Want to buy the company rather than the business?

2 min read

The PBL key 5 tips and traps of private share transfers for a purchaser

When business owners and potential buyers get together to try and reach agreement about a deal about a target business the first hurdle may well be what the structure of any deal will look like.
 
In most cases that comes down to working out whether there is going to be a sale of the actual business or the transfers of shares of the selling company to the buyer.
 
Both parties have to agree on the structure and seek to maximise the advantages that may be available. 
 
Although many transactions involve the sale of the business it is not uncommon for agreement to be reached to sell the shares in the company. 
 
But this comes with both benefits and risks. 
 
So what are the key 5 tips and traps for a purchaser in a transfer of shares?
 
  1. Before even considering this structure make sure that you get good quality tax and financial advice about such a structure particularly in respect of Asset protection and income tax flexibility. 
  2. If you are buying the shares undertake significant due diligence to test the promises being made by the seller . Such due diligence would include financial taxation compliance and legal matters and therefore you need to retain the A team composed of lawyers accountants and relevant compliance experts to ensure the due diligence checks are effective. 
  3. Be careful , very careful if you are going to buy the shares in a company with any lengthy history as it may well come with significant adverse issues which may come back to haunt you and when it is too late to chase the departing shareholder. 
  4. Make sure that you get access to all relevant documents and have them reviewed by your team before you sign up to any sale of share agreement. Such documents would include but not limited to all relevant company client and supplier contracts, leases , employment agreements financial and company records it and ip documentation.
  5. If in any doubt about the value of what you are going to get by purchasing the company rather than the business make sure you have included in the sale documents relevant warranties earn outs and security arrangements. The best way of avoiding waking up in the middle of the night and worrying about broken promises from a vendor is by putting into place the right checks and balances such as a strong retention arrangement and PPSA and property securities over the vendors personal assets at best and the company’s assets at worst. 
 
If you want further information or advice about this topic or are thinking about buying or selling shares in a company then contact David or Reuben on 43053500

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Picture of Authored By<br>PBLTeam

Authored By
PBLTeam

Director Lawyer, PBL Law Group

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Anita Bradley has been an absolute dream to deal with. Anita's conveyancing skills and knowledge knows absolutely no boundaries along with her effective communication skills which has made selling and buying a completely stress free exchange for us. We recommend PBL Law to everyone looking for outstanding service. We will definitely be returning clients.
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I have experienced an excellent service from PBL (especially from Anita) during the sale of my recent property on Central Coast, and during the purchase of our current property in Sydney. Throughout many challengers, especially with the sale, Anita presented her very professional and knowledgeable conveyancer, positively solving all obstacles. "Above and Beyond" Award going to Anita!!! :-)
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The five-star reviews are well-deserved. I needed a motion and a bylaw drawn up for urgent repairs of my strata unit and the AGM was in two weeks' time. My solicitor was friendly, efficient, knew what documents to ask for, and had all the paperwork prepared well within the timeframe. She also took the time to run through all the legalese and the different possible scenarios with me to make sure I understood. I am so glad to have found this firm and I will not hesitate to use their services again in future if the need arises.
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Anita is amazing! So attentive, approachable and communicates everything every step of the way. I have now bought and sold property with Anita and I cannot recommend her highly enough.
Ron Thomsen
Our Commercial Property conveyancing was handled very professionally. Anita’s experience and responsiveness was an asset in this transaction.
Trace M
I am so grateful for Anita Bradley from PBL Law Group helped me with this property settlement, she has went above beyond to ensure I understand everything because of our deafness. I will recommended Anita or their team. Thank you so much for all the hard work you have done for us.
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Jye Hall
Anita Bradley has been an absolute dream to deal with. Anita's conveyancing skills and knowledge knows absolutely no boundaries along with her effective communication skills which has made selling and buying a completely stress free exchange for us. We recommend PBL Law to everyone looking for outstanding service. We will definitely be returning clients.
Kushlan Aluwihare
PBL Law Group were fantastic. Anita from PBL worked with us closely during our property search and made the exchange and settlement process smooth and stress free. Highly recommended.
Gail Whitford
PBL handled my late mothers estate, they were very obliging and patient with any and all questions that we had, thank you to David , Sharon and the other staff that we dealt with, everyone was so easy to talk to and friendly .David came to the home where my Mother was living and helped her to get her will in order, Sharon helped us through the process of executing her wishes when the time came even doing a house call which was so much easier, thank you all so much
S M
I have experienced an excellent service from PBL (especially from Anita) during the sale of my recent property on Central Coast, and during the purchase of our current property in Sydney. Throughout many challengers, especially with the sale, Anita presented her very professional and knowledgeable conveyancer, positively solving all obstacles. "Above and Beyond" Award going to Anita!!! :-)
Amanda Reitzin
The five-star reviews are well-deserved. I needed a motion and a bylaw drawn up for urgent repairs of my strata unit and the AGM was in two weeks' time. My solicitor was friendly, efficient, knew what documents to ask for, and had all the paperwork prepared well within the timeframe. She also took the time to run through all the legalese and the different possible scenarios with me to make sure I understood. I am so glad to have found this firm and I will not hesitate to use their services again in future if the need arises.
Ricky Cooper
Anita is amazing! So attentive, approachable and communicates everything every step of the way. I have now bought and sold property with Anita and I cannot recommend her highly enough.
Ron Thomsen
Our Commercial Property conveyancing was handled very professionally. Anita’s experience and responsiveness was an asset in this transaction.
Trace M
I am so grateful for Anita Bradley from PBL Law Group helped me with this property settlement, she has went above beyond to ensure I understand everything because of our deafness. I will recommended Anita or their team. Thank you so much for all the hard work you have done for us.
Tricia Wheatstone
For almost 18 months I have been a client of Alex Ilkin. Alex is very knowledgeable and professional and has consistently provided me with thorough, honest and well set out advice, including steering my case through appeal proceedings. He always worked for my best interests with integrity and compassion. I recommend Alex and his team at PBL.