Selling your business does not release your personal guarantees. Each one is a separate contract between you and the bank, the landlord, the lessor or the supplier — and the sale of the business is nothing to do with it.
Find Them All, Because You Have Given More Than You Remember
The usual list: an overdraft or term loan guaranteed personally, often years ago when the facility was first put in place. The lease, guaranteed to the landlord — and note that assigning a lease may leave continuing liability even where a guarantee is released. Equipment finance, hire purchase and leasing agreements. Supplier credit accounts, where a guarantee sat in small print on an application form nobody kept a copy of. Sometimes a guarantee given to a franchisor, a utility, or a landlord of a second premises long since vacated. The consequence of missing one is stark: you complete the sale, hand over the keys, and remain personally liable if the buyer later defaults — which is how a successful exit becomes a serious problem three years afterwards, usually arriving as a letter you were not expecting. Assembling the schedule is an afternoon’s work: bank facility letters, the lease, finance agreements, and the credit account applications your bookkeeper will have on file.
Getting Released
Ask each beneficiary, in writing, for a formal release — and make those releases part of the deal rather than an afterthought, ideally a condition or at least a documented completion item. Identify them at the readiness stage, not the week of completion, because beneficiaries have their own timetables. They are not obliged to agree: a bank or landlord will generally want to satisfy itself about the incoming owner, or to be offered a substitute guarantee from the buyer or its principals. Where a release genuinely cannot be obtained, the fallback is a counter-indemnity from the buyer — a promise to reimburse you if the guarantee is called. That is better than nothing and it is materially weaker than a release, because it is only ever as good as the buyer’s ability to pay when the moment comes. Release is what you want; indemnity is the compromise; nothing is not an option. And after completion, chase the releases that were promised but not delivered on the day — which is extremely common, and which is why the post-completion diary matters.
Ask the question now, not at completion: can you list every personal guarantee you have given? Most owner-managers cannot, and the ones who can are the ones who have looked.
Preparing to sell? 01 5827148.
Richard O’Shea — Solicitor & TEP
Solicitor at Mary Molloy Solicitors, established 1981, and a TEP of the Society of Trust and Estate Practitioners. The firm acts for buyers and sellers on business sales and acquisitions — structure, heads of terms, due diligence, the sale agreement, warranties and disclosure, completion and what follows it. Because a substantial share of Irish business sales are retirement exits, the firm’s estate and succession practice sits alongside the transactional work: the deal and what happens to the proceeds are usually the same client’s problem. Nothing here is tax advice — structure is tax-driven and that belongs with your accountant and Revenue, before heads of terms are signed. 01 5827148 · richardoshea@marymolloysolicitors.com · LinkedIn
General information, not legal advice. This website contains general information about Irish law on business sales and acquisitions. It is not legal advice and does not create a solicitor—client relationship. Every transaction turns on its own facts — the structure, the documents, the parties, the consents required — and advice on yours requires a consultation.
Nothing here is tax advice, and tax drives structure. The choice between an asset sale and a share sale is very largely a tax question, and it should be settled with your accountant or tax adviser, and by reference to Revenue’s own guidance, before heads of terms are signed rather than afterwards. This firm does not advise on tax, does not state rates, thresholds, reliefs or conditions, and does not indicate any tax outcome.
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