Planning an exit from a business needs to be planned effectively. Whatever the reason for your departure, the documents you sign at this point have long-term consequences. They decide how and when you leave, what you are paid, what rights you give up, and what obligations continue after you have gone. A legal review gives you the chance to spot and fix any issues before they become a problem.
Why It Helps to Review Exit Documents Before You Sign
Business exits tend to move quickly, and in that rush, documents might not always be prepared with the most care. Sometimes, things do not always align with the company’s Articles, the Shareholders’ Agreement, or any earlier investment documentation. That’s why you must thoroughly review everything in front of you before you sign. A legal review gives you the chance to:
- Understand exactly what you are giving up and what you are keeping.
- Check that the exit terms match what was agreed in principle.
- Avoid being tied to ongoing liabilities after leaving.
- Confirm that payment terms are clear and properly documented.
- Make sure the exit process complies with company law and the existing constitutional documents.
- Protect your position on tax, especially if SEIS/EIS, loan notes or share buybacks are involved.
Once the documents are signed your ability to revisit the terms becomes extremely limited, so this is the point to raise any concerns.
Common Exit Scenarios
People leave a business for different reasons, and each type of exit tends to involve a common set of documents. Below is a quick overview of the usual scenarios and the paperwork you are likely to see.
Voluntary Sale of Shares
A straightforward sale to another shareholder, a new investor or an external buyer. You’ll typically see a Share Purchase Agreement, a stock transfer form, and associated documentation. The Shareholders’ Agreement will also need checking for pre-emption rights and approvals.
Transfer of Shares Without a Sale
Sometimes shares are transferred for no payment, such as between founders or family members. At the minimum, this will involve a stock transfer form , and (depending on the company’s setup) a Deed of Adherence for the incoming shareholder to the shareholders agreement.
Company Share Buyback
The company itself buys your shares using a regulated process under the Companies Act 2006. Expect a Share Buyback Agreement, shareholder and board resolutions, and a review of how the share buyback interacts with any SEIS / EIS relief.
Founder or Director Exit
Where you are leaving both your role and your shareholding. You will often be given a Settlement Agreement (for the employment side), a Share Purchase / Transfer Agreement, a stock transfer form, IP confirmation, updated confidentiality or non-compete terms, and a Deed of Termination removing you from the Shareholders’ Agreement.
Investor Exit
Investors usually exit through a sale, transfer or loan note conversion. Depending on the structure, documents often include a Share Purchase Agreement, a stock transfer form, Loan Note Repayment or Conversion Agreement, and SEIS/EIS paperwork.
Key Documents to Review During a Business Exit
Below is a more in-depth look at the documents you are most likely to come across during a business exit. Not every departure involves all of them, but these are the ones worth checking carefully.
Shareholders’ Agreement
If the company has a Shareholders’ Agreement, this is always the starting point. It sets out any pre-emption rights, drag or tag rules, restrictions on transfers, good and bad leaver provisions, and approval requirements. You should not assume these provisions match what is in the Articles. A review checks that your exit complies with the rules already in place and that no hidden obligations will continue after you leave.
Share Purchase or Transfer Agreement
This agreement records the sale or transfer of your shares. It sets out the purchase price, how it will be paid, completion timelines, and any warranties you are asked to give. You should pay close attention to liability limits, delayed payment clauses, and anything that ties you to ongoing responsibility for company issues after completion or restrictive coventants that stop you competing with the business. If you are transferring shares without a sale, you will still need this document to confirm the terms.
Stock Transfer Form
This is the form required for transferring legal ownership of shares. It seems straightforward, but it must match the details in the Share Purchase or Transfer Agreement and comply with the company’s pre-emption process. If the wrong form is used or completed incorrectly, it can delay the registration of the transfer. You should check whether you will need to pay stamp duty on the purchase price for the shares ro whether an exemption applies. If stamp duty is payable it must be paid before the company can record you as the holder of the shares.
Deed of Adherence or Deed of Termination
If the company has a Shareholders’ Agreement, any incoming shareholder usually signs a Deed of Adherence. If you are leaving, you may be asked to sign a Deed of Termination confirming you no longer have rights under the agreement, although you may left with some obligations. You should check any terms continue to apply after your exit and whether this is appropriate in your circumstances.
A Release or Waiver of Claims
A release helps create a clean break between you and the company. It usually covers employment rights (if relevant), shareholder claims, or any historic liabilities. You should review the wording carefully to confirm that the release works both ways where appropriate, and that nothing important has been carved out without your knowledge.
Settlement Agreement (on director exits)
If you are leaving both your employment and your shareholding, the company may give you a Settlement Agreement. This is a statutory document used to settle employment claims. A solicitor’s advice is required for it to be valid. You should check that it accurately reflects your benefits, notice pay, bonus entitlements, and any post-employment restrictions.
Share Buyback Agreement
If the company is buying back your shares, a Share Buyback Agreement is required. Company law sets out strict requirements for buybacks, under Part 18 of the Companies Act 2006. A review checks that the share buyback is lawful, that the price is correct, and that the company has followed the correct approval process. It is also essential to confirm that the company will file the required forms at Companies House.
Intellectual Property (IP) Assignment or Confirmation
If you are a founder or director leaving the business, the company may want confirmation that all IP created during your tenure belongs to the company. This can be a routine document, but it is important to check that it does not assign rights you own personally or affect any future businesses you plan to run.
Confidentiality and Non-Compete Clauses
Exit documents often restate or strengthen confidentiality obligations and restrictive covenants. You should check whether these restrictions are reasonable and proportionate. Overly broad non-competes can hinder your ability to work elsewhere or set up a new business.
SEIS/EIS Relief Documentation (if applicable)
If you originally invested under SEIS or EIS, your exit may affect your tax relief. A review helps you understand whether the sale timing or the structure of the exit puts your tax relief at risk. There may also be specific documents that need to be completed.
Loan Note Repayment or Conversion Agreement
If you hold a loan note, the exit may involve repayment, early redemption, or conversion into shares. These documents need careful review because they govern repayment obligations, interest, conversion mechanics, and what happens if the company cannot pay immediately.
Key Legal Points a Solicitor Will Check
During an exit, the paperwork often hides details that make a meaningful difference to what you walk away with. A solicitor’s job at this stage is to look past the headline terms and check that the documents work together, follow company law, and genuinely reflect what you agreed. There are several areas your solicitor will look at in detail:
Compliance with Pre-emption Rights and Approvals
A transfer or sale must follow the rules already set out in the Articles and Shareholders’ Agreement. Your solicitor will check whether the company has properly offered the shares to existing shareholders (if required) and whether the board or shareholders need to approve the deal.
Valuation and Payment Terms
They will make sure the price is recorded correctly, that the payment structure is realistic, and that there are no hidden conditions or delays that could cause problems later.
Application of Leaver Provisions
If the exit involves a founder or director, vesting terms may apply and the company may try to categorise you as a ‘good’ or ‘bad’ leaver. Your solicitor will review whether the classification is fair and whether the company is following its own documents.
Whether Your Exit Gives You a Clean Break
Your solicitor will look at release clauses, remaining obligations, and any ongoing liabilities to confirm that you are genuinely able to step away without future disputes.
Get Advice from JPP Law
If you are planning a business exit, or you have been sent a set of documents that you want someone to look over, JPP Law can help. We regularly advise founders, directors and investors on exit strategies of all kinds. We can review the paperwork and help you negotiate terms that support a clean and fair departure. Get in touch to book a consultation.
