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A detailed look at M&A activity

12.09.2017

Buying or selling a business can be complex and here at Gullands, our Business Hub team will guide you through the whole process.

Shares of a company are bought and sold between existing shareholders or by new shareholders under a share sale agreement.
The key features of a share sale agreement should include:

There are of course advantages and disadvantages of a share acquisition and sale. For the seller, selling shares has a number of advantages including:

Advantages for the buyer often include:

There are of course also disadvantages on the sale of shares:

When there is an agreement in principle reached between the seller and buyer, it is advisable
for the parties’ next step to enter into a heads
of agreement.

The heads of agreement typically contains the essential terms of the transaction which forms the basis for drafting the legal documents. The heads of agreement are generally not legally binding, with the exception of exclusivity (for the buyer) and confidentiality provisions (for the seller).

If not dealt with in the heads of agreement, it is advisable for the seller to have a confidentiality agreement in place prior to the buyer commencing their investigations or due diligence in relation to the company.

The sale and purchase agreement is different for every deal, but often covers:

Management Buy Outs, Management Buy Ins and Buy In Management Buy Outs:

Typically, external finance is needed for whichever form of buy-out structure is chosen, as it is unlikely that the managers will have sufficient funds to complete the deal themselves.

These types of transaction normally involve a management team setting up a new company which then acquires the business or shares of the existing business. Funding for the new company is typically from:

There is clearly much to consider with M&A activity, and our Business Hub team will be delighted to help:

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