Sales and Purchases of Business

Business people these days range from mums-and-dads who are buying a business for the first time to experienced entrepreneurs who are or have been in business most of their lives.

Buying a Business

Businesses are bought and sold daily privately or through agents and range in prices depending on various factors, including the industry, the type of business or the size of the business. The process of buying a business includes:

A. Before making a decision to purchase the business, you must:

• assess your reasons for going into business (if it is for the first time)
• consult your business advisor (or accountant) regarding your financial situation and any sacrifice that you may need to make
• ensure that you are able to arrange finance not only for the purchase of the business and also for working capital
• identify an industry and carry out as much research as possible
• choose a business available for sale and obtain as much information regarding that business from the agent or the owner including why the business is for sale
• have your accountant carry out financial due diligence
• consult your solicitor regarding a business structure (see also Business Structures) suitable for the purchase of the business

B. Once you have made the decision to purchase the business and agreed to the price, then have your solicitor:

• read the contract and negotiate any amendments to it
• read and explain to you any contractual obligations that will be assigned to you upon completion including the lease (see also Leases)
• if it is a franchise, explain to you your obligation under the franchise agreement (see also Franchising)
• explain to you your obligations in respect of any applicable law affecting the business
• explain to you your obligations in respect of the employees who are to continue to be employed

C. Once the contract is finalized and exchanged, the following may need to be carried out:

• arrange with your lender to finalize any documentation for finance and ensure the lender is ready for settlement
• provide necessary details to the landlord for either a new lease or for the transfer of the existing lease
• attend a trial period with the vendor during which you will know whether the business is performing as represented to you
• attend any training with the franchisor (in case of a franchise) or the vendor to find out how the business operates, you are introduced to the customers and the suppliers
• your solicitor will ensure all legal requirements have been met and all necessary documentations have been prepared and executed for the transfer of the business to you

D. Settlement

• at settlement, the balance of the monies owing the contract is paid
• a new lease comes into existence or the old lease is transferred to you
• any utility service is also transferred to you at settlement
• the owner may continue to provide training after settlement
• your solicitor ensures that all necessary documents are lodged for registration with appropriate government bodies

Selling a Business

You can sell the business either privately or through an agent. You solicitor can prepare a contract for sale of business once you have found a buyer. Depending on the business, various documents will need to be attached to the contract. You solicitor will advice you what documents are required. The most common documents are: Certificate of Registration of Business Name and the Lease. You may also need to consider the taxation implication of the sale.

Whether you are buying or selling a business please contact LAC Lawyers for professional legal assistance.

Contact us now for Fast, Accurate and Timely legal advice

Phone LAC Lawyers on NSW 1300 799 888 or VIC 1300 734 638 or send us an email