Company Sales/ Purchases
Case 1 – The Pension Fund Was The Answer
The assets in an old established engineering business were sold, with a review of the goodwill value after two years, dependent on how many customers had been retained.
Customers had been lost: the vendors thought because the new owners didn’t know how to handle them; the purchasers were suspicious that the vendors knew the customers who would be lost, and they refused to pay the final instalment of the purchase price.
The differences were narrowed, but agreement could not be reached. Then it emerged that the purchasers wanted to exercise an option to buy the freehold factory at £600,000, but through their pension fund, not by the new company in whose lease the option lay.
For the new company to exercise the option the Stamp Duty would have been £24,000 at 4%, with a second £24,000 payable when the factory was sold to the pension fund by the new company.
The vendors agreed to have the option clause extended to the pension fund – that was no loss to them and the saving of £24,000 was sufficient to close the gap, so that agreement on the whole case was reached.
Case 2 – Signed & Sealed In A Day
A family company had the freehold of a retail shop which one brother had operated for many years, but he wished to retire. Another brother wished to buy the first brother’s shares so that the company’s main asset, the property, could be redeveloped.
The developer brother came along with a fat cheque book, and the other brother with a form requiring signatures so that he could draw his company pension. Agreement was reached; a cheque and signed pension consent were passed to the retailer brother, and the developer brother received a signed stock transfer form, and could now develop the property.
This is the only occasion on which I have known a settlement agreement setting out, not what the parties promised to do in future, but what they had already done some minutes earlier.