Buying Limited Company

[ClubCola]

Hi there,
Opportunity appeared to buy a bussiness I used to work at.
It's a small automotive workshop. Owner is retiring. We know each other well.
It's a small, one man operation and it's a limited company with him as a director who owns 100% shares.
I will be totally new to run the company and not sure how to buy a bussiness. And owner is not clued up about how to go about the proccess of selling too.
I know that company have an accountant.
After reading a bit on the internet I understand that the process involves him transfering his shares to me, issuing share certificate, resigning as a director and so on.
Also I would like to mention that we already disccused everything, I am happy with the "books" and we would like it to be as smooth as possible and with minimum expenses.
So my question is:
Can we DIY whole proccess ourselves with forms from internet or do we need at least our accountant?
Or do we need some kind of lawyer or broker or solicitor?
I couldn't find definite information online and today I walked-in in in some solicitor office when in town, but he said it will cost me £200+VAT an hour for just consultation without filling any documents.
Thanks!

 

[KAC]

You will need an accountant anyway once you acquire the business so it would be sensible to contact one now. Not the existing one as his duty is to the current owner. You should get advice on the taxation implications of your acquisition.

Are there employees? Have you considered the obligations that these will impose on you?

Normally sensible to have some sort of purchase agreement with advice from a suitably experienced lawyer. If you are acquiring shares, you need to establish the assets and liabilities you are acquiring in the company. You also need to consider whether there are any warranties required

All this does also depend upon the value of the transaction as the advice would be different if you were paying £100 or £100K

 

[ClubCola]

Thanks KAC!
There are no employees.
Is purchase agreement is necessary?
I am positive I know what I am aquiring when buying (re:"assets and liabilities")
I am planning using same accountant- he worked for a long time.
My question is still the same: Can we do it DIY?
Or if we need an accountant -what will be his role in the sale proccess?
Also we wanna make it as simple as possible.

 

[KAC]

Of course you CAN DIY. Whether you SHOULD is up to you. Unlikely to get someone to recommend on the limited information given. I guess I could service my car. Not sure it would be a good idea

 

[ClubCola]

Ask me about the cars... And many people learn and service their own cars...
So now it's clear to me that there is no legal requirement to use lawyer, accountant, etc. and it's possible to do it without them.
That's good to know. I thought otherwise.
Let's presume I still want to get some profesional advice or even someone to oversee the process. Where should I go first to: to the accountant, the broker, the lawyer or solicitor.
Is there a fixed fee for that?
Cheers

 

[KAC]

Sorry but we really don't have enough information Should you be trading as a limited company? Should you just be buying the assets? Does the company have undeclared VAT liabilities? Will there be stamp duty on the share transfer? Maybe he should appoint you as a director before resigning. Are there any leases/ finance agreements involved. Will the bank accept you as the signatory on the account etc etc

But yes, in my opinion, there is nothing legally to stop the vendor just signing a share transfer in your favour. If it were only that easy

By all means PM me the company name and I will look at the last accounts on Companies House which may help

 

[Clinton]

You do not need any external assistance to complete the purchase. You simply buy the shares of the business for the agreed price and register the change at Companies House. That's it, you're now the owner of the business. You don't even need a contract with the seller and you do not need to download any forms from the internet.

But if go ahead with a purchase as above, and without professional assistance and advice, you will be making a huge mistake!

Buying the assets and liabilities is not the same as buying the shares of the business. Those are two very different ways to buy a business and I explain them here. And you can't randomly pick one of those options - there are numerous implications to buying shares just as there are numerous implications to buying the assets.

If you buy the shares you are automatically assuming all the liabilities of the company, including liabilities that you are not aware of and that will rear their head in the months and years to come! To protect against that buyers normally get a solicitor to go through a long list of questions with the vendor and get various guarantees and assurances from him. In writing. That's an important step that you skip at your peril.

But there are also other matters to be taken care of. The seller has probably issued personal guarantees on the lease, for example. The landlord won't transfer that PG to you! There are usually various other little bits like this that need sorting!

If you buy the assets rather than shares then you have to start a new company, open a new bank account, agree a new lease with the landlord ... and much more.

Buying a company is not the same as buying a pair of shoes. Do it on the cheap and it could turn out to be very, very expensive.

 

[ClubCola]

Thanks KAC!
I am planning trading as Ltd company as previously.
We think it's better to buy company in shares rather then assets due to not needing change contracts with various suppliers.
Company is not VAT registered.
No stamp duty on the shares transfer.
There is a lease for the workshop for 5 years.
No finance agreements. Maybe overdraft with bank.
Re: Regarding bank accepting me as a signatory. Does the bank wants to know if I have a good credit history? Or is there are other requirements? What if bank disagrees?
PM sent

 

[ClubCola]

Thanks Clinton, very informative post!
I will read a link and also more about assets and liabilities.
And also will ask about PGs.
Anything else I should know?
Is there an aproximate price for solicitor to ask those questions for a small business?
What could be the liabilities I am not aware apart Corporate tax?
Thanks!

 

[Clinton]

What could be the liabilities I am not aware apart Corporate tax?

That would take many hours to explain and I have no intention of getting into due diligence and the numerous potential liabilities that need to be checked out before proceeding with a purchase.

Anything else I should know?

Yes. That you should stop thinking about how to do it yourself.

Go hire a professional ASAP. Start with a lawyer who specialises in business buying/selling transactions. If you don't have the right type of solicitor at the right price drop me a note and I'll introduce you to one or two. But be prepared to spend money!

 

[ClubCola]

Thanks Clinton - I will let you know!