Buying A Business

At Lawson West Solicitors we specialise in buying and selling businesses. We act for a wide range of clients in different industries and sectors across Leicestershire and beyond.

We have Leicester offices at Meridian Business Park (off junction 21 of the M1) and Market Harborough.

We understand that you will have your own particular concerns, when preparing or negotiating the contract documents, and we look to tailor them as far as possible to suit your individual needs and protect your interests.

If you are considering buying a business, have any questions or would like to discuss further, then please Contact Us.

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Key considerations when buying a business

If you are buying a business then you should speak to a solicitor who specialises in acquisitions.
This overview sets out some key points and questions for you to consider.

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Should I purchase the shares or assets?

This is a key question which should be considered at an early stage. There are advantages and disadvantages to each option (including time, tax and legal implications).  Generally, asset deals are more buyer friendly but they can require significant practical implementation in relation to the transfer of key contracts. For further information in relation to the differences between the structures please see here.  

Do I need Heads of Terms?

This is a subject to contract document (also known as a Memorandum of Understanding) which sets out the main deal terms.

This could set out matters such as:

  • the structure of the deal (see above);

  • the purchase price;

  • over what period that price is payable (i.e. upfront, deferred or a combination);

  • whether any of the price is conditional on the performance of the business (i.e. an earn-out);

  • whether the purchase price is subject to adjustment (such as a working capital or cash free debt free adjustments);

  • whether any security is to be provided by the buyer to the seller for any consideration not paid upfront;

  • employment/consultancy terms for the seller (if they are required to continue in the business or assist with a handover);

  • exclusivity provisions (i.e. given that you will incur costs in considering and negotiating the sale, you require the buyer to cease negotiations with anyone else); and

  • confidentiality undertakings.


Whilst Heads of Terms are usually non-binding (save for exclusivity and confidentiality provisions) they set out the headline terms and can save time and cost in negotiating the principal deal documents.

Legal advice should be taken before signing Heads of Terms as it may be difficult to renegotiate the key terms during the transaction.

What due diligence should I undertake?

A prudent buyer will want to learn every aspect of the business including legal and tax implications, employee structures, existing debts, property, assets and liabilities, key contracts, customer and supplier information and risks.

A due diligence exercise should allow a buyer to:

  • understand the company’s liabilities;

  • decide if they want to proceed with the transaction;

  • highlight key areas of risk/concern which may require indemnity protection and/or an adjustment to the purchase price; and/or

  • obtain management and operational information for the business moving forwards.

Problems with a company’s share/corporate history can cause significant issues (i.e. can a buyer be confident that the business has no other shareholders).

What warranties and indemnities do I need?

Warranties are contractual statements of truth given about the status, position and affairs of the company and its assets and liabilities at completion.

These should be bespoke to your deal to provide protection in relation to the specific business you are buying and also to keep costs proportionate. In relation to the latter, if warranties are not specific to the business then this can increase the amount of time and cost required negotiating with the seller’s solicitor.

Warranties serve two purposes:

  • To encourage the seller to disclose any issues; and
  • To provide a basis for claiming damages should the warranty be false.

Warranties are a key buyer protection. They are often negotiated to include financial, time and other limitations in favour of the seller to reach a fair position between the parties. It is important that any limitations are carefully considered from a risk perspective.

If a warranty is untrue then damages are assessed on whether the shares/assets are worth less than their warranted value.

An indemnity is stronger protection for a buyer as it is a promise from the seller to pay the buyer’s losses on a pound-for-pound basis (rather than needing to prove that the shares/assets are worth less). They are usually reserved for risks a buyer considers unacceptable and require the seller to be fully responsible for should there be an issue. A buyer may not be prepared to agree to limitations to the indemnity protection.

What restrictions can I place on the seller?

Buyers usually do not want a seller competing with them after the deal, having paid significant money for the goodwill in the business.

Restrictive covenants are often placed on a seller on:

  • being involved in a competing business;

  • soliciting and dealing with customers and suppliers;

  • poaching employees; and

  • using the business’ intellectual property.


Restrictions should be drafted carefully (in relation to scope and duration) as they will be unenforceable if they do not protect a legitimate business interest and are unreasonable.

Sellers are usually required to enter into confidentiality undertakings not to disclose the company’s confidential information and trade secrets.

Buying a business is far easier to do when you have someone by your side
who is experienced and can advise you on the best course of action
and how to overcome the obstacles as they arise.


At Lawson West, our approach is to support and help guide you
through to a successful outcome and be on hand to answer your questions.

robert f

If you’re considering buying a business and want to discuss your options, then please contact Rob Flannagan on 0116 212 1033 or email rflannagan@lawson-west.co.uk