Most commonly, the transfer of a business as a going concern will be an asset sale. This means that the business is sold as a going concern along with its assets such as, goodwill, cash in bank, stock, any equipment necessary to carry on the business and the business premises, which may be leased or owned outright. Sometimes if the business is operated by way of a limited company then the business transfer may be by way of sale of the shares in the limited company. This type of transfer is less common but can have the benefit of reducing the tax liability of the purchaser. However a higher level of due diligence may be necessary as the tax liabilities of the company will transfer to the purchaser.
A business transfer should be documented in a contract. The detailed terms need to be negotiated between the purchaser and the seller. The contract deals with matters such as specifying the assets that are to be transferred, any ongoing contracts such as supply agreements or maintenance contracts, transfer of employment contracts under the Transfer of Undertakings Protection of Employment Regulations (TUPE Regulations), liabilities pre and post completion of the transfer and any conditional elements such as landlords’ consent that may be required before a lease of the business premises can be transferred.
Miller Hendry’s commercial lawyers are experienced in dealing with business sales and purchases and can assist in the negotiation of and preparation of the relevant contracts.