There are still some great business acquisition opportunities out there, but how do you know that you will be getting the value and benefits in the deal that you had hoped for?

This is where your pre-contract probing into the target business’ affairs, known as due diligence, comes in.  The quality and depth of the due diligence is vital, especially when it comes to assessing whether or not the contracts the business presently enjoys, and which make it an attractive prospect, are transferable to you.

‘It can come as quite a shock to purchasers of businesses that important contracts, which underpin the target business’ success might not be transferable” says Jonathan Fletcher, a solicitor in the corporate team at Tilly Bailey & Irvine LLP, based at Wynyard.

“It is certainly one of the key questions we ask when investigating a business’ affairs on behalf of a potential purchaser and the transferability of those contracts is one of the key assurances that we obtain from a seller.”


Buying shares in a business

These are all questions that you will need answered before you even consider exchanging contracts on the deal. This may lead to our requiring the seller to provide a copy of every contract that is relevant to their business, although, it is likely that you will be asked to sign a confidentiality agreement prior to the disclosure.  We regularly advise on the terms of such agreements.

It is vital that you have sight of a complete contractual ‘snapshot’ of the business at the time you are making a final decision to invest.  By analysing the contracts you will find out a great deal about the business, both for the better and for the worse.  That allows our clients to be fully informed about what they are getting before committing to any deal and protected contractually in the event that they don’t get something they expected to get.

How can we help?

How can we help?

We will help you to navigate the transfer of business-critical contracts at the time of the acquisition, so that you can be confident about maximising the return on your investment and that you are not held to ransom by the seller if you need their assistance to novate or assign business contracts after completion. 

Please contact Jonathan Fletcher in the corporate team on 01740646000 or email  Tilly Bailey & Irvine LLP has offices in Hartlepool, Stockton, Wynyard and Barnard Castle.

Call: 01740 646000