legal costs for sale of company

olivia

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we have recently been quoted 17k in legal costs for services involved in selling our 94% shareholding in a company to the other shareholder. We believe it is a relatively simple straightforward transaction as all three of us are in agreement and the Heads of Agreement which we have drawn up between us are straightforward. Our accountant warned us that the legal costs could be 'hefty' but we werent expecting this! Any advice?
 
if you are happy, culd you simply not just transfer the shares, paying the 1% SD?
 
The reason for the hefty legal quote is perhaps that the solicitor is treating it as a sale by bargain at arms length. The appropriate share purchase agreement for use in these circumstances can run to over 100 pages, including perhaps 40 pages of warranties.

If you as vendors want to sell without giving all of the normal commercial warranties, and if the buyer is happy to buy without getting them (which will most certainly be against his legal advice, but then he is not obliged to take the advice) the transaction can certainly be handled for a lot less than €17k.

On the scant info provided, the above is only a possibility. It might equally be the case that despite seeming straightforward to the original poster, the transaction is anything but. For example, the financing requirements for the buy-out may involve a lot of legal work (there are particular requirements to be followed where a company's assets are being used to finance the purchase of the company - dealing correctly with this is a four-figure fee on its own); there may be existing mortgages etc. personally guaranteed by those exiting the company, and a general re-mortgage may be involved; this might involve updating title documents in relation to planning and other matters. As I say, on the scant info provided, it is simply impossible to make an informed judgment.

I think it would be extremely unwise to simply do a share transfer yourselves, without taking proper tax and transactional advice. But by all means, do shop around, in case the transaction is genuinely a very straightforward one and one where detailed warranties are not required by the buyer or on offer form you the sellers. But if the money involved is in any way substantial, it is false economy to dispense with taking proper advice.
 
Even the various minutes in relation to a relatively simple buy out and the relevant companies office forms can be comprehensive, depending on the particular company circumstances etc. I would not have thought €17k was overly expensive. Get your Solicitor to issue you with a detailed quote and then you will see what exactly is involved.
 
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