Legal Support of the Company Sale
Legal advice on the sale of companies, as well as support for the sale of companies
Legal support for the sale of a company has become relevant for businesses for various reasons. Some investors prefer to buy a ready-made operating business without wasting time on its development, others buy companies similar to their existing ones in order to eliminate competition. The reasons for the sale of companies may be different, but the sequence of actions for such a transaction is usually the same for everyone. So, to buy a company, you need to carry out the following actions:
- a comprehensive audit of the company, checking for participation in court cases;
- analysis of possible risks, encumbrances, pledges;
- preparation for the deal, negotiations on the sale of the company;
- registration of all necessary documents and transaction.
To sell a company, the seller also needs to prepare the company for its sale:
- Bring all required reporting in line with legal requirements;
- Carry out accounting and financial audit;
- Make a list of all company assets;
- Prepare a list of existing contracts and trustworthy counterparties;
- Carry out a preliminary assessment of the company's value.
The main goal of legal support in a transaction for the sale of a company is its safety, both for the buyer and the seller, at the same time, the sale of a company is a complex procedure and the work of lawyers, appraisers, accountants, etc. Participation in accompanying the sale of the company by versatile specialists is due to the fact that at the stage of preparing the transaction it is necessary to check and put in order the necessary reporting, liabilities, assets, etc., which subsequently minimizes possible hidden risks that may arise after the transaction. At the same time, legal support for the sale of a company also allows the seller to avoid such adverse consequences as the transfer of confidential information and trade secrets to an unreliable buyer, because the legal support for the sale of a company also includes verification of the future buyer.
Also, when selling a company, it is important to consider what entrepreneurs invest in the concept of “selling a company”, because it can be a simple acquisition of a limited liability company or the purchase of a company with its assets, brand, trademarks, intellectual property rights, labor resources, technologies, capacities and so on. The regulation of this process by qualified lawyers allows entrepreneurs, the seller and the buyer, to clearly understand the entire process of the future transaction, which clearly regulates the possible expectations of the parties.
Meanwhile, the sale of the company can be carried out in different ways:
- Sale of business as a property complex. Under the contract for the sale of an enterprise, the seller undertakes to transfer the enterprise as a whole as a property complex into the ownership of the buyer. Exclusive rights to the means of individualization of the enterprise, products, works or services of the seller (commercial designation, trademark, service mark), as well as the rights to use such means of individualization belonging to him on the basis of license agreements, shall be transferred to the buyer, unless otherwise provided by the contract.
- The sale of a stake in an LLC, shares in a JSC is regulated by Federal Law No. 14-FZ of February 8, 1998 “On Limited Liability Companies” and Federal Law No. 208-FZ of December 26, 1995 “On Joint-Stock Companies”, respectively.
- Reorganization of a legal entity, for example, through a merger, is governed by Article 57 of the Civil Code of the Russian Federation.
Depending on the method of sale of the company, the relevant rules of law that govern these relationships apply. It is also important to note that after the sale of the company, it is also necessary to take a number of additional, but no less important measures:
- to notify creditors and counterparties about the sale of the company;
- to re-register a trademark, license, etc.;
- to conclude additional agreements, if necessary, to already concluded and existing agreements, etc.
Considering all the variety of regulatory documents governing the sale of companies, as a rule, it is rather difficult for an entrepreneur to understand all the intricacies of the applicable law on his own, however, it is not always possible to conduct a full-fledged audit of the activities of the acquired company and assess possible risks. At the same time, it is important to note that the lack of legal support for the sale of a company can lead to adverse consequences for the entrepreneur:
- possible hidden risks of the company, which become clear after the transaction in the course of further activities;
- loss of funds invested in the acquisition of the company;
- incorrect execution of documents, which may result, for example, in the invalidity of the transaction.
Considering the possible adverse consequences that may arise during the sale of a company, it is preferable to involve qualified and experienced lawyers to support such a transaction, who will not only assess the reliability of the future transaction and the counterparty, but also prepare the necessary documentation, conduct an audit and become a representative of the entrepreneur at all stages of the transaction.
- Legal advice to clients on the sale of companies
- Legal support and execution of all necessary documents for the sale of companies
- Legal due diligence of company documents
- Audit of the company’s activities and risk analysis
- Verification of counterparties for good faith