Buying and Selling a Business in Ireland-Some Key Decisions and Considerations

If you are thinking about buying or selling a business in Ireland the principal decision you will have to make at the outset is how you will structure the transaction.

There is essentially two methods of carrying out a transaction-

1)   A share purchase

2)   A purchase of the assets and liabilities of the business.

(This part of our Irish business law series which deals with some of the many issues surrounding small business in Ireland today.)

The most popular method is by way of share purchase but you do need to carefully weight up the pros and cons with your solicitor and accountant.

Purchase of assets

This method of buying a business has the advantage of allowing you to choose which assets you will buy and which liabilities you simply will not take on.

It does run the risk though of being challenged subsequently by a creditor who has not been paid and whose liability you have not taken on as part of your purchase.

Comparison of the two methods

Asset Purchase

As the buyer you will choose which assets and which liabilities you are taking on.

However it is difficult to get your hands on any tax losses of the target company and you many end up paying stamp duty of up to 9% depending on what assets are included in the deal.

Share Purchase

With a share purchase you will only pay stamp duty at 1%, regardless of the value of the target business.

The employees of the company will be taken on as a matter of law as part of the transaction; you may however be able to benefit from any tax losses which pass from the target company.

All assets and liabilities pass as part of the share transaction so the potential for liabilities rising up to bite you down the road is high.

Due diligence essential

It is absolutely vital that proper due diligence is carried out before buying a company or business.

Depending on the size and complexity of the target business it may be necessary to carry out due diligence under the following heads (this is not an exhaustive list)

  • Insurance
  • Legal
  • Accounting
  • Environmental
  • Statutory obligations (CRO obligations included)
  • Title
  • Taxation

Other critical issues to be dealt with include

  • Warranties (statements given by the vendor to the buyer in relation to the business being acquired).

Warranties would normally cover matters such as the target companies accounts, pending litigation, taxation, employees, assets, liabilities and essentially all aspects of the companies affairs.

  • Disclosure letter ( a letter from the vendor to the purchaser which sets out where the target company has any issues in relation to the general warranties already provided).

This might include any problems the target company/business has in relation to employees, title to property, insurance, banking facilities and any number of other areas where the actual position on the ground deviates from the warranties given in the agreement to sell.


The TUPE (transfer of undertakings) regulations are also of critical importance when buying or taking over a business. The existing staff enjoy significant protection under these regulations and, by and large, any liabilities arising from the failure to properly adhere to TUPE will rest with the new employer/purchaser.