Are you selling a Jersey business or company?
If so, it is important you obtain the right advice from experienced Jersey legal advisers to protect your assets. You need to consider, at the very least, the following important issues.
Don’t disclose confidential details to a potential purchaser
Firstly, before you disclose any detail about your business, its client base or financial records you should consider entering into a non-disclosure/confidentiality agreement. You can never be sure of the motives of the person you are negotiating with. However, don’t just download a non-disclosure/confidentiality agreement from the internet. Your business is important and to protect it you need Jersey legal advice.
Reduce your in principle agreement down to heads of terms
Secondly, if a deal in principle is reached you should reduce this down to writing. Lawyers refer to such a document as the heads of terms. This document should be marked subject to contract. It is not the contract of sale but a document that outlines the significant terms which are agreed in principle. This provides your lawyer with the ‘template’ within which to prepare the sale documentation and should reduce down the ambiguity as to what actually was agreed at the time. Taking legal advice prior to negotiation and then with the production of heads of terms may end up a prudent move. Lawyers can advise you on such issues as making sure you don’t mis-represent facts about your business or company.
Use a lawyer when entering into the actual transaction
Thirdly, don’t move to the next stage ie preparing the sale documents without instructing a lawyer and where necessary an accountant. At this stage the purchaser will wish to carry out a more in-depth review of your business activities, accounts and other applicable reviews. In usual course questions will be posed of you and you will be expected to provide information. This so called due diligence exercise is one of the most important activities that you will perform as a Seller. Using professionals to assist can avoid future issues.
The Purchaser will no doubt instruct lawyers (and accountants) to assist them, and as part of the process will expect a purchase agreement to be produced. This will either be a share sale agreement or a business sale agreement depending on whether you are selling the shares in your company or the business assets only. It is important to use experts to draft and review such agreements.
The sale agreement can look relatively simplistic but will contain warranties, representations indemnities and the like. It is vital that you take advice to ensure you deal with these points correctly. If you don’t, or you don’t consider these issues accurately, the Purchaser may be able to take action against you post completion.