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. There are a number of steps involved in buying a business; these are detailed below.
Before You Decide
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
Upon Making a Decision
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
Once You Have A Contract
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
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.
Sales and Purchases of Business Articles
Business and Commercial Law - Partnerships - The traps and pitfalls
Date: January 07, 2011
Author(s): Scott Gray LPAB, Grad. Dip. Legal Practice
There are no strict legal requirements for the forming of a partnership other than when two or more persons carry on a business in common for profit, however given that this is a legal relationship it is advisable to create a written partnership agreement so that the terms of the relationship are clarified between the partners.
Business & Commercial Law - Franchising Law - Franchising Code of Conduct
Date: May 29, 2009
Author(s): LAC Lawyers
Franchising in Australia is governed by the Franchising Code of Conduct (“FCC”). This piece of legislation was design to protect potential franchisees from unscrupulous franchisors and requires the franchisor to disclose certain information to the franchisee so as to...
Business Law - Business Structures - Partnerships
Date: April 02, 2009
Author(s): LAC Lawyers
The term “Partnership” is defined in the Partnership Act 1892 (the “Act”) as the relationship that exists between persons carrying on business in common with a view of profit. From this...
What to expect when you call LAC Lawyers
Date: December 13, 2006
Author(s): LAC Lawyers
LAC Lawyers is a full service firm dedicated to the provision of superior legal services in Australia. Our aim is to provide unrivalled client satisfaction coupled with high quality service and advice. When you call LAC Lawyers our friendly reception staff will spend time with you to identify the area of law your enquiry relates to then pass you on to one of our qualified solicitor's who can help you.
Business and Commercial Law - Do’s and Don’ts for Small Businesses
Date: September 24, 2005
Author(s): LAC Lawyers
Starting a new business can be a daunting operation. A remarkably high percentage of small businesses fail within the first five years of operation. Sometimes that is because the business itself is not sound. However, on other occasions the problem lies in a lack of planning or an ignorance of the many legal requirements that must be met by the small business operator.