Some of the areas that I have covered in previous posts (or will cover in future posts) on business law will be relevant when you are advising a client acquiring or disposing of a business or company. These are as follows:
Formation of a private company
It is common for corporate transactions to involve the purchase of target through a ‘newco’. This is a newly incorporated company set up by the buyer to act as the purchasing vehicle. This is especially common in management buyouts and other private equity transactions.
Equity and debt finance
Issues of finance will usually arise for the acquiring client who will often need to raise finance in order to acquire target.
If the company acquiring or disposing of target is a listed company then the provisions of the Listing, Prospectus, Disclosure and Transparency Rules (LPDT Rules) will need to be considered. If the transaction meets certain criteria in accordance with the LPDT Rules the transaction may need prior shareholder approval.
Accounts
Whether it is during the due diligence process or to assist you in working out the consideration to be paid for target, accounts will play a key part in every transaction. It is important that transactional lawyers understand business
accounts in order to be able to advise fully.
Employment law
There are strict regulations in relation to the transfer of employees that apply on a business sale, such as in relation to TUPE.
Financial Assistance
It is quite often the case that financial assistance will be given during the course of a share sale. You will need to understand how to identify a transaction involving financial assistance and how to ensure that, where target is a
public company or has a subsidiary which is a public company, no illegal financial assistance is given in the course of financing the transaction. Since 1 October 2008 it is no longer unlawful for private companies to give financial assistance in relation to the acquisition of their own shares or shares in their private holding companies.