Due diligence of a target business is key in the decision-making process of any acquisition, helping a potential buyer to decide whether to proceed at all, whether a price adjustment is required, or if any specific risk identified needs to be covered by way of specific warranty or indemnity in the sale and purchase agreement (SPA).

During the period of uncertainty following the EU referendum result, buyers need to consider broadening the extent of their due diligence to include Brexit-related issues such as European-registered intellectual property, foreign employees, and contracts with third parties based in the EU.

In connection with any European-registered IP identified, consider whether it would be wise to obtain specific UK registrations. IP licences where the territory of the licence is linked to the EU or the European Economic Area may need to be renegotiated, so as to ensure that all relevant parts of the UK are still included (as appropriate).

If a number of foreign workers are engaged or employed by the target business, consider the likely impact if the free movement of people to the UK is restricted post Brexit.

If the target company has entered into contracts with an EU dimension, consider the territorial scope of the contract, the governing law, the forum for disputes, and any agreed payment terms, taking into account that there will most likely be an effect on currency now article 50 has been engaged.

The regulatory EU law affecting UK businesses will change following Brexit. The extent and nature of these changes remains unknown. However, buyers should carefully consider the existing contracts and trade arrangements of the target company to assess whether they will continue to be contractually bound by the potentially more onerous EU regulatory legislation following Brexit.

Buyers should also identify if the business has been adversely affected in terms of customer demand following the referendum result and the potential impact on any EU grants, funding, or other investments that the target company may have received.

If you require legal advice on the buying or selling or a business or any other corporate matters, please get in touch with Farleys Solicitors on 0845 287 0939 or contact us online today.