Huntley Legal's Blog

All companies and businesses are made up of a collection of moving parts. As such, their accounts and financial position are always in flux.

This makes it tricky when you’re:

• selling shares in a trading company
• buying shares in a trading company
• selling a business or business unit by means of an asset purchase
• buying a business or business unit by means of an asset purchase

When you initially start negotiations, the completion date may be some way off. This means it can be hard to decide the price, as the financial position and set of accounts you use to form the basis of your negotiations may well change over the period of time it takes to get the deal done and completed.

This article explores the established conventions for dealing with this situation.

Nothing stays the same for long. Here are some of the potential changes coming up in 2022 that you need to be aware of.

When you borrow money for your business, it’s likely to be under a loan agreement. But there is an alternative – loan notes.

I’ve had to review some quite complicated loan notes recently, so this article explores why you might consider them over a loan agreement (which is typically simpler).

This article builds on my previous one: Considering a loan?

Before you borrow money, you need to understand the different types of lending. Although lenders may fling around lots of fancy jargon, there are a small number of basic loan types which are relevant to business borrowers (rather than consumers) and share certain core characteristics.

This article is designed to help you make an informed choice about which is right for you.

I wrote recently about Prince Albert’s Etchings, and what happened when there was an attempt to publish them without permission.

This article builds on that by explaining how the law around confidential information has evolved and what it means to you today.

Past case law means your confidential information should be protected, at least to some extent, even if you have not put formal agreements in place (the core reference is the 1969 case of Coco v Clark). This generated the three-limb test for when you can get court protection for your confidential information, and is relevant whether or not there is an agreement in place.

I was considering whether confidential information could be protected by the law when there is no written agreement about it between the relevant parties. So I blew the dust off my memories and (online) law books and re-found the case of Prince Albert v Strange from 1849. (Just to be clear, I wasn’t around at the time, but the story is unforgettable.)

As a hobby, Prince Albert and Queen Victoria used to etch pictures of their family. They wanted to show their etchings to friends and give them as gifts, so they approached a printed in Windsor called John Brown. He duly made the original etchings into copper plates, produced the copies that had been ordered, and delivered them to the Castle.

However, a member of his staff had run off a few extra copies, and sold 63 of them to Jasper T Judge, who had published a book in 1848 about the finances, spending and patronage of the royal family, called ‘Sketches of Her Majesty’s Household’.

Jasper planned to display the prints at a public exhibition. So he approached a publisher, William Strange, who produced and distributed 50 copies of a catalogue describing the etchings – two copies of this were sent to Windsor Castle.

At this, Prince Albert was not best pleased.

Starting a business? There’s lots to do and you can’t do it all at once. When income hasn’t yet started flowing, you may have to prioritise the legal documents you use.

This article covers what’s most important for your team, suppliers, customers and regulatory requirements. It’s part 2 of a mini-series. Part 1 covers what you’ll need to govern the business structure. You’ll find it here: Your business baby needs to take the right first steps… legally speaking (part 1).

Documents around the team

Employment contracts

You’ll need to give an employment agreement to any members of staff or workers you take on. These are time-sensitive documents, as it’s a legal requirement for any employee to have their Terms & Conditions of employment in writing within eight weeks of starting.

Issues to cover include:

• “What legal structure should we have?“

• “What legal agreements should we have in place?”

• “Which legal documents do we need first?”

I often have this conversation with clients when a group has decided to go into business together.

Although, in their previous lives, they will have used agreements as a supplier, customer or consumer, they are probably not clear what some agreements do. Everyone they talk to makes recommendations and suggests a bunch of things they will need to start with. The owners of the new business end up with the names of various legal documents rattling around in their heads.

They know what they want to do, in terms of the goods, services or software products they want the new business to offer, but they haven’t yet generated any income so they don’t yet have a pile of money. They know they will need legal documents for their business but have a limited budget and it can be hard for them to decide where to start.

Having a ready-to-go starter pack would be great. But, if you buy one of the off-the-shelf legal packages, they are only ever a crude template, and can be a bad fit for your business in horrifying ways.

In this article, and the next one, I will describe some of the legal documents you will need (depending on your situation). This may help you work out your priorities.

When you’re negotiating, whether for a commercial arrangement or for the purchase or sale of a company, at some point, the person you’re negotiating with may suggest simplifying some part of the deal.

Their ideas may vary (and I have seen all of these):

• Removing the whole schedule of warranties they should give you about the business they are selling you
• A shorter clause, say, to cover data protection requirements
• Intending to proceed without using a solicitor on their side “to save themselves time and money”
• Asking you to send money direct to them or via a third party ready for completion

You might find they present such shortcuts to you as worthwhile and almost saintly. As if you’d be mad to question them. That they are offering this approach to make the deal faster, cheaper and simpler.

Speed, affordability and simplicity are like ‘motherhood and apple pie’. Symbols of cosy, reassuring goodness that are commonly assumed to be beyond reproach.

It can be hard to challenge anything that is described as making things faster, cheaper and simpler. It’s impossible to object to them as concepts. The other party’s suggestion may therefore come across to you with all the social weight of motherhood and apple pie and the added implications that you would have to be mad not to want the benefits of these shortcuts. And, in the often emotional environment of a business negotiation, you don’t want to be seen as perverse or churlish (after all, the strong message is that it would reduce your status and leverage in the negotiation).

But but but…

I was listening to a topical podcast recently about what we lose when we work from home. Called ‘The Empty Office’, it was based on a Guardian audio long-read by Gillian Tett, and looked at the changing dynamics of workforces who haven’t been in their traditional workplaces or shared office spaces for a while.

The podcast introduced me to the scientific theory of ‘sense-making’ which I found most intriguing.

These ethnographic studies and sociological theories came to the fore academically in the 1990s led by academic, John Seely-Brown, and have since been taken up by business sectors including consumer goods and financial services.

It’s all about understanding the difference between knowledge and reality.