With recession comes opportunity and when one door closes another opens, or at least that is the view of those with a glass half full mentality! The problem that frequently occurs with the glass half full mentality is that it fails to see any risk, only the opportunity. Seeing opportunity is a great entrepreneurial asset, but it needs to be balanced by carrying out a detailed risk assessment of the new opportunity.
Obviously, what that risk assessment involves will very much depend on what the new opportunity is. If it is starting up a new business, expanding an existing business or purchasing an existing business from someone who perhaps wishes to retire, then it is highly recommended that you give some thought to the following questions:
Setting up a new business.
Is the business to be just you as a sole trader or are you considering going into partnership with one or more like minded individuals?
Have you considered whether you should be set up as a limited company or limited partnership?
With a Partnership you will need to have in place a Partnership Agreement.
If setting up a Limited Company, then you will need to give consideration to whether you take the Model Articles of Association or whether you need bespoke Articles; Shareholders Agreement and also a Directors Service Agreement for where there is more than one shareholder/Director. You also need to appreciate and understand that the different roles of the Shareholders and the Directors even when these are one and the same person.
Expanding an existing business.
You should review your existing agreements for partnerships, shareholders, and directors (depending on the type of business setup that you have) in order to ensure that the current agreements are suitable for the intended expansion.
Purchasing an existing business.
Are you purchasing goodwill, stock, a limited company including all the existing assets?
Are you taking on the staff of any existing business?
You will need to ensure that full agreements are entered into for the transfer/assignment of the goodwill, premises lease, purchase of existing stock, transfer of undertakings in respect of any employees, tax implications (in respect of which you will require the services of an accountant) the transfer of any shares in an existing limited company, reviewing and updating Shareholders Agreements and Directors Service Agreements and ensuring that any existing Directors stand down from their appointment which is not necessarily automatic just because their shares have been transferred.
Newnham & Jordan can assist with all aspects of drawing up the legal documents for setting up a new business, purchasing an existing business or selling your business. For more information or just a general chat about your proposed venture and how we can assist please call the office asking for Angie Newnham or use the web contact form below giving a brief description of the intended transaction.