Irwin Mitchell
29 Contributions by Irwin Mitchell
PRACTICE NOTES
Heads of terms
A business purchase (the target business) typically starts with settling the key commercial points—price, structure of the deal, due diligence steps, exclusivity provisions and timetable. These points are commonly negotiated by the parties themselves, or alongside their accountants and other professional advisers, and then set out in heads of terms, sometimes called a ‘letter of intent’ or ‘memorandum of understanding’. See Practice Note: Heads of terms—share and asset purchases.
Where environmental risks are known or suspected, the heads of terms might cover:
providing the buyer with any existing environmental report(s)
a requirement for a reliance agreement or collateral warranty, giving the buyer the benefit of those report(s)
a process allowing the buyer to undertake a phase 1 environmental audit or phase 2 ground investigations
headline terms for an environmental indemnity or environmental
Environment
PRACTICE NOTES
Heads of terms
Acquiring a private company typically starts with settling the principal commercial points, including price, the deal structure, due diligence logistics, exclusivity obligations and the timetable agreed. Those commercial points are usually negotiated directly between the clients, or sometimes in conjunction with their accountants or other professional advisers, and captured in the detailed heads of terms, also referred to as a letter of intent or memorandum of understanding. See the Practice Note: Heads of terms—share and asset purchases.
If environmental matters are known or suspected, the heads of terms might provide for:
disclosure of any existing environmental report(s) to the purchaser
a requirement for a reliance agreement or collateral warranty so the purchaser receives the benefit of the environmental report(s)
a procedure enabling the purchaser to undertake a phase 1 environmental audit or phase 2 ground
Environment
PRACTICE NOTES
Vendors frequently rely on a virtual data room—an online portal with restricted access created by a specialist service provider on the sellers’ behalf, as distinct from a ‘physical’ data room—to co-ordinate the bidding process (where applicable) and the due diligence stage of the transaction. The data room will typically include relevant financial, legal and technical due diligence materials relating to the target’s business, and may contain responses to the due diligence questionnaire...
Environment
PRACTICE NOTES
Technical due diligence
Where non-compliance is known or land contamination suspected, the buyer, or ideally its lawyers, may engage an environmental consultancy to carry out a phase 1 environmental, health and safety (EHS) compliance audit, or undertake intrusive phase 2 testing, to gauge liability and financial risks.
Types of environmental audits
Typical prices (exc VAT) and timescales:
Desktop searches: historic uses, landfills, environmental permits, pollution incidents, ground stability, flooding. Contaminated land risk screening report £180; combined contaminated land and flooding search £270–£320; 1–3 days.
Basic phase 1 audit: desktop search, site walkover, management interview, regulator replies; £1,000–£2,000; 5–10 days.
Detailed phase 1 environmental, EHS audit: as phase 1 plus report reviews, operational controls and systems, key health and safety compliance issues, capex investment assessment; £2,500–£4,000; 5–10 days.
Asbestos survey: Management Asbestos Survey, Demolition or Refurbishment Survey, asbestos register; £2,000–£5,000; 5–10 days.
Phase 2 report: intrusive testing of soil, water and gas; price
Environment
PRACTICE NOTES
Most of the completion and post-completion tasks in a share purchase transaction are routinely carried out by corporate lawyers and typically include:
holding the relevant completion meeting
filing notices at Companies House
stamping the stock transfer form
preparing the transaction bible of all signed documents
making any adjustments to the purchase price
The buyer gains beneficial ownership of the target company’s shares once all completion formalities have been completed or expressly waived.
Transfer of the legal title to the target company’s shares...
Environment
PRACTICE NOTES
This Practice Note sets out principal environmental and health and safety (EHS) points to address in a share purchase. The questions can operate as a checklist for a seller’s solicitors preparing the data room, or for a buyer’s lawyers assessing whether the EHS materials are adequate for the business. See Practice Notes: Environmental due diligence—share purchase and Environmental issues when selling a company or business.
Contaminated land
In a share purchase, the buyer assumes responsibility for land contamination or water pollution caused or knowingly permitted by the target, present at or migrating from current or former properties; spills by the target on third-party land (for example, tanker incidents); and contamination or pollution at current properties as a Class B owner or occupier. The buyer should evaluate potential liabilities and remediation costs, which may require a phase 1 environmental audit or a phase 2 ground
Environment
PRACTICE NOTES
For further details, see: Post-completion environmental issues (asset purchase)—checklist.
Deal with any EHS issues highlighted in the legal due diligence report
Legal due diligence reports and asset purchase agreements (APAs) may identify specific matters to be addressed after completion. Typical follow-up actions include:
conducting a baseline phase 2 environmental audit
undertaking a phase 1 compliance audit to address issues raised during due diligence
preparing an asbestos management plan
implementing recommendations from a fire risk assessment or legionella report
Once the buyer controls the property, it will usually carry out these steps. The APA can also provide routes for the seller’s lawyers to input into post-completion activity, for example:
agreeing the scope of work for any environmental audits
granting access rights to complete specified works
requiring the seller to reimburse costs incurred by the buyer
See Precedent:
Environment
PRACTICE NOTES
For further details, refer to Checklist: Post-completion environmental issues (share purchase)—checklist.
Deal with any environmental health and safety (EHS) issues highlighted in the legal due diligence report
Legal due diligence reports and share purchase agreements (SPAs) may specify particular matters to resolve after completion. Typical steps include:
Conducting a baseline phase 2 environmental audit
Carrying out a phase 1 compliance audit to address items identified during due diligence
Producing an asbestos management plan
Implementing recommendations from a fire risk assessment or a legionella report
With control of the property, the buyer undertakes these activities. The SPA may include arrangements for the seller’s lawyers to influence the post-completion programme, such as:
Agreeing the scope of any environmental audits
Granting access rights to complete specified works
Providing for the seller to reimburse costs incurred by the buyer
See Precedent:
Environment
PRACTICE NOTES
Sellers frequently employ a virtual data room (a restricted-access online platform established by a service provider for the sellers, as opposed to a 'physical' data room) to manage the bidding process (where relevant and appropriate) and to oversee the due diligence stage of the overall transaction...
Environment
1 Contributions by Irwin Mitchell Experts
PRACTICE NOTES
ARCHIVED: This archived Practice Note distils a selection of employment cases on coronavirus (COVID-19) highlighted by the Lexis+® UK Employment team, aiming to provide a snapshot of the kinds of disputes reaching tribunals and the stance being taken both there and on appeal. It is not a complete inventory of all significant decisions. Employment tribunal judgments sit at first instance and do not bind other tribunals. As tribunals decide matters by reference to the pandemic conditions and guidance in force at the relevant time, cases with comparable facts to those outlined below could now be determined differently. For matters that are appealed, see Practice Note: Case tracker—Employment.
The legal context
For general information on employer issues arising from coronavirus, see Practice Notes:
Health and safety—protection from detriment and dismissal
Living with coronavirus (COVID-19) in the workplace from 24 February 2022
Employment
If you expected to see yourself on this page, click here.
