Sale and Purchase of Company Disputes Solicitors
Acquiring a new business can be a stressful time. Disputes may arise during the negotiations of the terms of the intended sale and purchase agreement. Many of the disputes that arise from commercial acquisitions can be avoided by taking legal advice at the earliest possible stage.
Before signing a contract for the sale and purchase agreement for a business or company it is very important that you understated the effect that the proposed terms will have on you, whether you are the seller or the purchaser. It is well worth considering from the outset if you need the support of a commercial dispute solicitor throughout the negotiation process to review with you the proposed terms of your business sale or purchase agreement.
Disputes also often occur once parties have entered into the agreement, particularly if you discover after the sale has been completed that the business you have acquired is not as it was initially represented or sold. Equally, if you have recently sold a business but have encountered issues with the new purchaser making a claim against you or withholding from you a payment that you are due, you will also need expert legal advice to help you to either resolve the dispute or pursue your claim.
Lupton Fawcett help corporate and commercial clients facing any type of acquisition dispute and are experts in resolving issues arising from the sale or purchase of a business. Whether you are bringing a claim or find yourself in the position of defending one, we can offer you advice and representation.
The most common causes of post-acquisition disputes include:
- misrepresentation (which can be challenged under the Misrepresentation Act 1967)
- breach of any warranties given
- fraud or deceit
- tax and property issues
- post-acquisition disputes caused by financial discrepancies in the accounts or forecasted profits
- failure to disclose relevant details prior to the sale
- uncertainties, misunderstandings and misinterpretations of contractual terms and of how contractual obligations are to be performed
- an event or a change in circumstances which has an effect on the responsibilities and obligations of the parties
- undisclosed liabilities
- undue influence or pressure placed on a party
- issues around the enforcement of restrictive covenants
- share transfers
- fulfilment of statutory duties
- intellectual property, trade secrets, and protection of confidential information issues.
- projected financial performances for the business.
- breaches of payment terms.
- breaches of fiduciary duties.
When disagreements or claims arise following a company acquisition, they can be disruptive and negotiations to resolve these disputes can become protracted without skilled and efficient handling of the key issues. You will need the assistance of a commercial dispute solicitor, who will review the terms of the contract in place relating to your business sale or purchase agreement.
Making a claim
If you think that you have reason to make a claim following the sale or purchase of a business, prompt action is crucial as there are usually time limits in place that may affect your rights and responsibilities. These may be set out in the agreement between the parties, although if you are in any way unsure, your solicitor will be able to advise you.
The agreement will also dictate the grounds and terms of any claim, which is why it is important to fully understand what is stipulated in the agreement, and that each party is aware of their rights and responsibilities within it.
Avoiding disputes during commercial acquisition.
Unfortunately, many of the disputes that arise from commercial acquisitions could be avoided by taking legal advice at the earliest possible stage – any risks related to the proposed transaction can be assessed, planned for and mitigated. Basic financial due diligence may not always be sufficient, and as most disputes that arise are generally financial, getting the right advice from the outset can vastly reduce the possibility of disputes arising.
The best insurance against later disputes is the Sales and Purchase Agreement (SPA) – a legally binding document which should set out very clearly, (so that each party fully understands what is meant and is not able to misinterpret it) the terms of the sale that both seller and purchaser agree to. It will also usually specify the means of resolution to be used should a dispute arise, and will be the first, and most important place to look for guidance in that event.
Disputes of this nature tend to be complex, and it is important to choose a lawyer who will use their expertise to fully understand the intricacies of your position in the dispute and advise you of the best way to resolve it. At Lupton Fawcett we thrive on the challenge each case brings, we have a proven track record of achieving the best results for our clients, and we will always offer you the most advantageous, efficient and cost-effective solutions.
Representations and warranties
Representations and warranties are statements included within the written agreements drawn up between the buyer and seller of a business, and they set out for the buyer certain facts which the seller asserts are true about the business being sold, such as its financial and operational credibility. For example, a seller may state in writing that the company does not have any pending lawsuits, but following the sale it becomes apparent that this is not in fact the case. As this can constitute a breach of the agreement, the purchaser of the business may have grounds to make a claim for damages.
Representations and warranties are put in place to reduce the risk of disputes in the course of the buying and selling of companies and businesses. In order to keep the possibility of dispute to a minimum, representations and warranties are quite extensive for the purpose of safeguarding the buyer.
Generally, a buyer should ask for warranty protection in relation to (amongst other things):
- the accounts of the company or business being purchased
- commercial contracts
- financing and banking
- intellectual property
We at Lupton Fawcett are experienced in advising clients on pursuing or defending warranty claims and protecting the interests of clients by drafting terms designed to exclude, reduce or mitigate their liability through the use of exclusions, disclaimers and other contractual terms.
It is important for companies to include clear, unambiguous and user-friendly dispute resolution terms within their SPA so that if disputes arise they can be dealt with promptly and proportionately. Resolution methods may include negotiations or court proceedings, although the option of the parties participating in some form of alternative dispute resolution (ADR) methods is becoming more widely provided for in SPAs.
ADR can be a faster, cheaper route to resolution than pursuing litigation and while it can successfully resolve disputes, there are sadly many incidences where commencing court action and pursuing claims or defences to trial remains the last remaining option for the parties to follow to obtain determination of the matter. When you talk to one of our experts at Lupton Fawcett, we will thoroughly examine your case and will quickly identify the most appropriate method of resolution to recommend to you for your particular circumstances.
We put your business interests at the forefront of everything that we do, and we will make sure that the course of action that we recommend is the most beneficial route available to you.
How can Lupton Fawcett help?
At Lupton Fawcett, we have a dedicated team of specialist and experienced solicitors with a proven track record of advising sellers and purchasers at each stage of the sale and acquisition process. If as a purchaser you feel that the business that you’ve acquired has been misrepresented, or if as a seller you are dealing with a claim against you, or your buyer is withholding payment, or for any breach of contract, please get in touch.
Our team have extensive experience of handling commercial disputes and are able to provide you with pragmatic, accurate and commercial advice.
We are here to help you to navigate:
- warranty claims
- breaches of the sale or purchase agreement
- breaches of payment terms
- issues relating to trade secrets or confidential information
- breaches of fiduciary duties.
Whatever the size or value of the sale or acquisition, whether it concerns a small scale business or a large public company, our experts are here to help you. We will take the time to get to know you and your business – your case is important to us and we will work hard to ensure that you get the resolution you need to the commercial issues that you face.
Within every area of law, we put your interests first.
We provide a personalised service, with sector specialists and extensive resources to ensure we are giving you the best solutions to your problems.
Lupton Fawcett has long been recognised for our expertise in Contract Disputes.
Our M&A Dispute Solicitors act regularly for clients across the United Kingdom including Bradford, Birmingham, Hull, Liverpool, London, Manchester, and Nottingham.
We can support your needs wherever you live in England, Wales & Northern Ireland.
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