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Band Hatton Button extends Coventry Rugby partnership

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Reading Time: 2 minutes Coventry Rugby has today announced that Band Hatton Button has extended its partnership with the club. Our logo will be seen on their shirts for the 2019/20 season.

It’s all in the planning when it comes to selling privately-owned companies

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It’s all in the planning when it comes to selling privately-owned companies
By Marta Fisher, Commercial law specialist with Band Hatton Button

For the shareholding directors of many privately-owned companies, the end-game is focused on selling up before moving on to new ventures or sometimes retirement. But many owners under-estimate the time involved in making a business market-ready, or do not seek advice on the different options before they start, nor the route-map to follow to secure a successful sale.

Ideally, an advisory team should be put together, involving a lawyer and an accountant specialising in company transactions, to guide the company on the preparation for sale, before any moves are made to seek out buyers.  Calling in advisors after a deal has been struck may mean financial or legal pitfalls that can cause a deal to fail in later stages and the role of the advisory team in this preparatory stage is as important as any work they will undertake in finalising the deal.  Taking your time to get it right and make the business market-ready means that timescales of 12 to 24 months for preparation are not uncommon.

In putting together a detailed exit plan for a limited company, the first question you are likely to be asked is whether you are looking for a share sale or an asset sale, also known as a business sale.   The answer may be influenced by personal, financial or legal reasons which can be explored with the specialists, but the final decision will determine the process to be followed and the resulting tax implications for both buyer and seller.

It’s worth mentioning before exploring this further, that choosing between these two options will apply only for limited companies, where the company is an entity in its own right.

SHARE SALE

The shareholders sell their shares in the company that owns the trade and assets of the business.

    A share sale is effectively the clean-break option for the shareholders. The buyer is purchasing the whole company, its assets, liabilities and the business as a going concern.   There is no need for new contractual arrangements with employees, suppliers, customers, landlords or others, as the corporate entity that is the company will continue in its present form; it is simply that the shareholding has been transferred.

ASSET SALE

The company sells some or all of the assets which comprise the business.

    Here the seller is the company itself, rather than the individual shareholders. Only those assets and liabilities identified and agreed to be transferred are involved in the sale.  This can cover both tangible assets, such as property, stock or machinery, and intangible assets, such as intellectual property and goodwill.   An asset sale may take place because a seller wants to retain parts of the business that will continue to operate, or be sold elsewhere, or because the buyer wants to cherry-pick and avoid certain company liabilities.  As the business is being transferred to a different corporate entity, third-party contracts with customers and suppliers need to be redrawn; commercially-rented property requires negotiation with the landlord to agree an assignment of the lease and there would have to be employee consultation.  A Transfer of Undertakings (Protection of Employment) Regulations situation is likely to arise, commonly known as TUPE, where employment rights are protected and transferred to the new owner of the business assets.

A key factor in the decision making between these two routes is the tax position.  This is complex and specific to each situation, but generally individual shareholders will be better off in a share sale, with a single tax charge on any capital gains arising, and which is likely to be reduced to 10% if entrepreneurs’ relief applies.  In an asset sale, there is a potential double tax charge, firstly on the company, with corporation tax on the profit made on the sale of assets, and then on the shareholders when they withdraw the sale proceeds from the company.

Whichever of these two routes is finally decided upon, the management team need to be sure that contracts and policies are all in order, and that any disputes or other issues have been resolved. Once the company is ready to go on the market, a non-disclosure agreement (NDA) for potential buyers should be in place and confidential information must be withheld from any interested parties until the NDA has been signed.

Once a deal has been agreed, buyers should be credit checked and their source of funds validated.  If those pass the test, then set out the terms at an early stage of negotiation.  The sale price is important, but it’s not the only thing that matters.  Getting a clear document setting out the heads of agreement can influence the way the transaction progresses and means everyone knows what is expected of them.

This is likely to include a timetable covering aspects such as when contracts will be sent, how long the buyer has to complete due diligence, through to when exchange of contracts and completion will take place.  It should clearly set out what is being sold and what may be specifically excluded.   And while a non-refundable deposit is usual on exchange of contracts, it is worth considering a deposit on the signing of the heads of terms, as this can protect against a buyer withdrawing without good reason or failing to meet the timetable.

At each stage, the most important thing is that all members of your advisory team are working with each other in a seamless way throughout the process, as well as directly with you. Where the ground shifts, as it inevitably will, it’s important they remain focused on the vision you have for the company sale, and work with you to achieve the best possible outcome in changing situations.

Web site content note: This is not legal advice; it is intended to provide information of general interest about current legal issues.

Lawyer takes next step in career…

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Reading Time: 2 minutes A Coventry solicitor has achieved a Society of Trusts and Estate Practitioners (STEP) diploma, following additional studies which have improved her technical knowledge in advising clients in estate planning, trust and estate practice.

Firm building on plans for long-term future by investing in apprentices

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Reading Time: 2 minutes Coventry law firm is building on plans for its long-term future by investing in a group of apprentices.

Stepping up to the challenge of the sale board   

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Reading Time: 4 minutes Homeowners, estate agents and solicitors up and down the country are wondering whether to expect the traditional upsurge in the property market in April and May.

Coventry residents urged to check eligibility for LPA refund

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Reading Time: 2 minutes Coventry residents urged to check eligibility for LPA refund

Landowner carries the can on illegal waste

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Reading Time: 2 minutes An illegal waste wood stockpile on land in Devon has seen the landowner prosecuted and left with the clean-up bill after being held responsible for knowingly permitting the tenants’ activities.

Over £12,500 Raised for Shine A Light in 2018!

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The leader of a Coventry-based childhood cancer charity has thanked one of the city’s law firms for helping them to overcome the most difficult year in their history.

This time last year Shine A Light Support Service – which supports families affected by childhood cancer – had to leave Coventry Point with no initial alternative accommodation.

Charity founder Sam Schoolar eventually found new premises at the Koco Community Centre at Spon End, and joined forces with Band Hatton Button who adopted Shine A Light as their charity partner for 2018, which went on to raise more than £12,500 throughout the year.

“The donations from Band Hatton Button has quadrupled the annual income we are used to, and without that money it has given us the confidence to move forward from what was a very bleak situation,” said Sam.

“Without those funds we would have been looking at a very different future, but we now have two spaces at the Koco Community Centre where we support around 40 families a month.

“We have a play area for children and a café area for parents which means we can lay on coffee mornings and introduce structured play activities.

“We also have a separate space for private counselling which means we can provide a useful, rounded service for people who are doing through some of their darkest days.

“We’ve seen a big spike in enquiries for our services over the last couple of months – driven by word of mouth and referrals from hospitals – so we are appealing for as many donations as possible to help us keep up with demand.

“The two most popular services are the counselling and the trips that we do because that’s when families can socialise with others who have gone through similar experiences to them.

“We are also introducing some academic sessions for youngsters who can learn about coding and how to create their own game or website – it’s something different that helps to take their minds off what they are going through.”

Over the past year Band Hatton Button has hosted a charity ball, taken part in the Lake District Six Peaks Challenge and organised a quiz night in conjunction with the Rotary Club of Kenilworth to raise funds, with staff also helping to decorate the charity’s new base.

Sarah Jordan, Head of Marketing and Client Relations at Band Hatton Button, added: “This has been one of the most rewarding years for us as a firm having seen the difference that our fundraising has made.

“We’re hoping news of Shine A Light’s revival will inspire other businesses to reach out and help them grow further – they provide an invaluable support to families who are going through extreme difficulty.”

For more information about Shine A Light, visit www.shinealightss.org.uk.

ENDS

Photo caption: From left, Jonathan Miller (Rotary Club of Kenilworth), Dina Parmar (Band Hatton Button), Kristy Ainge (Band Hatton Button) and Sam Schoolar (Shine A Light Support Service).

For more information contact Adam Manning:

amanning@advent-communications.co.uk

024 76633636

New Trade Mark Rules Simplify Counterfeit Challenges

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A branding challenge toppled the golden arches when a small Irish fast food company managed to block the international McDonald’s food chain from trademarking the terms Big Mac and Mc throughout Europe.

The European Union Intellectual Property Office ruled that McDonald’s had not been able to prove genuine use of the name Big Mac as either a burger or restaurant name, and that the trademark they registered back in 1996 should be cancelled.

The judgement opens the door to expansion for Galway-based Supermac as it will be able to register its brand as a trademark in the UK and Europe.  McDonald’s had used the brand name’s similarity to Big Mac as a reason to block previous expansion outside Ireland, even though the Supermac company name had been based on the founder’s nickname when the food chain was established in 1978.

Said commercial expert Sean Byrne of Coventry town solicitors: “This was a real David and Goliath case and demonstrates how important it is to protect your brand whatever your company size.  It is also a good example of why you need to look ahead and anticipate where your company may go in future.  If Supermac had registered their trade mark in other jurisdictions when they started out, they would have been in a stronger position when McDonald’s came along.”

The ruling in the case coincided with changes to UK trade mark law which came into force recently (14 January 2019) which saw amendments introduced to the Trade Mark Act 1994 as a result of the new EU Trade Marks Directive 2015/2436/EU.

The Directive is focused on harmonising the law at national level across member states and offers brand owners new ways to fight counterfeiting and misuse of trade marks within company names, as well as introducing new procedures for registration, renewal and restoration.

Some of the key changes are:

  • Marks can be represented in forms other than graphically, allowing online filing in electronic formats, so that sounds, multimedia, animation or holograms may all be registered. A graphical representation will still be required for registration under the international Madrid system
  • Technical function restrictions have been extended, so these apply not only to shape, but also to any other characteristic which performs a purely technical function
  • The Intellectual Property Office will no longer notify applicants if any conflicting trade mark has expired at the date of filing, meaning applicants need to conduct searches themselves for any trade mark that has expired less than a year before their application, as these could be restored or renewed
  • Proof of use, which may be used in any opposition proceedings, will no longer be effective from the date of publication but will instead be counted from the date of filing, which will need to be borne in mind when counting down for the challenge on the five-year period for non-use
  • When owners believe counterfeit goods are being exported bearing their trade mark, they will no longer have to prove they are the right holder in order to detain the goods; instead, the burden of proof will be with the exporter to show that the holder does not own the right
  • Owners will have extended rights to act against those producing packaging, labels or other materials to be used on counterfeits, even where the producer is unaware that they are acting without authority
  • Dictionary usage that identifies a trade mark as a generic term will be open to correction, including the option of a court order for amendment of a publication
  • Easier rules for restoration of a lapsed trade mark will require applicants to demonstrate only that the failure to renew was unintentional, where previously a decision had to be made as to whether it was just to allow the renewal
  • The ‘own name’ defence for use of an existing company’s name has been removed for company names, so in future this will be an infringing act and will be allowed only for personal names

Added Sean: “The amendments to UK law are mainly straightforward and many people will have come across them as they have already been implemented into EU Trade Mark Law.

“The one that may cause some controversy is the change to the own name defence as this is not being applied retrospectively, so we will have situations where long-standing companies continue to use a name that would fail under the new infringement provisions and we will have to see how the courts tackle this.”

New Offices

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A Coventry law firm is moving into larger premises in the city in line with its growth plans and to ensure the business is well placed for the future.

Band Hatton Button, which currently occupies 7,500 square feet of office space on Warwick Road, is making the move to Earlsdon Park on Butts Road to acquire 11,500 square feet of open-plan office space on a 15-year lease.

The move heralds a new era for Band Hatton Button, which has grown its workforce from 62 to 82 and increased its budget from £3.5 million to £4.5 million since forming in 2013 as a result of a merger between Varley Hibbs, Button Legal and Band Hatton.

Band Hatton Button are set to move into their new premises over Easter, and managing director Mark Moseley highlighted the significance of the move.

“This office move is laying the foundations for us to realise our long-term ambitions to grow – both organically and through acquisitions,” said Mark.

“We are nearing maximum capacity in our existing offices whereas the new space will enable us to grow our workforce to around 120 staff which has been our plan for some time.

“Extra office space is key for us as we are keen to attract new talent into the firm which will help us to diversify our client-facing services.

“We are particularly on the lookout for individuals with commercial expertise in the agriculture and construction sectors, which are going to be two big areas of focus for us over the coming months and years.

“We’ve enjoyed a successful journey of growth since the business’ merger in 2013, notably more recently with Coventry’s in-demand residential and commercial property markets, which is showing no signs of slowing down.

“We are in the heart of a city that is attracting more students than ever before, is at the forefront of developing driverless cars and is preparing to become UK City of Culture in 2021 – the future is bright for Coventry and we look forward to sharing in the city’s success.”