Buyouts—documentation
Buyouts—documentation

The following Corporate guidance note provides comprehensive and up to date legal information covering:

  • Buyouts—documentation
  • Sale and purchase agreement
  • Articles of association
  • Investment agreement
  • Facility agreement and security documentation
  • Other documents
  • Post-completion

The key documents for a buyout are:

  1. a sale and purchase agreement

  2. articles of association for the investee company or its parent company which will serve as the buyout vehicle/group, ie the entity to acquire the target group or business

  3. an investment agreement, and

  4. a facility agreement and related security documents

For further information, see Practice Note: Buyouts.

Sale and purchase agreement

The sale and purchase agreement documents the transfer of ownership of the target business whether for a share or asset purchase.

As to whether the acquisition is one of shares or assets depends on the particular circumstances of the sale including:

  1. the structure of the selling group and how the business sits within that group, eg as a specific division/subsidiary, or with assets and employees across the group

  2. the tax or other liabilities of the business

  3. the ability to obtain change of control consents for contracts critical to the business, and

  4. stamp duty and land tax

The sale and purchase agreement for a buyout is broadly the same as for any other acquisition of shares or assets, though there are some issues specific to buyouts, including:

  1. the nature of assurances given for the period between exchange and completion in conditional agreements, and

  2. the level of warranty cover given, and by which parties

For further information, see Practice Note: A guide to share