Impact Of TUPE On Selling Your Business

The TUPE regulations are very wide & go into great depth. This article is intended to give you a brief understanding of the process, though professional advice should always be taken to suit your own circumstances.

What is TUPE?


TUPE means ‘The Transfer of Undertakings (Protection of Employment) Regulations 2006.  The purpose of TUPE is to safeguard the rights of employees when a business or undertaking (normally a contract), transfers to another business.  This is normally when the legal identity of the employer changes.


TUPE does not apply when the business transfer occurs by:-

  • Buying / Selling the Shares of a business

  • The transfer of assets only, such as selling plant & equipment

 

Employment law should always be considered regardless of whether you choose an asset sale, or a share sale of the business, and it’s the existing (pre-sale) business owners responsibility to start the process.  


If selling a business through a share sale, the TUPE regulations do not apply.  This is because, although the management of the company may change, the employer remains the same.  To put this into context, if you consider when you buy shares in a publicly traded business, it has no impact on the employees of that business, they continue to receive their pay check from the exact same company.  In fact you could buy 100% of the shares of that public company, and it would still not have any impact on the employees.  In a share sale, a buyer will of course have to honour any existing employment contracts and agreements, along with any litigation issues that might arise from a time before the share sale was completed.


Employment law, and the TUPE regulations can change at any time, so it’s important as a business owner wishing to sell, that you get it right.  Consulting with an experienced HR & TUPE specialist will avoid any employment claims against you.

We hope you’ve received some value from this article, and some information that you can use to move forward toward your vision.

 

If you’re confident that selling your business is the way to go, or perhaps you’re undecided, it’s important to consider the significant amount of effort and resource you’ll need to make it happen.  It’s a full time job. - The time investment alone is enough to put anyone off.  So imagine for just a minute, that you didn’t need to do all of this work.  What if this could be done over the next 3 - 5 years (by someone else).  Everything we’ve listed in this article, is what you’d need to do, if you were selling through a business broker, or direct to a buyer.

 

Unlike other private equity firms, our focus is on growing businesses at the smaller end of the market.  We’ve worked in, and grown our own businesses in the exact same fields you work today.  We’ve spent years coaching and supporting small businesses just like yours, developing their teams, and helping them to grow, but now, we’d like to help you.  

 

We have a solution for business owners that need to sell their business immediately, or for those who want to stick around for a few years.

If you’re considering the options to grow or sell over the next five years, read more about how we're helping others just like you. Click here to read about our unique approach to helping you get what you want with the YokeFormula™ for your business.

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