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LPC Law Notes Private Acquisitions Notes

Methods Of Acquiring A Business Notes

Updated Methods Of Acquiring A Business Notes

Private Acquisitions Notes

Private Acquisitions

Approximately 339 pages

A collection of the best Mergers and Acquisitions* notes the director of Oxbridge Notes (an Oxford law graduate) could find after combing through dozens of LPC samples from outstanding students with the highest results in England and carefully evaluating each on accuracy, formatting, logical structure, spelling/grammar, conciseness and "wow-factor".

In short, these are what we believe to be the strongest set of Mergers and Acquisitions notes available in the UK this year. This collection is f...

The following is a more accessible plain text extract of the PDF sample above, taken from our Private Acquisitions Notes. Due to the challenges of extracting text from PDFs, it will have odd formatting:



Share Acquisition Asset Acquisition
  • Parties: B and shareholders

  • Ownership of the corporate entity (and its subsidiaries) is transferred to B through the purchase of all or the majority of the target company's shares

  • All assets and liabilities are automatically transferred.

  • There is no change in the ownership of Business, which will continue to operate with all its assets, obligations and ongoing liabilities.

  • Parties: B and owner of the assets of Business

  • Ownership of identified assets used in Business is transferred (and any agreed liabilities).

  • Each asset must be transferred in accordance with Specific form of transfer required for that asset (e.g. a conveyance for land).

  • After the acquisition, B will own Business and will continue to operate it using the assets acquired or absolve the company and absorb its assets into its own company.

  • The company itself remains (as an empty shell) and will either be dissolved

Scheme of Arrangement (England and Wales)

What is a Scheme of Arrangement?

  • In England and Wales there is no formal procedure for a legal merger, but a merger can be achieved through the use of a "scheme of arrangement" (Pt 26 & Pt 27 CA 2006)

  • The target company agrees with its shareholders (a majority in number representing not less than 75% in value of Shareholders present) that Shares in the target company be cancelled in consideration for shares to be issued by B. Those shares are then sold on the market to convert Shares to a cash price.

Why use a scheme of arrangement?

  • As Shares are cancelled, no SDLT is payable on the transfer of shares by B.

  • However, the complexity of the court procedure and the time required to achieve a result which is Same as a share acquisition means its use remains limited.

  • It will only really be viable in high value mergers (i.e. where SDLT will be exceptionally high compared with the cost of the court process).

Pre-sale restructuring - "Hive Down"
  • Combination of both an asset and share sale.

  • Where B does not want to proceed with SS of target (e.g. for tax and commercial reasons), this can be circumvented by:

  1. target sells some or all of Business/assets required by B to newco (usually set up as a wholly-owned subsidiary of target).

  2. B then acquires Shares of newco instead.

  • Allows B to obtain only the assets and liabilities which it wishes to buy and to acquire a 'clean' company with no history.

Hive Down
  • ABC plc wishes to acquire XYZ plc, but for commercial/tax reasons is reluctant to do so via a share sale (e.g. XYZ has liabilities it does not want to take on).

  • XYZ will 'hive down' the assets/business required by ABC into Newco 1.

  • ABC will then acquire Newco 1 through a share acquisition.

  • After Share acquisition

  1. Selling shareholders will own XYZ plc but it will most probably be an empty shell.

  2. Newco 1 will become a wholly-owned subsidiary of ABC plc.


Share Asset


  • Clean break

  • Entrepreneurs' Relief - 10%

  • Easy transfer

  • No consents

  • No double tax


  • Warranties and indemnities more extensive

  • Joint and several liability

  • Tax deed of covenant

  • More DD

  • Change of control clauses

  • SMA - advertising/soliciting


  • TUPE - employees

  • FSMA definitely doesn't apply


  • Transfer by proper forms

- more complex

- more time

- time = money

  • Cherry pick assets and liabilities - may be left with odds and sods with little to no value.

  • Potential double taxation

  • More need for consent - S remains liable for burden (unless novated)

SELLER - factors affecting choice of acquisition

Factors Share Acquisition Asset Acquisition
Clean break from business


  • S will lose all connection with Business. Co’s assets/liabilities remain with the target and are transferred automatically to B. Those liabilities will become enforceable against B not S.


  • BUT.... the nature of a SS means B requires wide protections in SPA, such as:

  1. warranties as to State of co

  2. disclosure of problems/liabilities

  3. indemnities/guarantees against undisclosed liabilities

However.... may be possible to limit these warranties/indemnities/guarantees (e.g. time restrictions, minimum amount, maximum amount)

  • If S has guaranteed obligations of the target company (e.g. a personal guarantee on bank lending) then a clean break will only be possible if S can negotiate a release from such obligations on completion.


  • Only certain assets and agreed liabilities are acquired by B, and so S may retain residual assets which are difficult to get rid of for value.

  • S may also remain liable for liabilities of Business which B does not wish to acquire


  • B may be willing to take on the liabilities of the company (e.g. trade debts) as leaving them in the hands of S has the potential to damage relations with suppliers etc should S not pay.

Third parties

  • Debts and obligations owed to third parties, even where B has agreed to take responsibility for them, can still be enforced by the third party against S (unless they have expressly released S from liability).

  • possible to have indemnity from B, but this may be difficult to enforce - particularly if B is insolvent.

Transfer of title & consents


Mechanics of transfer are quicker and easier

  • simple signing of stock transfer forms to transfer the title.

  • BUT.... consider DD


  • Terms of contracts should still be checked for change of control, or need for third party consents


  • May be longer and more onerous as each asset must be transferred in the appropriate way (e.g. a deed of conveyance for land, assigning patents, physical delivery for some assets, etc).

  • problematic and cause problems where third party consents are required which may delay the transaction (e.g. for assigning a lease).

DD of B (length of time)


  • As B is taking on all the assets/liabilities of target, the DD may take longer in...

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