Expertise/Mergers and Acquisitions

Service

Buying and Selling a Business

A business passes to its new owner either together with the company, where interests or shares are sold, or without it, where individual assets are sold.

We are most often instructed by:

  • Buyers of established businesses
  • Owners selling a whole company, an interest in an LLC or a block of shares
  • Participants buying out another participant's interest
  • Investors acquiring control
  • Related companies transferring assets within a group

The information on this website is provided for information purposes only and does not constitute a public offer.

What the Service Includes

Timing and Fees
from 10business days
from ₽fee on request

Timing and fees are indicative and are confirmed when the engagement is agreed.

01 / Overview
How a business purchase or sale is structured

A business may be sold as a whole or in parts. The transaction may involve the disposal of an interest in the charter capital of an LLC, a block of shares, an enterprise as a property complex, or individual assets and rights. The chosen structure determines the subject of the transaction, the scope of rights and risks passing to the buyer, the payment arrangements and the set of documents required.

When buying an interest or shares, the buyer acquires an equity stake in the company. The company itself continues to own its property, perform its contracts and remain liable for its obligations, including those that arose before the transaction.

An interest or a block of shares may be sold in full or in part. The size of the stake acquired affects the scope of the buyer's economic rights and degree of control.

When individual assets are acquired, the agreed items and rights pass to the buyer: real estate, equipment, inventory and intellectual property rights. The transfer of contracts and debts is documented separately, subject to the applicable rules and the required consents.

As a general rule, rights under a licence to carry on an activity do not pass to the buyer of an enterprise; whether the licensed activity can be continued is checked separately.

The appropriate structure is determined by the composition of the business, existing obligations, restrictions on the disposal of assets, the approvals required and the consequences for the parties.

02 / Stages
Stages of the transaction
  1. Deal parametersThe parties' objectives, the subject of the transaction and the proposed structure are defined.
  2. Preparing for saleOn the seller's side, the company's documents are reviewed and any deficiencies identified are remedied before negotiations with the buyer begin.
  3. Confidentiality and key termsA non-disclosure agreement (NDA) is signed, and the key terms of the transaction are recorded in a term sheet.
  4. Due diligenceThe seller's title to the interest or shares, encumbrances and the company's corporate history are checked.
  5. Transaction termsThe subject, price, payment arrangements, liability of the parties and closing conditions are agreed.
  6. Documents and consentsThe transaction documents are prepared and the necessary approvals and consents are obtained.
  7. ClosingThe documents are signed, payments are made and the transfer of title is completed.
  8. After closingThe company's affairs and documents are handed over, and performance of deferred obligations is monitored.
03 / Outcome
Service Outcome
  • Transaction structureThe chosen acquisition or sale model and a plan for its implementation, setting out the sequence of the transfer of title and payments.
  • Due diligence findingsIssues identified regarding the seller's title, encumbrances, the history of changes in participants and restrictions, which are reflected in the terms of the transaction.
  • Transaction documentsThe agreement, applications, resolutions, transfer orders and other documents for signing and for documenting the transfer of title.
  • Post-negotiation draftsDocuments reflecting the terms agreed by the parties, with any outstanding points of disagreement marked.
  • Closing materialsSigned documents, confirmations of registration or recording actions received for the stages actually completed, and handover certificates for the company's affairs and documents to the new owner.

The outcome of the service is the work performed within the scope agreed with the client.

04 / Projects
Selected Projects
01 / 06

Acting for the buyer

Acquisition of a group of companies in industrial equipment and digital solutions

Challenge

Advising the buyer on the acquisition of shares in a foreign company that owns a Russian manufacturer of industrial equipment and digital solutions for equipment management and monitoring, as well as shares in a Russian legal entity. The acquisition of the foreign company was governed by English law.

What was done

Comprehensive legal due diligence of the Russian business was carried out, covering its corporate history, contractual relationships and intellectual property rights. The foreign ownership structure, title to the shares being acquired and the legal aspects of the buyer's entry into the existing corporate structure were analysed separately. The structure and documents of the transaction were agreed, and the findings on the Russian and foreign parts were reflected in the terms of the transaction and the arrangements for its closing.

Acting for the sellers

Sale of four production assets in a single transaction

Challenge

Advising three sellers on the sale of four production assets of a building materials manufacturer to a single buyer. The assets were held in different ways – through interests in companies, as a property complex and through a mixed structure – and closing for all four assets had to take place simultaneously.

What was done

A single transaction structure was developed: some assets were transferred through the sale of participatory interests and others through transactions with the property complex. The parties and the contractual documentation were coordinated to take account of the different legal regimes for transferring the assets.

Option programme

Option programme for an investment fund linked to asset returns

Challenge

Advising on the design of an incentive programme for the managers of an investment fund and the executives of its portfolio companies (11 companies in the portfolio). The size of the economic participation had to be linked to the actual return on the assets, while retaining control over the terms on which key partners participate.

What was done

A multi-level model was developed: phantom participation in the value of the fund, with the possibility of moving to an equity interest in individual portfolio companies once set targets are met. The terms varied according to each participant's role and level of responsibility, and economic rights were tied to confirmed results.

Partnership arrangements

Structuring a partnership of three owners

Challenge

Advising on documenting the relationship between three partners with different stakes, ownership horizons and expectations regarding the management of the business. A model for decision-making and for changes in ownership was needed under which a significant divergence of interests would not lead to a corporate deadlock.

What was done

A multi-level system of mutual option mechanisms was developed, triggered by predefined circumstances, including changes in financial performance or in the ownership structure and the occurrence of a deadlock. A separate course of action for the partners was set out for each scenario.

Acting for the seller

Sale of an interest in a packaging manufacturer

Challenge

Advising the seller on the sale of an interest in a packaging manufacturer with net assets exceeding RUB 500 million. The seller was also the company's director, so the risk of claims relating to the management of the company being brought against the seller after the exit was taken into account.

What was done

The transaction was structured with possible claims after the transfer of the interest to the new owner in mind. Mechanisms were put in place to limit these risks and protect the seller's interests after closing.

Raising investment

Investment in a developer of treatment systems with a buy-back right

Challenge

Advising on raising investment for a growing company that develops treatment systems. The financing was provided directly to the company, with the investor acquiring an equity stake.

What was done

The transaction was structured with a right to buy back the investor's stake upon the occurrence of agreed conditions. This mechanism combined raising capital to develop the business with a predetermined scenario for changes in ownership.

05 / Questions
Frequently Asked Questions

As a general rule, a transaction disposing of an interest must be notarized. The law provides for exceptions, so the required form is checked against the chosen structure. Where the sale is notarized, the notary files the application to record the transfer of the interest in the Unified State Register of Legal Entities.

A written agreement is usually sufficient. Title to the shares passes when a credit entry is made to the acquirer's account – in the shareholder register or in a custody account, depending on how the shares are recorded. Signing the agreement and paying under it do not in themselves replace the book entry.

The law and the current version of the charter are checked. The charter may require consent to a disposal or prohibit sales to third parties. The pre-emptive right is assessed separately: the charter may exclude certain participants from it or set conditions for its exercise. If the right applies, the holders of the right, the price and the notification procedure are checked.

If the pre-emptive right applies, its termination is evidenced by waiver statements with notarized signatures or by the expiry of the applicable period. The offer, the date on which the company received it and the provisions of the charter are checked.

Where an interest that forms part of the spouses' joint property is sold before a notary, the notarized consent of the other spouse is required. The time and basis of acquisition of the interest, any marriage contract and other documents on the property regime are checked. For personal property, such as property received as a gift or by inheritance, the legal basis is confirmed by documents.

As a general rule, the interest passes to the buyer when the entry is made in the Unified State Register of Legal Entities. The terms of payment and of the handover of the company's documents are aligned with the registration stage.

The subject of such a transaction may be the assets, rights and contractual relationships that make up the business. The status of individual entrepreneur does not pass to the buyer. The method of transfer and the required consents are determined for each item.

No. An interest, shares or assets can be purchased without reorganizing the companies involved. Merger and accession, as forms of reorganization, follow their own procedure; whether they are needed depends on the structure of the particular project.

This depends on the subject of the transaction. For the sale of an interest or shares, the charter, documents confirming the seller's title, information on encumbrances and the required consents are checked. A sale and purchase agreement and a set of documents for the notary, registrar or depositary are prepared. For a sale of assets, the documents are determined for each item being transferred.

An hourly rate, a fixed fee or a combined model is used; in some cases part of the fee depends on the outcome achieved. The fee is determined by the time actually spent, the complexity of the matter and the overall timeframe of the project, and is agreed before work begins.

Key Contacts
Deni Murdalov Deni Murdalov Partner, PhD (Law), LL.M.

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Other Services in This Practice
Joint Ventures (Partnerships) Legal Due Diligence Deal Structuring Cross-Border Transactions Venture Deals Option Incentive Programmes Documents and Consultations

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