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share sale checklist

Written by Rory Graham on 20th July, 2017

This note is intended to help the shareholders (owners) of a private company limited by shares understand a key part of the process of selling those shares to a potential acquirer or investor. It sets out, in headline terms, the main points on which the potential buyer will seek information as part of the due diligence exercise, so that the sellers can endeavour to collate the relevant material and to anticipate problems. Of course, much of what is in this note is relevant to the buyer/investor.

It is not a substitute for detailed and specific legal advice on a particular transaction. It assumes that the corporate target for the acquisition is registered in England and Wales – if there are overseas subsidiaries or joint ventures etc, these need to be considered in addition.

before talking to a potential buyer:

preparing for due diligence:

due diligence checklist – what the buyer is likely to require to see:

incorporation and corporate organisation:


technical and IP:

business assets:

risk management:


 other issues:

If you were buying the company, what other issues would occur to you?  Some examples of headline topics follow:


The above list of questions covers most of the topics usually addressed, but of course the nature of the business will dictate the emphasis of the buyer’s due diligence.  We have seen due diligence questionnaires with over 1,000 individual questions!

The aim should be to collate the answers and supporting documentation such that the process of due diligence is as painless as possible, not least that:

When it comes to recording the buyer’s assumptions in the share purchase agreement (also known as a sale and purchase agreement or SPA), the aim should be to give warranties (ie binding statements of fact) only in relation to those matters of which the shareholders have knowledge and which are within their control, and to avoid giving broad statements or hostages to fortune (for example as to future performance).

Where the due diligence process throws up potential issues, the buyer may try to reduce the purchase price or to insist that some of the money is retained to cover any potential claims in relation to the warranties; only being paid over after a certain amount of time (say 18 months) has elapsed, and net of any claim amounts.  The sellers will naturally wish to resist this, and having clear data and supporting evidence will assist in negotiations on these points.

The essence of the due diligence process is to try to avoid surprises – for either the sellers or the buyer – so that the price can be as definite and unqualified as possible, with as little continuing or contingent risk for the sellers as can be achieved.

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This note is prepared for clients and contacts of the firm and does not represent legal advice on any specific matter

© 2017 Coffey Graham (UK) Limited



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