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Posted on 25 January 2014 by Conybeare Solicitors

Buying a Business

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The Court of Appeal has recently held that clauses in a share purchase agreement providing that, in the event of a breach of the seller’s restrictive covenants, the buyer’s obligation to pay deferred consideration would cease and the buyer would be entitled to acquire the remainder of the seller’s shares at a price based on net asset value (and excluding goodwill), were unenforceable penalties.

This business briefing highlights the main legal risks to consider when buying another business or enterprise. Whilst a buyer should always take legal advice at the outset of any acquisition, this checklist will provide a useful summary of some of the key points to keep in mind.