Business Share Purchases
Purchasing shares in a limited company
Private limited companies which are registered with companies house are able to sell, gift or transfer company shares to other individuals. A company share represents a proportion of the business which you own. Having ownership of a share entitles you to a relative proportion of the company profits.
The process of buying or issuing shares, regardless of the company’s size, can be complicated and time-consuming. Rotheras Solicitors are trained in all the areas surrounding the sale and buying of shares.
With an experienced team of solicitors at your side, you will find the process easy, simple and quick. We ensure the process is communicated to you in simple terms so that you understand everything that is going on.
How do company shares work?
Shares represent a portion of the company. The number of shares that a company has will depend on how many shares were created when the company was registered with companies house. The minimum number of shares a company has is 1. There is no upper limit on the number of shares a company has.
Usually, companies will have an even number of shares to make it easier to divide among shareholders.
The best way to imagine how shares work is like a cake. Each slice of the cake is a piece of the whole cake. The cake itself can be divided up equally – halves, quarters, eighths. Or it can be cut up unequally – e.g. one third and two thirds.
Shares work in the same way. A company can be divided up and shared equally or unequally between different shareholders.
What needs to happen to buy shares?
To buy shares in a company either an existing shareholder has to give up or sell their shares, or the company will need to create new shares. However, the creation of new shares will impact the shares already in existence as the total always has to be 100%.
If you are buying the company through share purchase, it is likely that you will be buying all the existing shares of the company. This will grant you full ownership of the business, its assets and liabilities.
How much does it cost to buy shares?
The price of shares in a private company will depend on many factors such as previous performance and predicted future profit performance. It could also depend on the purpose of you buying shares. Is it because you are investing in the company, or potentially buying the company outright.
On the other hand, shares in a private company do not even need to be bought. Shares can be gifted to individuals by existing shareholders.
For example, you may want to give part ownership to a family member. Alternatively, you might look at gifting strong performing employees with some shares as a reward.
What is the process of buying shares?
The process may differ slightly depending on whether you are looking to invest in a company, take part ownership of a company or take full ownership of a company. However, the usual process included the following steps:
- The parties involved will often negotiate the basic terms of the deal which is sometimes set out in writing using “Heads of Agreement”. This is a document in which both parties agree;
- We will work with you to consider and plan for the future and carry out enquiries and searches where applicable;
- The seller will often require a non-disclosure agreement/confidentiality undertaking;
- The buyer will carry out Due Diligence to obtain various information relating to the company being purchased; if we are acting for the buyer we can help to prepare a detailed list of questions to send to the seller’s solicitor and keep a detailed record of the answers and documents received;
- The buyer’s solicitor will usually prepare a draft of the Share Purchase Agreement which will be forwarded to the seller’s solicitor for their review, which may undergo several revisions as the negotiation progresses;
A Disclosure Letter is drafted by the seller and negotiated between the seller and the buyer. This aims to bring any potential problems to the buyer’s attention by stating any matters that the seller knows of.
Why use Rotheras for Share Purchases?
Advice will be given to you on all legal aspects of share purchases.
Throughout the due diligence process, you will get direct help in making enquiries to gather information about the company you wish to purchase sales from.
By listening and working with your individual needs, we will provide you with tailored advice and help in negotiating and structuring the right deal for you.
During your share transaction, you will be kept updated on the progress.
We will liaise with your professional advisers to ensure that the documentation is drafted clearly, fully and accurately.
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Anton Balkitis frequently represents the operators of both goods and passenger vehicles in court proceedings. Clients remark: "He has a commercial understanding of real-life issues and will always provide a balanced view
Chambers UK, 2019
Impressive group with expertise in both matrimonial finance cases and children matters. A strong childcare team handles cases involving physical and emotional abuse, as well as fatalities. Well versed in matters with international aspects, Hague Convention cases, as well as adoption and guardianship issues.
Chambers UK, 2018
My previous dealings with Rotheras have always been excellent-total efficiency and professional. Jayne Smith previously and now Emily Weston. I would always use Rotheras as my solicitors. Thank you.
Chris Powell at Rotheras was recommended to us by a trusted associate within the Transport Industry; without doubt we wouldn’t have had the excellent outcome we did without his and his team’s involvement. The level of professionalism, expert advice and assistance was faultless; we felt reassured and well informed throughout the whole process. It was a pleasure to do business with him and would highly recommend his services!
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The team at Rotheras, and Mr Powell in particular, have provided us with an outstanding service. We are extremely grateful for the help and support they gave us in dealing with issues relating to our transport operations and our goods vehicle operators licence. Mr Powell was professional, knowledgable, efficient and effective. He quickly understood our business and the problem we had. He responded with sensible advice and acted quickly on our behalf to resolve the matter. I cannot thank him enough for his help and I would recommend Mr Powell, and the Rotheras team, without hesitation. I am extremely grateful for the help they gave us.
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I would highly recommend James Briggs, solicitor at Rotheras. He has been extremely helpful, patient and thorough whilst helping me with affairs following the death of my husband. Even during lockdown (covid) he maintained communication and kept me informed of what was happening. He successfully achieved the outcome I needed and I would not hesitate to recommend him.
We are in the middle of launching our own packaging agency and contacted Rotheras for some professional legal advice with regards to contracts. After an initial call with Billy, he made it clear what we needed and asked plenty of questions to understand what it was we needed. He was very responsive to our questions, whether it be over the phone or via emails and made the process really simple. We had little experience in this area so it was fantastic to work with Billy, who explained everything concisely. We were also really pleased with the quick turnaround and great value offered. Would thoroughly recommend working with Rotheras.
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Axl Barber, Sales Director of Rightbox Ltd
I was extremely pleased with the service that Kerry provided in order to sell my mothers house. Good, prompt communication and all questions dealt with or answered as requested. Consequently I would recommend yours services to others.
Anton has substantial experience acting for commercial goods hauliers and other transport operators. He advises on a range of contentious issues including operator licence, maintenance and tachograph matters, with a wealth of experience acting in public inquiries before Traffic Commissioners."Anton is a highly informed and personable lawyer.
Chambers UK, 2020
Chris Powell focuses his practice on road transport issues, regularly representing haulage, transport and logistics companies. He has considerable experience in regulatory matters involving operator licences and compliance failings, as well as more serious criminal investigations relating to fraud.
Chambers UK, 2020
Billy advises businesses on a range of commercial and corporate issues and is happy to assist you with buying or selling businesses, corporate mergers and shareholder agreements.
Lauren Kilbride is a Trainee Solicitor within Rotheras’ Corporate & Commercial department and is based at the firm’s Lace Market office.
Sandeesh Samra is a Senior Paralegal in our Corporate and Commercial team and is based at our Lace Market office in the heart of Nottingham city centre.
Anjnee Gorecha is a Paralegal in Rotheras’ Corporate and Commercial department and is based at our Lace Market office.
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