LAW
WORDS : JULIE BURNISTON PICTURE : TOM BANKS
When it comes to buying , selling or winding up a business , the involvement of an experienced solicitor is crucial to ensure a smooth transaction and avoid potential pitfalls . Elaine McLaine- Wood , partner and head of corporate and commercial property at Punch Robson Solicitors , emphasises the significance of skilled legal representation in these matters …
While it may be tempting to cut costs , aiming to complete a business transaction without the advice of an experienced solicitor can leave you vulnerable to significant issues down the line .
Elaine shares an example of a recent purchase where the target company to be bought was involved in carrying out unlawful waste dumping . This could have resulted in six-figure fines that the buyer would inherit .
But with her expert help , her client was able to claw back the amount fined from the seller by holding funds in an escrow account where it had been ringfenced when the deal completed in case of this eventuality .
This case highlights the need to get things right the first time and avoid potential financial liabilities .
Elaine says : “ If you ’ re not careful , and don ’ t get the right representation , you can be hit where it hurts – in the pocket – and create issues for the success of the business acquired .”
So while hiring a solicitor may seem daunting , Elaine insists it ’ s vital and that involving legal advisors at the outset is definitely worth the investment in the long run .
“ Although it ’ s not a legal necessity to instruct a solicitor , it really is a big gamble if you go into a business transaction blind . Many individuals who have attempted to do their own due diligence have faced fines , litigation or serious tax implications as a consequence .
“ It can also create problems if you involve a solicitor late into the transaction . Although initial terms are not legally binding , trust can be broken if terms are renegotiated , and the deal may then fall apart .”
Corporate sales , purchases and winding ups are complex issues , requiring knowledgeable , experienced and specialist solicitors who can have a significant impact on the success of the deal .
“ That ’ s why ‘ doing it yourself ’ or engaging a high street firm that may possess general legal knowledge but doesn ’ t have specific expertise in handling commercial transactions just won ’ t suffice ,” states Elaine .
Punch Robson is one of only a few firms in the Tees region with extensive experience in dealing with corporate transactions , providing bespoke negotiation services to their clients and offering tailored advice , transactional experience , a network of resources , risk mitigation and long-term support , ensuring you are legally protected and guided by professionals .
With more than 20 years of corporate expertise , Elaine is skilled at representing a wide range of clients , including many global and national firms , guiding them through the maze of legal requirements , ensuring proper preparation and review of documents and conducting thorough due diligence to identify any potential risks and issues .
Her firm ’ s caseload continues to grow , with the pandemic appearing to be a catalyst for change among many business owners .
“ I ’ ve certainly seen a steady increase in the number of business leaders wishing to make a full or sustained exit ,” she says .
“ In our post-Covid world , many people have rethought their futures and are seeking an exit plan for early retirement , either with immediate effect or over the next few years .
“ The team at Punch Robson can deal with these decisions via different deal structures . These include a management buyout or any sale or purchase structured with deferred consideration , which provides sellers and buyers with an income stream over a set amount of time , allowing for predictable cash flow and tax planning , together with earn-outs , where directors remain working for the buyer for a period after the sale .”
While a solicitor cannot represent both the seller and purchaser , acting in good faith for both sides helps facilitate a straightforward and simple transaction .
Open communication , legal advice for both parties and understanding the bigger picture are essential in negotiating a mutually beneficial outcome .
“ The buyer and seller will usually talk first so they agree on what they want , and providing that both sides have taken legal and accounting advice so neither have claims against each other that could lead to litigation , it shouldn ’ t be a problem to negotiate a happy outcome ,” says Elaine .
“ I often play devil ’ s advocate and challenge my clients to look at the bigger picture and understand what is important . By assessing commercial risks and giving clients the solution to problems , we can avoid a fight neither party wishes to have .” When buying a business , the contract plays a crucial role in any transaction , and a good solicitor can draft or review the agreement to protect their client ’ s rights and minimise legal disputes .
Regulatory compliance is another key area where a business solicitor ensures adherence to laws and regulations related to licensing , permits , tax obligations and employment .
“ Engaging a business solicitor streamlines the buying process , as they coordinate with other professionals involved and maintain clear communication to expedite the transaction ,” says Elaine .
“ Prior to contract , I would also advise having heads of terms drafted by a solicitor .”
Heads of terms , also known as a letter of intent or memorandum of understanding , serves as a preliminary document in business transactions , and while not legally binding , they outline the key terms agreed upon before formalising contracts .
“ Heads of terms provide clarity , efficiency and flexibility , helping parties reach a common understanding before proceeding further ,” Elaine adds .
With such complex and in-depth work going into each case , Elaine admits her work can be exhausting – but also incredibly fulfilling .
“ It ’ s exciting to drive a deal and I do feel my clients sweat , pain and fear . Saying that , the feeling when a deal is completed is just amazing – it makes me feel alive !”
Find out more about Punch Robson and its services at punchrobson . co . uk .
The voice of business in the Tees region | 127