How we helped sell a residential and commercial property investment company - Jonathan Lea Network
Author: Jonathan Lea | Managing Director, Senior Corporate & Commercial Solicitor
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How we helped sell a residential and commercial property investment company


The Jonathan Lea Network represented the selling shareholders of a property investment company in the sale of its entire issued share capital for £4.2 million.

The property investment company was founded in 1959 to own several residential flats and a commercial shop premises close to Sloane Square. It has since been owned by several family trusts over two generations.

Despite having used various large established London law firms over the years, the two directors decided to instruct us after firstly having found a lot of the content on our website useful and then secondly meeting Jonathan in person and deciding the firm’s team had the right mix of experience, credibility, pragmatic approach and resourcefulness to represent the sellers.

Heads of terms

Our involvement started when we prepared the heads of terms for our clients which set out clearly the deal structure, the substantive terms and time frames required for both parties.

This required negotiating with the buyer’s solicitor to ensure that the aims of both parties were being accurately reflected in these terms without compromising the interests of our client.

The selling shareholders

As this was the first time our clients had been involved in such a process, we communicated regularly with them in order to aid their understanding of the legal process and the transaction as a whole.

As the various different sellers were located far from each other, we obtained powers of attorney for those whom it would be impractical to attend the pre completion meeting and sign off on the many agreed form documents that were required to be exchanged.

Some of the selling shareholders who we were acting for were trustees and we therefore reviewed the trust documents in order to ascertain the details of the relevant trustees and verify that these correlated with the information supplied separately by our clients. This allowed us to ensure that our client had the authority to sell the relevant shareholdings to validly effect the sale of the company.

Legal due diligence

We assisted with collating all the relevant documents and information from our client in response to the buyer’s legal due diligence questions. We helped to speed up the process by answering the technical/legal queries ourselves in order to save our client time with the amount of queries they were responding to. This was important as the transaction was time sensitive.

As the company selling its shares owned a property, our client was required to respond to the relevant property standard enquiries relating to the transaction, comprising CPSE 1 – general pre-contract enquiries for all property transactions, and CPSE 6 – supplemental pre-contract enquiries for property subject to residential tenancies.

We also effectively liaised with our client’s accountants in order to obtain information for the financial due diligence enquiries which were raised by the buyer.

When the buyer’s lender became involved they also raised their own set of enquiries to which we responded ourselves as far as possible in order to expedite matters.

Our team’s junior fee earners were particularly useful in ensuring that our clients could keep on top of all the due diligence enquiries and also that the information was well organised and presented. The various parties involved in the transaction quickly came to rely on us to quickly retrieve documents and answers.

Share purchase agreement

This was the main contract that governed the transaction. We took the initiative and carefully prepared a first draft of the share purchase agreement so that it included enough contractual certainty for both parties, but also protected our clients’ interests as much as possible and limited their liability and obligations post completion.

The SPA ended up requiring careful negotiation over a number of weeks. As the buyer had a lender involved the lender’s solicitors also had to approve the share sale documentation and raised a number of additional points to be considered.

There were therefore numerous parties with competing views commenting on the documentation and raising different issues. We positioned ourselves as the main party leading and driving the transaction to completion, patiently and persuasively dealing with complicated and sometimes contentious situations.

We held a number of calls with the various parties and established a good relationship with everyone in order to agree terms more effectively, which also included explaining legal terms to our clients and helping them to propose and agree compromises and solutions where there sometimes appeared to be deadlock on important points.

Disclosure letter

We ran through the warranties with our client and ensured that they understood these in order for them to comfortably provide these at completion safe in the knowledge that the buyer had been formally provided with all relevant qualifying information and the sellers could therefore not face any breach of warranty claim post completion.

Where there were facts and circumstances that made the warranties inaccurate we put together a detailed list of qualifying statements in a disclosure letter (together with supporting documents) in order to explain the reasons as to why there were issues which conflicted with each relevant warranty statement the buyer required the sellers to give. The result of the disclosure letter meant that the buyer could be confident that northing was being hidden or kept from them, while the sellers could agree to all the warranties, while knowing that the disclosure letter would protect our clients from facing any claims for breach of warranty.

Deed of contribution

Given that there were a number of selling shareholders involved, we put together a contribution agreement in order to state the maximum amount of liability each party would be subject to in the event that the buyer made a warranty claim on a several basis (i.e. targeting just one or some of the warrantors). We included provisions whereby if one seller were to default on the sums they owed, the other sellers would split the non-paying party’s share and the non-paying party would then be responsible for reimbursing the remaining paying parties accordingly.

Completion deliverables

As part of the transaction there were a number of documents which our client was required to supply as part of the completion process. These included, inter alia, the following:

Stock transfer forms

We put together each relevant stock transfer form in preparation of completion for each seller of the relevant shares.

Powers of attorney

As some of the parties were unable to attend the pre completion meeting (when all the completion documents were to be signed) we needed to obtain power of attorneys from some of the sellers who would be granting a power of attorney to the attending sellers. This allowed signature of the finalised documents to take place efficiently in readiness of completion.

Resignation letters and TM01

We prepared resignation letters and the relevant Companies House TM01 (termination of appointment) forms in order for the sellers who were also acting as outgoing directors, would resign at completion.

Board minutes

A set of board minutes were prepared for the company to resolve the actions required in order to effect completion in accordance with the share purchase agreement (such as resigning the current directors, appointing the buyer as the new director and executing the appropriate stock transfer forms).

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