BPP University College Of Professional Studies Limited (BPP)
A complete summary of all chapter handouts, lecture recordings and SGSs consolidated into clear and concise notes with worked examples. Contains everything you need to know for the Acquisitions section of the BPP BLP exam.
BPP University College Of Professional Studies Limited (BPP)
Legal Practice Course
Business Law and Practice
All documents for this subject (43)
2
reviews
By: maxelmes123 • 4 year ago
By: mansi14c • 4 year ago
Seller
Follow
lpc-bpp
Reviews received
Content preview
ACQUISITIONS
Valuing a Company
If listed then share price will be quoted on a stock exchange so can place market value, but may not be
representative of value if well managed and not available if not listed, therefore use -
- Book Value: Balance sheet value, may not be true reflection or break-up value, value if all assets sold and
all liabilities paid.
- Going Concern: Worth more as a money generating business than broken up and sold, depends on how
well performing and future prospects.
- Future cash flows: Investors buying a company expect future return, so use present value and profits and
multiply by a number of years, not including increase in value of the company when it is sold.
Acquiring the Business of a Company
A company limited by shares is owned by SH with shares that can be transferred – 2 ways to acquire:
Share Sales - Acquire all the shares in the company.
- Buyer purchases issued share capital of a company from SHs – transfer using stock transfer form.
- Can purchase some so not wholly owned, but usually buy all to avoid issue of minority SHs.
- Target company continues to operate as before but with a new owner.
- Original SH receives consideration for their shares.
Asset Sales - Acquire a group of assets that make up the business (or part of) – continues as going concern.
- Buyer purchases whole business or trading division as a going concern from the company itself.
- Each asset needs to be transferred separately and have part of the purchase price apportioned to it:
o TR1 for property
o IP licence for IP
o Novation or assignment of all contracts
o Employees automatically transfer under TUPE
o Debtors
- Ownership stays with original SH but business changes hands, selling company left as a cash shell – no
assets other than cash proceeds of sale.
- Selling company keeps creditors, liabilities and existing litigation and will acquire consideration
Acquiring a partnership or sole trader
- Asset Sale – Buy all and continue trading under old name (can change later), or
- Buy individual assets – business not sold as going concern.
Parties
Asset Sale - Buyer / Purchaser: Purchasing company, partnership or sole trader and Seller / Vendor: Selling
company, partnership or sole trader.
Company will need to declare a dividend or be wound up to pass consideration to SH.
Share Sale - Buyer / Purchaser: Purchasing company, partnership or individual and Seller / Vendor: Selling
shareholder (could be individual, company or partnership).
Consideration will go straight to SH so no need for dividend or winding up.
Documents required
- Mutual NDA: Continues indefinitely even if transaction does not go ahead.
- Heads of Agreement: Key commercials and structure, not legally binding. Often key part of
negotiation as proceed straight to contract. Will include binding exclusivity clause – not approach
others, means parties comfortable to incur DD costs.
The benefits of buying summaries with Stuvia:
Guaranteed quality through customer reviews
Stuvia customers have reviewed more than 700,000 summaries. This how you know that you are buying the best documents.
Quick and easy check-out
You can quickly pay through credit card or Stuvia-credit for the summaries. There is no membership needed.
Focus on what matters
Your fellow students write the study notes themselves, which is why the documents are always reliable and up-to-date. This ensures you quickly get to the core!
Frequently asked questions
What do I get when I buy this document?
You get a PDF, available immediately after your purchase. The purchased document is accessible anytime, anywhere and indefinitely through your profile.
Satisfaction guarantee: how does it work?
Our satisfaction guarantee ensures that you always find a study document that suits you well. You fill out a form, and our customer service team takes care of the rest.
Who am I buying these notes from?
Stuvia is a marketplace, so you are not buying this document from us, but from seller lpc-bpp. Stuvia facilitates payment to the seller.
Will I be stuck with a subscription?
No, you only buy these notes for $4.55. You're not tied to anything after your purchase.
