M&A Lawyer: Buying Or Selling A Company In The UK

Thinking about buying a business, selling your company, or merging with a competitor? That’s exciting - and a little daunting. Mergers and acquisitions (M&A) can unlock growth, succession and exit opportunities for small businesses, but they also come with serious legal and commercial risks if you don’t structure the deal properly.

In this guide, we’ll demystify what an M&A lawyer actually does, how a typical small business deal runs from “heads of terms” to completion, and the key legal documents and pitfalls to watch. We’ll keep it plain-English and focused on practical steps so you can move forward with confidence.

What Does An M&A Lawyer Do (And Why It Matters For Small Businesses)?

An M&A lawyer helps you plan, negotiate and close the sale or purchase of a business. For small businesses, that support is less about lofty corporate theory and more about risk, cash, and certainty - making sure you get the deal you think you’re getting, with protections if things go wrong.

In a small business transaction, your M&A lawyer will typically:

• Scope the right deal structure (asset sale vs share sale) and map the legal steps.
• Run or respond to due diligence so there are no surprises after completion.
• Draft and negotiate the principal agreement (the contract that actually transfers the business) and key ancillaries.
• Manage employment, property and contract transfer issues (including TUPE, leases and supplier/customer contracts).
• Coordinate completion - funds flow, board/shareholder approvals, filings - so you close on time and on terms.

Good M&A support isn’t about making things complicated - it’s about spotting deal-breakers early, simplifying decisions and protecting you from day one. That way, you avoid costly disputes after completion and keep your attention on running the business.

Asset Sale Vs Share Sale: Which Structure Suits Your Deal?

Most UK small business deals use one of two structures. The “right” choice depends on tax, liabilities, contracts, licences and how cleanly you want to separate the old company from the business you’re buying or selling.

Share Sale (Buying/Selling The Company)

In a share sale, the buyer acquires the shares in the company from the shareholders. The company remains the same legal entity - it keeps all its assets, liabilities, contracts and employees.

Pros:

• Smoother operational continuity - the company keeps trading with the same contracts, licences and VAT registration.
• Often simpler for regulated or contract-heavy businesses where consents are hard to secure.
• Potentially more tax‑efficient for sellers (subject to independent tax advice).

Cons:

• Buyer inherits historic liabilities (known and unknown), so due diligence and warranties/indemnities matter more.
• Complexity if there are multiple shareholders or legacy issues in the company.

Your principal document will be a Share Sale Agreement (sometimes called an SPA), which sets price, conditions, warranties and post‑completion obligations.

Asset Sale (Buying/Selling The Business)

In an asset sale, the buyer purchases selected assets (and sometimes certain liabilities) from the company or sole trader/partnership - things like stock, equipment, IP, goodwill, and sometimes contracts.

Pros:

• Cleaner risk profile - the buyer can cherry‑pick assets and leave behind unwanted liabilities.
• Useful where the seller has multiple business lines or there are historic issues in the entity.

Cons:

• More steps - contracts, leases, licences and employees need to be transferred or re‑papered.
• Potential disruption if counterparties won’t consent to transfer.

The principal contract is usually called a Business or Asset Purchase Agreement (APA). On our services page, this is covered under Business Sale Agreement.

Key Legal Considerations When Choosing

• Employees: In an asset sale, the Transfer of Undertakings (Protection of Employment) Regulations 2006 (TUPE) usually transfer employees to the buyer on existing terms. TUPE is mandatory and technical - for example, you generally cannot reduce pay simply because of the transfer. We explore this in more detail in our guide on whether salary can be reduced under TUPE.
• Contracts: If critical contracts don’t allow assignment, you might need counterparty consent or to renegotiate. We explain the differences in a practical way under novation or assignment.
• Leases: Commercial property often can’t simply be handed over - speak with your landlord early about consents. This is where assigning a lease becomes important.
• Tax and price mechanics: Earn‑outs, completion accounts, stock valuation and working capital targets can flex the price post‑completion - your structure affects the mechanics.

Not sure which route is best? An M&A lawyer can weigh the legal and practical trade‑offs with your accountant so your structure aligns with your tax position, timelines and risk appetite.

Step‑By‑Step: How An M&A Lawyer Guides Your Transaction

1) Early Scoping And Heads Of Terms

Start with a candid chat about your goals, deal breakers and timing. From there, most parties sign heads of terms (also called a term sheet or memorandum of understanding). This sets the commercial outline (price, structure, timetable) and usually includes binding confidentiality and exclusivity while due diligence takes place.

2) Due Diligence (Legal, Financial, Tax)

Due diligence is where risks are surfaced before you sign. For buyers, it’s about verifying what you’re buying and pricing risk. For sellers, it’s about preparing the data room and answering queries quickly to build trust and momentum.

Legal diligence for small deals typically covers:

• Corporate: Ownership cap table, company filings, board/shareholder approvals under the Companies Act 2006.
• Commercial: Key customer/supplier contracts, change‑of‑control provisions, unusual liabilities.
• Employment: Contracts, handbooks, disputes, compliance and TUPE exposure (for asset deals).
• Property: Leases, licences, rent, service charges, landlord consents and repair obligations.
• IP and brand: Ownership of trademarks, copyright and domain names; licences in and out.
• Data protection: GDPR/Data Protection Act 2018 compliance, Privacy Policy, DPIAs for high‑risk processing.
• Disputes and compliance: Claims, regulatory issues, health and safety.

If you’re buying and want a focused, small‑business‑friendly approach, our Legal Due Diligence support scopes the right depth for the price and timetable you agree.

3) Drafting And Negotiation Of The Main Agreement

Once diligence is underway, drafting begins. In a share sale, the main contract is the SPA; in an asset sale, the APA. Either way, expect negotiation on:

• Price and adjustments (earn‑outs, completion accounts, stock or working capital).
• Warranties and indemnities (what the seller promises and what happens if something wasn’t accurate).
• Limitations of liability (caps, baskets, time limits) so neither party carries open‑ended risk.
• Restrictive covenants (non‑compete, non‑solicit) to protect goodwill.
• Conditions precedent (CPs) - e.g. landlord consent, regulatory approvals, third‑party consents.
• Completion mechanics - money movement, documents to deliver, filings.

4) Ancillary Documents And Consents

Alongside the principal agreement, you’ll prepare a suite of ancillary documents: board and shareholder resolutions, disclosure letter, assignments/novations of material contracts, IP assignments, lease assignments or new leases, service agreements for founders who will stay on, and releases for repaid loans or security.

If the company has multiple owners, check whether your existing Shareholders Agreement requires drag‑along or tag‑along procedures. Where majority owners need to compel a sale, those drag‑along rights may dictate how minority shareholders are brought into the deal.

5) Completion And Post‑Completion

At completion (closing), funds are exchanged, title passes and the buyer takes control. Post‑completion, there’s usually a tidy‑up: Companies House filings, releases of charges, updating registers, notifying customers and suppliers, and bedding in new employment arrangements.

Key Legal Documents In A Small Business M&A Deal

Every deal is different, but most transactions involve some combination of the following. Your M&A lawyer will tailor the list to your structure, risks and timetable.

• Heads of Terms/Term Sheet - a short document capturing the headline commercial terms and process.
• Confidentiality/Exclusivity Agreement - protects your information and gives breathing room to negotiate.
• Principal Agreement - SPA for shares or APA for assets. See our Business Sale Agreement page for what’s usually covered.
• Disclosure Letter - where the seller qualifies the warranties with specific disclosures, reducing the risk of future claims.
• Assignment/Novation Agreements - to transfer key customer/supplier contracts; whether you use assignment or novation depends on the contract language and consent pathways set out in your existing agreements (we break this down under novation or assignment).
• IP Assignments and Licences - to move trade marks, copyrights, domains and software to the buyer.
• Lease Assignment Or New Lease - property is often critical to value, so nail down landlord consent early and plan the assigning a lease process in parallel with SPA/APA negotiation.
• Employment Agreements - new service agreements for key managers/founders staying on, or settlement agreements where someone is exiting.
• Board and Shareholder Resolutions - Companies Act approvals and filings.

Bonus housekeeping before you go to market: tidy share registers, settle any inter‑company or director loans, and align founder equity. If you’re still building towards an exit, a clear vesting schedule and well‑drafted founder and investor arrangements can make the future sale smoother and increase buyer confidence.

Employment, Property And Data: Hidden Issues To Get Right

TUPE And Employee Transfers

In most asset sales, TUPE transfers employees automatically on their existing terms. You’ll need to inform and, in certain cases, consult with affected employees or their representatives before completion. Post‑completion changes tied to the transfer can be void or trigger claims if not handled correctly. TUPE also carries joint and several liabilities between seller and buyer for certain pre‑ and post‑transfer obligations, so your warranties/indemnities and price need to reflect the risk.

Leases And Property‑Linked Value

If location is central to the business (think retail, hospitality, gyms), the lease is a core asset. Confirm term, rent review mechanics, break rights, arrears, dilapidations and landlord consent requirements. Start the consent request early - property timelines often drive the overall deal timetable.

Customer And Supplier Contracts

Revenue concentration risk matters. If a single customer provides 40% of revenue, check change‑of‑control clauses carefully and make your completion conditional on getting their consent or signing a new agreement. Where contracts are silent, consider practical workarounds (e.g. transitional services, short‑term subcontracts) so operations don’t stall.

Data Protection And IP

Under the UK GDPR and Data Protection Act 2018, buyers will expect to see compliant privacy notices, data mapping and contracts for processors. If your business processes personal data at scale (for example, a subscription app), a robust framework (Privacy Policy, internal procedures, processor terms) increases buyer confidence and reduces the need for price chips or escrow. On the IP side, confirm chain‑of‑title - have contractors and agencies assigned rights properly? If not, plan clean‑up assignments pre‑completion.

Costs, Timelines And Practical Tips For A Smooth Closing

Typical Timelines

For small business M&A, expect 6–12 weeks from heads of terms to completion, depending on:

• How quickly diligence documents are produced and reviewed.
• Third‑party consents (landlords, key customers, regulators).
• Whether there’s bank or investor approval required.
• Tax and price mechanics (e.g. earn‑outs take longer to agree).

Indicative Costs

Legal fees depend on deal complexity, whether you’re buying or selling, and how much negotiation is needed. Fixed‑fee phases (e.g. heads, diligence, main agreement) are common in small deals so you can budget. Ask your lawyer for scope and assumptions up front - a good team will keep you updated if scope shifts.

Negotiation Tips For Owners

• Be realistic on value: Align expectations early by agreeing a valuation approach (EBITDA multiple, revenue multiple, asset valuation). If you’re still calibrating, our guide on how to value your company shares walks through practical methods.
• Price certainty vs risk: If diligence throws up gaps, consider targeted indemnities, escrow or price retentions instead of blowing up the deal.
• Focus warranties on what matters: Prioritise financial statements, contracts, compliance, IP ownership, employees, tax - and cap/time‑limit liability sensibly.
• Get CPs moving early: Landlord and key customer consents can take weeks. Put them on the critical path immediately.
• Plan the handover: Transitional services (IT, finance, payroll, licence sharing) for 1–6 months can make the first quarter post‑completion far smoother.

Regulatory And Competition Law?

Most small UK deals won’t trigger mandatory merger control. But if you’re combining sizable market shares or operating in sensitive sectors, your lawyer will check whether voluntary notification to the Competition and Markets Authority (CMA) or sector‑specific approvals should be considered. If in doubt, raise it early - the risk is usually about timing rather than outright prohibition for SMEs.

Thinking Ahead To Exit While You’re Still Growing

If you’re not selling yet but want to be “exit‑ready,” the steps you take now can improve price and reduce headache later. Keep statutory records tidy, document founder roles and equity properly, protect your brand and IP, and make sure your contracts are transferable. Provisions like drag‑along rights in your shareholder arrangements can also streamline a future sale process.

Key Takeaways

• Choose the right structure early: A share sale offers continuity but more inherited risk; an asset sale can be cleaner but needs more consents and careful TUPE handling.
• Run smart due diligence: Focus on ownership, contracts, property, employees, IP and data protection - this is where price chips and post‑completion disputes usually arise. If you’re buying, consider a scoped Legal Due Diligence process that fits your budget and timetable.
• Use the right contracts: The principal agreement (SPA or APA) should clearly set price mechanics, warranties/indemnities, limitations of liability, restrictive covenants and completion deliverables. Our Business Sale Agreement and Share Sale Agreement pages outline what these cover.
• Line up consents: Start landlord, key customer and supplier consent conversations early. Plan whether each agreement needs an assignment, a novation or a new contract - see novation or assignment for the differences.
• Address TUPE, data and IP: In asset deals, most employees transfer under TUPE; in all deals, make sure GDPR and IP ownership are in order to avoid price chips or claims after completion.
• Think like a project manager: Map your critical path, agree realistic timelines, and keep documents moving. Small businesses close faster when there’s a clear plan and a responsive team.

If you’d like tailored help from an experienced M&A lawyer - whether you’re buying, selling or preparing for an exit - you can reach us at 08081347754 or team@sprintlaw.co.uk for a free, no‑obligations chat.