Common Pitfalls When Buying A Business

Are you considering buying a business? Here at Burgh Thorpe Solicitors, we have a team of commercial lawyers experienced in supporting with the sale or purchase of a business. We have many years of experience in helping people buy businesses. This means that we can help you avoid the common pitfalls when buying a business.

There are common pitfalls that can devalue or derail the purchase of a business. Our commercial solicitors are here to help ensure you are safe and protected.

For example, we have seen many cases where the business buyer underestimates the risk of TUPE. The buyer is jointly liable for the failure of the seller to inform and consult employees during the purchase of the business. As a buyer you cannot passively rely on the seller. Instead, you must monitor the process actively. You should ask for specific indemnities to cover the potential financial penalties too.

Another common pitfall we have seen is where the buyer of the business fails to identify and secure consents for Change of Control clauses in key customer or supplier contracts. This can be fatal. If a vital contract is terminated due to ownership change, the acquired revenue and goodwill will vanish.

When buying a business, you may presume that the IP is automatically transferred. However, this is not the case. Unregistered rights require contractual formalities. Meanwhile, registered IP, such as trademarks and patents, demand a written assignment and subsequent filing in at the UK IPO. This is something that our commercial lawyers can support you with when buying a business. We will help you avoid this common pitfall.

Another common pitfall to avoid when buying a business is drafting unenforceable restrictive covenants that are overly broad. Instead, drafting must be strategic and highly specific, as well as justified. This will prevent the former owner from immediately competing.

The biggest thing to remember when buying a business is that the success of the deal hinges on attention to compliance. Neglecting the important post-completion tasks, such as payment stamp duty within the 30-day window for example, can result in the loss of the legal title. It can also undermine the entire business purchase and investment.

If you are buying a business and want to make sure you avoid the common pitfalls while protecting yourself – call our commercial lawyers in Peterborough.