What is the Role of Transaction Teams in Business Sales in England?

For the overwhelming majority of business disposals in England, sellers must ensure they have competent transaction teams. However, if you are a company director seeking to sell your business, you may not be familiar with the individuals involved in a transaction team or their purpose. This article will explain a transaction team’s legal and commercial function in the context of a business sale in England. 

What is the Purpose of a Transaction Team?

Selling your business to a third-party buyer is a complex and time-consuming process. Therefore, selling a business requires oversight by a competent group of professionals with adequate experience advising on similar transactions. 

As a seller, you will be involved in the buyer’s due diligence process, which can be intensive. After all, it is likely that the buyer’s questions will be highly technical. If you fail to answer the questions thoroughly, you can be held liable for any inaccurate statements, regardless of your intent. Depending on the buyer’s position, they may even try and strongarm you into signing certain contractual documents that leave you on the hook for the business’ future performance. 

In this sense, the goal of the seller’s transaction team — also called a deal team — is to level the playing field and ensure you are receiving the best possible value for the business you are selling. 

Your Responsibilities As Director 

A transaction team will likely comprise many professionals. However, as a company director, you will ultimately be responsible for the transaction’s outcome if any negligence, liability, or irregularity arises. This is because you cannot delegate your duties to your professional advisers unless you have taken all reasonable steps to ensure your advisers are competent. 

In other words, if you (as a director) hire a friend as your legal adviser and she fails to advise your company on the terms of the sale agreement, you might be held liable. On the other hand, if you conduct a thorough tender process to find the right financial adviser and they later misvalue an asset, you may not be liable. 

Who Are the Team Players?

Every team must have its players. The business world commonly calls the group of individuals directly involved in a business sale a transaction team. 

Of course, the number of individuals on the team depends on the size and complexity of the transaction. For small businesses with few employees and a modest turnover, if you are the sole shareholder and director, you would naturally be the only management team member. You may only need to instruct a single law firm or service. An accountant may also double as your financial adviser. On the other hand, billion-dollar companies have dozens of advisers that might spend thousands of hours to finalise a sale. 

However, the role of each committee is broadly the same. 

Management 

The management committee will usually consist of the company’s senior executives, such as the CEO, CFO and COO. In general, the management team will:

• instruct the external advisers; 
• market the target to potential buyers; 
• coordinate due diligence; and
• negotiate the transaction documents. 

Management will liaise directly with the external advisers and be primary project managers. When the management team reports to a board of directors, they must keep them informed of the process. 

Legal Advisers 

As you might expect, the legal team will handle all legal elements of the transaction. This includes ensuring that the:

• sale-purchase agreement is appropriately drafted; 
• business’ constitutional and corporate governance rules are followed; and
• terms of any acquisition finance documents are sound. 

The seller will need to instruct a solicitor experienced in corporate transactions. The corporate lawyer will coordinate with any other specialist lawyers, such as employment, intellectual property, or pensions lawyers. Likewise, if your business owns any intellectual property you wish to retain, you might need to instruct an intellectual property solicitor. 

Accountants

In business disposal, the seller will almost certainly need advice on the:

• the tax implications of the sale; 
• how best to structure the transaction from a tax perspective; 
• how to respond to specific financial queries in the due diligence process; and
• negotiating the accounting portion of specific contractual terms in the sale purchase agreement. 

Therefore, a team of accountants is best placed to advise on these matters. 

Financial Advisers 

You may need to appoint a corporate finance adviser to help market your company to prospective buyers, such as investors or competitors. These professionals will help you navigate the sale process, which may involve an auction. 

Key Takeaways

Selling your business is a complicated process. You will need various professionals to advise you on the process, such as marketing your business to prospective buyers, navigating due diligence, negotiating the terms of the sale-purchase agreement, and reviewing the final agreement. This process will involve the collaboration of the transaction team, which often consists of lawyers, bankers, accountants, and the senior management team.

If you need help selling your business, our experienced business sales lawyers can assist as part of our LegalVision membership. You will have unlimited access to lawyers to answer your questions and draft and review your documents for a low monthly fee. Call us today at 0808 196 8584 or visit our membership page.

Frequently Asked Questions