video, Jonathan Jay introduces John Andrews, an experienced lawyer who will shed light on the legal aspects of business acquisition.
Whether you're a seasoned entrepreneur or a first-time buyer, these insights will prove invaluable.
John Andrews discusses the complexities associated with asset purchases and addresses the need for consent from parties involved in long-term contracts, such as local authorities and health authorities. Change of control provisions play a crucial role in the due diligence process and can impact the transfer of contracts.
Furthermore, property transfers, whether leasehold or freehold, can add additional layers of complexity to asset purchases.
By contrast, share purchases offer continuity, as the same company provides services both before and after the acquisition, minimising disruptions and facilitating a smoother transition.
Share purchases may align with sellers' preferences and offer business and credit history continuity, but they come with their own set of risks.
Due diligence becomes even more critical to uncover any hidden issues that could affect the buyer's liability, post-acquisition.
Asset purchases can de-risk transactions to a great extent but may involve additional legal complexities, such as staff transfers, property transfers, and contract considerations.
Each deal requires a careful evaluation to determine which approach best suits your circumstances and goals.
Jonathan Jay and John Andrews explain the benefits of a group structure and how it can help you compartmentalise each acquisition, allowing for easier management and potential exits.
They clarify why setting up your holding company with the right articles is crucial, especially if you plan to bring in investors later on, and emphasise the importance of share classes, dividend rights, and pre-emption rights in your articles, giving you control over the future of your business.
Jonathan Jay and John Andrews delve into structuring deals, emphasising the seller's preference for more cash upfront and the buyer's goal of minimising personal investment. They explain the process of borrowing money from third parties and using deferred consideration, highlighting key considerations such as personal guarantees, security, and debentures.
Jonathan Jay discusses the benefits of retaining sellers on an earn-out basis, provided there is a good management team in place. He cautions against manipulating expenses to reduce EBITDA figures and emphasises the importance of maintaining a good relationship with sellers to ensure long-term success.
Whether you're a business owner looking to sell or a prospective buyer seeking guidance on acquiring an established business, this video offers valuable advice and strategies for successful business acquisitions.