This article provides a summary as to what to expect if you are considering buying or selling a business in Ireland. The primary focus will be on the purchase/disposal, of shares/assets and the different structures and procedures you will need to consider.

Of primary importance in the acquisition/disposal of a business, is to establish which of the two most common structures is the most suitable for the deal, an asset sale agreement or a share sale agreement. The tax implications will often dictate which route is taken.

An Asset Sale Agreement is appropriate when a buyer wishes to purchase assets from a company and leave liabilities both actual and contingent, behind. This may enable a buyer to cherry-pick certain assets which are particularly suitable to the buyer’s business. An asset sale agreement may also allow the buyer some flexibility in regard to the employees of the target company. However, careful legal advice should be obtained as the Protection of Employees on Transfer of Undertakings Regulations (SI 131/2003) (the “TUPE” regulations) may apply, resulting in the buyer inheriting some or possibly all employees of the target company with all their legal and contractual rights.

A Share Sale Agreement may be the appropriate structure where the buyer wishes to acquire shares in the target company. There are many reasons why this might be the case, most importantly however, you should remember that with this structure all assets and liabilities of the target company remain in place, so a comprehensive legal and financial due diligence is essential.

Heads of Terms (“HOT’s”)

The HOT’s is a document which sets out the agreement as between a buyer and seller. It will record the essential elements of the agreement as negotiated. The HOT’s do not compel the parties to conclude the deal and they are usually expressed to be “subject to contract” and not legally binding. HOT’s are used as a record of the main terms of the agreement.

Due Diligence

The due diligence exercise is hugely important in any corporate/commercial transaction. It is usually commenced by sending a detailed pre-contract questionnaire to the seller’s solicitor, and, from a timing point of view, this will very often take place at the same time the asset/share purchase agreement is being drafted. It will cover all aspects of the asset sale/ target business. It is a method of verifying that the buyer is being sold what was agreed in the HOT’s.  Generally, the maxim “Caveat Emptor” is applicable to a transaction, i.e. “Buyer Beware”. This will be diluted by the warranties (see below) however, in a share sale transaction a full investigation into the affairs of the target company is needed. To list but a few, the buyer will need to carry out the following:-

  • A full financial review of the target company’s financial affairs;
  • A review of the corporate structure of the company;
  • A review of the insurance cover and any current claims;
  • An investigation of title to any properties included in the transaction;
  • A review of all employee contracts including a review of the position of the employees under TUPE;
  • Enquiries into areas specific to the individual target company/assets;
  • A tax review will be required to ensure that no unanticipated tax liability issues will arise.

The due diligence process should highlight any issues in the target company/relating to the assets, allowing the buyer to either walk away or protect themselves through the imposition of warranties and indemnities in the contract.

Funding The Purchase

This can take many forms including venture capital funding, private equity funding and/or bank loan transactions. This aspect of the transaction will require additional investment documentation and/or providing security to a bank.


A buyer will need to cover off certain risks by the insertion of warranties in the contract to ensure that they have a remedy if it later transpires that certain statements or representations were made which were not in fact true and which result in financial loss to the buyer.  A buyer will be entitled to compensation if the seller is in breach of a warranty.

The Disclosure Letter

The disclosure letter provides the seller with an opportunity to disclose against the warranties provided which reduces the seller’s exposure to post completion damages. The seller may qualify warranties by referring/disclosing specific problems the company may have in relation to insurance, litigation, employees, etc. If the seller does not adequately disclose, it may face an action for breach of warranty claim under the agreement. From the buyer’s perspective, issues disclosed through the disclosure process may result in the buyer seeking a reduction in the purchase price or walking away from the deal altogether.


On completion, the buyer’s solicitors will look for the following to be handed over:-

  • Executed Share Sale Agreement or Asset Sale Agreement;
  • Executed share transfer forms (where applicable);
  • Disclosure letter;
  • Resignation letters of the directors;
  • Statutory registers and company seal;
  • Release of any mandates;
  • Delivery of assets in an asset sale transaction;
  • Any other documentation that may be required dependant on the circumstances.

A board meeting will take place to allow for the approval of the foregoing and to approve any individual requirements as the transaction may dictate.

What to expect from your solicitor

A solicitor is usually instructed after heads of terms for the sale have been agreed and reduced to writing.  A good solicitor having relevant experience will identify potential areas of dispute between the buyer and seller at an early stage in the transaction so that they can either be legislated for in warranties or indemnities or taken into account in the deal by way of a reduction in the purchase price, if necessary.  Prompt identification is key and will save you time and costs.

What Amorys Can Do?

At Amorys, we will carry out a detailed review of your requirements to ensure a suitable acquisition/disposal agreement is put in place. In collaboration with your accountants and tax advisors we aim to achieve a smooth transaction for you/your business. Our services extend to advising on merger and acquisition transactions for Small to Medium Enterprises (SME’s) including, management buy outs, carrying out due diligence and drafting the required legal documents.

If you would like further information in relation to any of the above please contact Brian Kirwan at, or telephone: 01 213 59 40 or your usual contact at Amorys.

Please also see our article on the Tax Considerations When Buying a Business

The content of this article is for information purposes only and is not intended to constitute legal advice. Amorys Solicitors is a boutique commercial and private client law firm in Sandyford, Dublin 18.

(c) 1st August 2017

Brian Kirwan Amorys Solicitors, suite 10, The Mall, Beacon Court, Sandyford, Dublin   18, Tel: 01 213 59 40, Email: Website:

Whilst every effort has been made to ensure the accuracy of the information contained in this article, it has been provided for information purposes only and is not intended to constitute legal advice. Amorys Solicitors is a boutique commercial and private client law firm in Sandyford, Dublin 18, Ireland.
For further information and advice in relation to “Buying or Selling a Business in Ireland”, please contact Brian Kirwan, partner, Amorys Solicitors, telephone 01 213 5940 or your usual contact at Amorys.

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