Selling Your Business
You’ve worked hard for many years to build up your business, and now it is time to cash out and enjoy the fruits of your labour. Or maybe there is some other reason why you are going to sell the business. Either way, you need to consider what obligations you might have to your employees, and ensure that they are addressed.
Unfortunately, this is often an issue that is left to the very end of the negotiations, when it can be of critical importance. We recently advised an individual that was looking to sell his business and fortunately, we are able to speak with him before the deal was concluded and explained that his potential liabilities to his employees were almost as high as the purchase price he was looking to obtain.
Your potential exposure to the employees will depend upon the nature of the transaction, and specifically whether it is a share purchase or an asset purchase.
Depending upon the nature of the transaction, you will have one or two sets of negotiations to engage in. The first will be your negotiations with the potential purchaser: you will need to clearly delineate who will be liable for any costs relating to the termination of employees, both at the time of the sale and subsequently.
The second negotiations that may be required will be with the employees themselves. If it is a sale purchase, then this becomes irrelevant. However, if it is an asset purchase, then the issue of whether the purchaser will continue to employ the individuals will potentially impact you.
It is critical that you have advice from an Employment Lawyer during this process. We regularly work with purchasers, often in conjunction with their corporate lawyers, in order to address these issues and ensure that they are protected.
Buying A Business
We work with individuals and organizations that are in the process of acquiring an existing business with employees in place.
When you take on a business, the nature of the transaction is critical. If you are engaging in a share purchase, then you will essentially be stepping into the shoes of the existing employer, and accepting all of their existing contracts and obligations (including those to their existing employees). In this situation, you may not want to keep all the employees, but if you dismiss them after taking ownership, you would be on the hook for all termination costs.
If it is an asset purchase, then you do not have to take on the employees, but you may want to take some or all of them. In this context, we can work with you to negotiate strategic contracts of employment. This must be done before you take over the business, since if they continue working, you may effectively be taking on the liabilities associated with them.
It is critical that you work with an Employment Lawyer to understand the potential obligations that you may be taking on, before you enter into any kind of agreement.
We regularly work with purchasers, often in conjunction with their corporate lawyers, in order to address these issues and ensure that they are protected before they enter into a binding agreement.