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Your power to winAccompanying the purchase and sale of business, M&A
The relevance of purchase and sale agreements for ready-made businesses in our country is growing year by year. Although current legislation does not define the concept of "business" or regulate the purchase and sale of such a specific object as a "business," this procedure is generally understood to mean:
- the purchase and sale of shares or a stake in a company's authorized capital;
- the purchase and sale of an enterprise as an integrated property complex or its key assets;
- the reorganization of a company through acquisition or merger.
In general, the procedure for buying or selling a business involves three main stages:
1) Pre-sale legal audit.
2) Development of a scheme for acquiring a ready-made business.
3) Execution of an agreement for the transfer of ownership of assets (implementation of the acquisition scheme).
Before acquiring an existing company, a potential buyer faces a number of legal issues. For instance, before purchasing corporate rights in a company, it is necessary to identify and assess existing risks, such as ongoing legal disputes involving the company or encumbrances on its property.
Given these circumstances, assistance from a lawyer specializing in this area of legal services is essential at the stage of acquiring an operating company.
The WinnerLex team brings together the best lawyers who provide comprehensive legal support for the activities of various agricultural firms, development companies, and enterprises in the light, machine-building, and other industries—from private enterprises to joint-stock companies and groups of interrelated companies. Our lawyers understand how business is conducted in our country, which allows us to offer the best solutions for addressing legal issues.
Legal audit (Due Diligence) of enterprises before acquisition;
Support for transactions related to the transfer and acquisition of corporate rights;
Documentation for the acquisition of a single (integrated) property complex;
Obtaining permits from the Antimonopoly Committee of Ukraine for concentration;
Consulting on taxation issues, identifying and minimizing potential legal risks associated with business purchases and sales, and supporting transactions for the purchase and sale of assets.
At the negotiation stage between the business seller and the buyer, the latter often has only a general understanding of the seller’s actual assets, the correctness of their legal documentation, financial performance, and the state of accounts payable and receivable. At this stage, it is essential for the parties to agree on a "roadmap"—the basic terms of the future procedure for buying and selling business assets.
The parties must hold initial negotiations, analyze documents, and conduct an assessment of the object. During this phase, they agree on which assets will be transferred and which indicators need to be confirmed.
It is most reliable for the parties to enter into a preliminary agreement, stipulating that a security deposit will not be transferred to the business owner until the primary agreement is signed.
The potential buyer should conduct a legal audit of the business, known as due diligence. The duration and scope of this audit should be specified in the preliminary agreement, along with a clause stating that the business owner must not obstruct the audit. Additionally, if the audit results are unsatisfactory, the security deposit is returned to the buyer, and the agreement is nullified.
If the audit results satisfy both parties, they can proceed with signing the primary agreement. The primary agreement should specify that the parties are obligated to fulfill commitments related to the transfer of assets, including mutual settlements and payment deferrals.
To re-register a company to a new owner, several steps are required, including the preparation of documents, signing them with a notary, and making changes to the Unified State Register of Legal Entities, Individual Entrepreneurs, and Public Organizations. These changes include updates to the composition of founders, information about the new director (if applicable), a new version of the charter, and other details such as contact information, among others.
Due diligence is a procedure for detailed and independent verification of an object, involving the collection of objective information and expert evaluation of the property being sold. This process allows for a well-founded and timely decision on the feasibility of financial investments in the proposed object.
According to the law, other members of a limited liability company (LLC) have the preemptive right to purchase the share (or part of the share) of another member being sold to a third party. A member intending to sell their share to a third party is required to provide written notice to the other members of the company, informing them of the price, size of the share being sold, and other terms of the sale. If none of the members of the LLC provides written notice to the selling member of their intention to exercise their preemptive right within 30 days of receiving the notification, it is assumed that they have given their consent on the 31st day from the date of receiving the notification, and the share may be sold to a third party under the terms previously disclosed to the members of the company.