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Question 1

Heads of Agreement

Answer 1

Records the main points on which buyer and seller have agreed & the basis on which they are prepared to proceed with the transaction.

May provide for an agreed period of exclusive negotiation.

Unintended to be legally binding

Question 2

Confidentiality agreement

Answer 2

Specifies parties’ obligations in relation to the confidential info, procedures for handling it & remedies for breach

Question 3

Due Diligence

Answer 3

The process by which detailed info about the target is obtained & assessed.

Helps the buyer decide whether it wants to proceed with the purchase, and if so, at what price and what terms

Due diligence report highlights the main areas of risk and how such risks may be minimised by the inclusion of appropriate terms in the sale & purchase agreement

Question 4

Contract

Answer 4

Once parties are ready to commit contractually, they will enter into a sale & purchase agreement

Question 5

Disclosure Letter

Answer 5

Prepared by seller’s solicitors. Incorporates a disclaimer that all info has. been provided by the client, that the lawyers accept no responsibility for its contents.

Has bearing on seller’s potential liability

Question 6

When does completion take place?

Answer 6

Immediately after sale and purchase agreement has been signed

Question 7

Completion

Answer 7

Title to assets subject to acquisition formally transferred by seller to buyer (in exchange for buyer providing purchase price / consideration)

share sale- stock transfer forms & completion BM

asset sale - individual assets transferred in the appropriate manner

Question 8

Post-completion

Answer 8

stock transfer forms are duly stamped

internal registers of target co are duly updated

appropriate registrations at LR

further steps to incorporate acquired assets / co into existing business organisation (changes to constitution of target, transfer of ownership or licences re particular assets)

Question 9

Why would a seller want buyer to enter into a confidentiality agreement?

Answer 9

Buyer may be a competitor - seller might be wary of revealing info such as customer lists /important contracts

Question 10

What terms will a confidentiality agreement generally include?

Answer 10

a) definition of confidential info

b) obligation on the buyer not to disclose or use such info except for authorised (defined) purposes in connection with the acquisition

c) undertaking by buyer to return or destroy such info (including copies) if the acquisition does not proceed.

d) agreement that parties will not without the written consent of the other party, make any announcement or disclosure that negotiations are taking place