Buying a Business – Through Company Acquisition

There is a potentially easier way for a buyer to purchase a business, where the business is owned and run by a company.

In a nutshell, this is possible, where:

-Â The business is set up is in the form of a company.

-Â All the goodwill, assets and stock of the business are owned by the company.

-Â The company only owns the business being bought and no other businesses or properties.

The process involved is as follows:

1. The company’s solicitor drafts a Share Transfer Agreement, whereby the buyer purchases the shares from the Director(s) of the company.

2. The company holds a general meeting whereby the Directors vote (in the best interests of the company) in favour of the share transfer, the retirement of the director(s) and the appointment of the buyer as new director. They also decide the date this will occur. The company solicitor can help draft the relevant minutes of the meeting. This decision of the directors must be registered with Companies House using the relevant forms.

If both the above are completed simultaneously, the buyer can successfully purchase all the shares in the company and be appointed the director of the company.

The above method will effectively transfer the control of the company and therefore the business to the buyer, including the company’s goodwill, assets, stock and property.

Any property occupied by the business/company should also be in the name of the company. This will ensure that the property (whether freehold or leasehold) is also transferred with the business to the buyer, without the need for a separate transaction that deals specifically with the transfer of the freehold or leasehold, which can be complex transactions in themselves.

It is important that all legal documents should to be drafted by a lawyer. If you are contemplating purchasing a business, then get in touch with one of the lawyers in our Commercial Department who will be happy to advise and assist.

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