Share Purchase of a UK Company on behalf of foreign company

Share Purchase of a UK Company – Context and Challenge

Our client came to us when they had already negotiated the deal. The challenge at this stage was to explain to the client that the deal they had negotiated (an asset transfer) would mean that consent would be needed from the Target’s customers for their contracts to be novated. They also hadn’t taken into account how TUPE would impact on the deal. It certainly would have been easier if we had been involved in structuring things from the outset. As we weren’t, we were now left in a position where the deal had to be restructured and re-negotiated with little time left to effect the business acquisition.

There were other major challenges with the deal which we cannot go into but we were left having to devote a lot of attention to making the deal happen within the time frame required and working with counterparties in Canada, the US and Australia. There was a firm date by which completion had to happen.

Process and Insight

At our initial meeting with our client we showed them various ways to structure the deal detailing the pros and cons of each and making recommendations. Based on the client’s needs we then put a small team together and engaged with the Seller and the Seller’s advisers to agree on the way forward.

We carried out due diligence and drafted the share purchase agreement. As part of this we also drafted the completion accounts provisions, basis of preparation of completion accounts, tax warranties and tax indemnity as well as all the other usual legal provisions.

Our due diligence involved not just assessing and reporting on a UK company’s operations but also those of a branch office in Africa.

Solution

We undertook due diligence but only received very limited responses back from the seller for reasons that we can’t go into. Given the nature of the deal our client was happy to rely on warranties and other strategies we adopted to mitigate risk.

We drafted the share purchase agreement on the basis of a split exchange and completion because the deal had to be signed off as quickly as possible. There were conditions precedent that the seller had to fulfil before we could proceed to complete. Completion was done remotely.

Results

We completed the share purchase on time and with conditions precedent satisfied. Although this was a complicated deal that involved effort to get over the line, our client ultimately ended up with a business that significantly enhanced its project portfolio and its revenue streams and which put it in a position to go after much larger projects in the future.