Selling your business to an overseas buyer
Would you know not to show the soles of your feet in Thailand? Make the “thumbs up” sign in the Middle East or even leave your chopsticks pointing upwards in Japan?
Selling a business to overseas buyers and failing to understand culture differences or approach early on can lead to major misunderstandings, frustration and potential loss of the deal.
Take for example our English-speaking cousins across the Atlantic.
Deal Structure: In the UK by far the most common method of sale is a share sale, where the company is sold “warts and all” to the buyer. In the US, asset purchases (where assets are “cherry picked”) are much more common.
Locked Box arrangements are more common in the UK than the US whereas the completion accounts mechanism is more unusual.
Damages: Unlike the UK, a US buyer will expect to be indemnified for any breach of warranty on a £ for £ basis, regardless of whether the breach actually results in a reduction in the value of the shares acquired.
Disclosures: The US treats disclosures (exceptions to the warranties) as schedules to the SPA itself, rather than a separate disclosure letter from the sellers to the buyer as in the UK. Also US post-completion restrictive covenants are three to five years whereas in the UK three years or under is more usual.
Employees: US buyer expectations regarding contractual and statutory rights for employees can cause problems given the US hire and fire culture.
Taylors have extensive experience negotiating for sellers of UK companies to overseas buyers. If you receive an offer from overseas we’d be delighted to help.
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