In the sale or acquisition of businesses and companies, a business lawyer is involved from the preparatory stages all the way through to the post-closing phase. Such transactions have both significant legal and human dimensions: legal, because any error could lead to the lawyer’s professional liability; and human, because the lawyer must tailor their communication to various stakeholders, including company executives, opposing counsel, accountants, and bankers. The Petroussenko business law firm offers this versatility to support your objectives.
I. Key Stakeholders in a Sale and Their Roles
The sale of a business or its shares involves various parties with interdependent roles. The goal is to coordinate these stakeholders to ensure the transaction remains coherent.
1. The Seller and the Buyer
- The Seller: Their objective is to maximize the sale price while limiting exposure to post-transaction risks. When advising on a business sale, a business lawyer plays a crucial role in price negotiations and helps limit the seller’s ongoing liability—often through a “guarantee of assets and liabilities” (GAP)—by defining its duration and cap.
- The Buyer: Their objective is to gain a comprehensive view of potential risks. A business lawyer conducts audits (financial and legal) to provide the client with a clear picture of the transaction’s reality and to secure their investment.
2. Supporting Stakeholders
- Accountants / Statutory Auditors: Determining the value of a business is essential. A business lawyer collaborates with these experts, relying on certified accounts to carry out a rigorous financial audit.
- Financial Stakeholders: Buyers often rely on bank financing or investment funds to complete a transaction. A business lawyer plays a crucial role in analyzing loan agreements, security interests (such as pledges or guarantees), and conditions precedent. They ensure that these commitments do not jeopardize the long-term viability of the business or company.
II. Managing the transaction: the role of the business lawyer
Executing transactions involving the sale of businesses or companies requires rigorous coordination.
1. Managing the timeline and communication
The business lawyer acts as a conductor, orchestrating the process through the creation of a “closing memo.” This document outlines the various stages (pre-agreement, signing, the Share Purchase Agreement or SPA, and the post-closing phase), the associated deadlines, and the parties involved. By developing this document, the business lawyer ensures the transaction is managed with precision. Furthermore, the lawyer facilitates the flow of information between the parties, while strictly upholding professional confidentiality.
2. Negotiating and drafting agreements
This is the most critical phase of the transaction, highlighting the business lawyer’s role as a “deal maker.” They advocate for their client’s interests regarding price determination, representations and warranties (including guarantees of assets and liabilities), and conditions precedent (such as obtaining regulatory approvals, securing financing, or clearing rights of first refusal). The business lawyer ensures that no condition precedent is classified as “potestative”—meaning it depends solely on the will of one party—as this would compromise the validity of the contract.
3. Execution and closing
Once the due diligence is complete, the contract has been negotiated, and the conditions precedent have been satisfied, the closing takes place (the formal signing of documents, often conducted via an electronic platform). The business lawyer meticulously oversees this process. Their involvement continues into the post-closing phase.
Throughout the process of a business disposal or transfer, a corporate lawyer adopts a proactive stance. Their involvement goes beyond the mere technical execution of legal tasks; it functions as a form of strategic guidance for businesses and companies.
From anticipating legal risks and identifying sensitive clauses to developing a bespoke legal structure, the team at the Petroussenko business law firm supports you at every stage.