We know that buying a business is a big step and a real worry is the feeling of not having all the information you need to make than informed decision. We’ve put together a list of things you should ask for from the owner if you are considering buying shares in their company.

Taking a look at these documents will help you get a good snap shot of the business and at Lionshead Law, we can help you ask the right questions before you buy and check that the business is what you expected We can help you go through the ‘due diligence’ process to get the answers you need and prepare the ‘legals’ required.

Organisational Documents

  1. The Company’s Articles of Association, the memorandum of incorporation and a list of current shareholders and their shareholding.
  2. The Company’s minute book, including all minutes and resolutions of shareholders and directors, executive committees any and other committees that manage its business.
  3. A schedule of all subsidiary, partnership, or joint venture relationships and obligations, with copies of all related agreements.
  4. Copies of all contracts between the Company and any of its officers, directors or shareholders or companies in common control.
  5. Details of any options or other rights affecting the shareholding in the company.
  6. A schedule of all subsidiary, partnership, or joint venture relationships and obligations, with copies of all related agreements.
  7. Copies of all contracts between the Company and any of its officers, directors or shareholders or companies in common control.
  8. Details of any options or other rights affecting the shareholding in the company.

Financial Information & Contracts

  1. A copy of the most recent audited accounts as well as copies of the audited accounts for at least the last 3 years.
  2. The most recent unaudited accounts; profit & loss and balance sheet;
  3. A list of all loans, liens and indebtedness as well as the business’ contingent liabilities.
  4. Notes on how the accounts have been audited and practices regarding amortization, depreciation etc.
  5. Details of capital expenditure in the last 12-36 months.
  6. Copies of the company’s strategic plan for the last 3 years.
  7. The company’s credit report.
  8. All loan agreements, mortgages, guarantees, bank financing or similar arrangements to which the company is a party
  9. A list of suppliers and details of contractual arrangements with them (including copies of the contracts, contract term, payment terms and in process orders).
  10. Copies of all distribution agreements, sales agreements, marketing agreements, and supply agreements.
  11. Any letters of intent or memoranda of understanding within last 3 years
  12. Copies of budgets and projections circulated to management in the last 12 months
  13. Copies of the company’s standard quote, purchase order, invoice and warranty documents.
  14. Details of any non-disclosure, non-solicitation and/or non-competition agreements the Company is party to (whether written or not).
  15. Details and copies of the Company’s PI and Employers Liability insurance and any other insurances it holds (e.g. key-man, directors insurance etc), as well as details of the company’s insurance claims history for past 3 years.
  16. All other material contracts.

Tax

  1. Company tax returns for the last 3 years.
  2. PAYE and NI returns for the last 3 years.
  3. VAT filings for the last 3 years.
  4. Details of any tax enquiries made by HMRC, C&E or similar body.

Leases and Equipment

  1. A schedule of fixed assets and the locations of them.
  2. A list of company vehicles.
  3. Copies of all property leases.
  4. Copies of all equipment leases.

Intellectual Property

  1. A schedule of UK and foreign trade marks and patents registered or applied for.
  2. A description of manufacturing methods and technical know-how in relation to products.
  3. A description and copies of any copyright works.
  4. A list of all consulting agreements for business advisors or consultants whose work involves intellectual property belonging to the company or advising in relation to it. Copies of those contracts and IP assignments if applicable.
  5. A list of any claims made, threatened  or likely to be made against the company, with a summary of the claim.
  6. List of all websites, domain names and digital services providers.

Staff and Employee Benefit

  1. A human resources organisational chart.
  2. A list of employees including positions, current salaries, benefits and bonuses paid during last three years and length of service, along with copies of their contracts. The same should be requested in relation to consultants.
  3.  Copy of the staff handbook and all staff policies.
  4. A description of any staff issues in the last three years including any disciplinary actions and any claims made by current or former staff.
  5. A list and description of benefits of all employee health and welfare insurance policies or self-funded arrangements.
  6. Copies of all employee share options.

Licenses, Permits & Environmental Issues

  1. Copies of any governmental or regulatory licenses, permits or consents.
  2. Any correspondence or documents relating to any proceedings of any regulatory agency.
  3. A list of any hazardous or regulated or controlled materials used in the business. Operations as well as any permits or licences relating to transport, use, storage and disposal of those.
  4. Any proceedings or threatened proceedings against the company for breach of any environmental legislation or guidance.
  5. Details of any HSE investigations threatened, pending or concluded.

Customer Information

  1. A list of the company’s customers for the last 3 years.
  2. Details of the company’s purchasing policies and credit policy.
  3. Details of unfilled orders.
  4. A summary and explanation of any customers whose business accounted for more than 20% of income that has been lost over the last 2 years.
  5. All surveys and market research reports relevant to the Company or its products or services.
  6. The company’s current advertising programs, marketing plans and budgets, and printed marketing materials.
  7. A description of the company’s major competitors.

Professional Services

  1. A list of all advisers engaged by the firm in the last 3 years, including accountants, consulting firms, solicitors etc and a list of matters they were engaged to assist with.