Oliver & Co advised on a share buyback transaction involving a company operating in the design industry. The company had four equal shareholders, and for commercial and strategic reasons, it was agreed that the company would purchase the shares held by one of the shareholders out of its distributable profits.
Key Transaction Details
The buyback was structured as an on-market purchase funded from the company’s available distributable profits. This required careful consideration of both statutory requirements and the commercial expectations of the parties involved.
A key feature of the arrangement was the inclusion of anti-embarrassment provisions in the share buyback agreement. These provisions entitled the exiting shareholder to receive additional consideration if the company was sold at a higher value within a specified restricted period post-buyback. This protected the seller in the event of a short-term value uplift following their exit.
In exchange for this, the selling shareholder agreed to certain non-compete and non-solicitation covenants, designed to protect the company’s goodwill and ensure business continuity. These restrictive covenants were tailored to be reasonable in scope and duration, to ensure enforceability while addressing the buyer group’s concerns about potential competition.
Legal Work Undertaken
Our role included preparing and negotiating all key transaction documents, including:
- The Share Buyback Agreement, incorporating the anti-embarrassment mechanism and restrictive covenants;
- Board and shareholder resolutions to approve the buyback and other ancillary documents to effect the buy-back;
- Dealing with all necessary Companies House filings; and
- Providing guidance on statutory requirements, including ensuring the availability of distributable profits and compliance with Companies Act 2006 procedures.
We also coordinated execution and completion, and ensured that all post-completion filings and corporate housekeeping were handled promptly.
Outcome
The transaction completed smoothly and on schedule. The company successfully acquired the shares from the exiting shareholder, and the governance structure was updated accordingly.
We Can Help
We can help companies and shareholders navigate share buybacks and other complex equity transactions with confidence. Whether the transaction involves purchasing shares from existing shareholders, managing equal ownership structures, or using distributable profits to fund the buyback, we provide practical, commercially focused legal advice to ensure the process is smooth and legally compliant. From reviewing agreements to advising on shareholder rights and strategic considerations, our team can guide you through every stage of the transaction.
If your business is considering a share buyback or any shareholder restructuring, get in touch with us today. Call us on 01244 312306, email us on law@oliverandco.co.uk or complete the form on our Contact Us page, and one of our team will be happy to discuss how we can support your objectives and ensure a successful outcome.
