The following Employment guidance note provides comprehensive and up to date legal information covering:
On a share purchase, the buyer takes over ownership of the company carrying on the business (the target company), acquiring as a result all of its assets, obligations and liabilities, whether or not the buyer was aware of them—see: General issues (share purchase)—overview.
The starting point for a buyer in any share purchase transaction is the maxim caveat emptor (let the buyer beware). The seller is under no duty to disclose to the buyer any defects in, or liabilities of, the target company. The buyer will therefore instruct its advisers to conduct due diligence on commercial, tax, financial and legal matters (including employment), and to prepare due diligence reports to highlight material issues arising from their review exercise.
While the purpose of due diligence from the buyer's perspective is risk management, the seller will want to limit the extent of the buyer's due diligence, to keep the time, effort and cost involved in dealing with enquiries to a minimum. The seller will also want to avoid giving the buyer any reason to seek a reduction in the purchase price, to minimise the risk of claims by giving disclosure against warranties and to avoid giving indemnities. For further information, see Practice Note: Employment due diligence—share and asset purchases—Introduction to the due diligence process.
This Practice Note explores the employment due diligence issues to consider when
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