Legal support for buying a business
Legal support for buying a business is for investors and companies acquiring an operating enterprise, a share in an LLC or individual assets in Ukraine. Buying without a review often ends in losses: the buyer inherits hidden debts, expired leases or property that has in fact already been sold. We review the company, structure the deal and take it through to registration of the changes in the state register.
The client receives a risk report, an agreed deal structure, contracts that protect the buyer and a registered title to the business. At MK Audit lawyers and auditors work on the transaction as one team, so the financial, tax and legal reviews do not contradict each other. The firm has supported acquisitions and disposals of companies for more than 20 years, including for foreign buyers.
What is included
- check of the seller’s reputation, court cases, enforcement proceedings and encumbrances on assets;
- legal due diligence: constituent documents, title to shares, licences, permits, leases and key contracts;
- financial and tax due diligence of the business, inventory of assets and liabilities;
- deal structuring: purchase of corporate rights or of assets, payment stages, seller’s warranties;
- drafting of the share or asset purchase agreement, preliminary agreement, letter of intent;
- participation in negotiations with the seller and its advisers;
- registration of changes in the Unified State Register, change of director, update of the ownership structure;
- post-deal support: handover of accounting, monitoring of the seller’s warranties.
Who needs it
- foreign and Ukrainian investors buying an LLC, a manufacturing, trading or service company;
- companies buying a stake in a partner’s business or buying out a co-founder;
- representative offices of foreign companies converting to a subsidiary by acquiring an operating enterprise;
- charitable foundations and non-profit organisations taking over a social enterprise, corporate rights or a property complex; after the deal such a project may require a grant audit under the donor’s requirements;
- buyers of online projects, trademarks and other intangible assets.
Share deal or asset deal
| Criterion | Purchase of a share in an LLC | Purchase of assets |
|---|---|---|
| What is transferred | The whole company: assets, contracts, employees, licences, history | Only selected assets: equipment, real estate, trademark, customer base |
| Debts and tax risks | Pass to the buyer together with the company | Remain with the seller |
| Formalities | Share purchase agreement, changes in the register | Separate agreements for each asset, re-registration of property |
| When appropriate | Licences, contracts, staff and company history matter | Doubts about the company’s past, or only part of the business is needed |
Examples from our practice
- During the review of a retail company for a foreign buyer it turned out that one of the founders had made the company a guarantor of his personal ten-year loan. The buyer withdrew from the deal and lost no money.
- In the purchase of a 50% stake in an export-import business, the tax audit and financial analysis showed that the company’s value was negative because of loans and the conduct of its officers. The buyer changed the terms and left the negotiations without losses.
- In the purchase of a woodworking plant it emerged that the land under the factory was not owned but leased, with the lease already expired. The deal was cancelled.
- A surprise inventory at a farm machinery dealer showed that two expensive assets on the balance sheet had long been sold and some vehicles had been transferred under general powers of attorney.
How the work proceeds
- Request and proposal. You describe the target, the budget and the timeline. We send a commercial proposal with the scope of the review within 1 day.
- Contract and checklist. We sign a confidentiality and engagement agreement and send the seller the list of documents for review.
- Execution. We perform the legal, financial and tax review, prepare the risk report, the deal structure and draft agreements, and take part in negotiations.
- Result and support. Signing, registration of changes, handover of the business. If needed we take over the accounting of the acquired company.
Documents you will need
- charter, register extract and minutes of shareholders’ meetings of the target company;
- financial statements and tax returns for two to three years;
- list of assets, title documents for real estate and land, leases;
- licences, permits, trademark certificates;
- key contracts with customers, suppliers and banks;
- staff list and employment contracts with key employees;
- information on court cases and claims.
Timing
The review of a small company takes two to four weeks; drafting the agreements and registering the changes takes another one to two weeks. For large enterprises the timeline is agreed separately.
Leave a request in the form below: a commercial proposal after we review the task, reply within 1 day.
Can we buy a business without a review if the seller gives warranties?
Contractual warranties are useful, but they only work when the seller is solvent and can be found. A review before the deal is cheaper than any court dispute after it.
Do you work with foreign buyers?
Yes, a large share of our transactions is for foreign investors. The report and the agreements are prepared in Ukrainian and English, and we communicate with the buyer in their language.
What if the review reveals risks?
That is a normal outcome. Risks become grounds for a price reduction, a change in the deal structure, deferred payment or seller’s warranties. We help conduct those negotiations.
Can you act for the seller?
Yes, we have a separate service for the sale of a business: preparing the company, a pre-sale audit, an investment memorandum and the agreements.