Asset purchases—employment due diligence issues acting for the buyer

The following Employment practice note provides comprehensive and up to date legal information covering:

  • Asset purchases—employment due diligence issues acting for the buyer
  • Effect of TUPE 2006
  • Employee liability information (ELI)
  • Extent of due diligence
  • The purpose of the due diligence questionnaire
  • Dealing with the response from the seller
  • Timing
  • Service provision changes
  • Insolvency situation
  • Other situations
  • More...

Asset purchases—employment due diligence issues acting for the buyer

IP COMPLETION DAY: The Brexit transition period ended at 11pm on 31 December 2020. At this time (referred to in UK law as ‘IP completion day’), transitional arrangements ended and significant changes began to take effect across the UK’s legal regime. This document contains guidance on subjects impacted by these changes. Before continuing your research, see Practice Note: Brexit and IP completion day—implications for employment lawyers.

Where a business or asset purchase amounts to a relevant transfer under the Transfer of Undertakings (Protection of Employment) Regulations 2006, SI 2006/246 (TUPE 2006), the buyer ‘steps into the seller’s shoes’ and acquires all rights and liabilities in respect of employees assigned to the business being transferred—see: Effect of TUPE 2006 below.

As with share purchases, the starting point for a buyer on the purchase of the business and assets of a company (asset purchase) is the maxim caveat emptor (let the buyer beware). In the case of a relevant transfer under TUPE 2006, the seller will be required to provide specified employee liability information (ELI) to the buyer (see: Employee liability information (ELI), below). However, aside from that obligation, the seller is under no duty to disclose to the buyer any defects, issues or liabilities affecting the business. The buyer will therefore always need to conduct its own investigations, and

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