When you buy a business, you want to invest in your future, and you need to make sure the business you purchase will be transferred to you with no headache. That is why the first step, Due Diligence is significant.
Buying or selling a business has a number of factors you need to consider, CFS Legal experienced commercial lawyers advise you on those typical issues for buying/selling a business:
- The size of the business;
- The asset of the business;
- Statutory and other regulatory requirements for the business;
- The nature of the industry and operations;
- The employment arrangements;
- The location and the lease of the business;
- the intellectual property of the business.
People often do not take Due Diligence seriously; it is a crucial and the first and most relevant step you should take when you purchase and sell a business. Due Diligence should not be overlooked by vendors and buyers. As a vendor, you should take time to assess and coordinate your business affairs and be sure the business is organized and completed. So when you plan to sell your business, you are ready for a buyer to conduct Due Diligence. As a buyer, you should give yourself enough time to conduct Due Diligence so you are satisfied that the business you are buying, is what the vendor represents.
During Due Diligence, CFS Legal dedicated commercial lawyers investigate the issues below:
- regulatory license;
- business structure;
- permits and approval;
- asset condition reports;
- finance agreements;
- material contracts;
- employment records;
- lease agreement;
- active litigation;
- insurance policy;
- intellectual property;
it is also important having independent financial advice about the business’s financial success as well. Due Diligence should occur before you sign the contract or before the contract cooling-off expiry date.
What are you buying/selling
There is a number of things you need to consider when you are buying or selling a business as below:
- what is being bought or sold?
- The whole business? Assets or goodwill?
- Part of assets?
- Part of shareholding in the company or 100% shareholding?
Buying/Selling a Business – Lease
When a business rents a premises for its business operation. It is essential to review the lease and clarify the process for transferring the lease and lease terms. CFS Legal business lawyers will advise you on unfavorable terms in the lease, and negotiate with the owner of the property to either amend the lease terms or negotiate a new lease to suit your requirement as part of obtaining consent. Often the lawyers negotiate the lease at the same time as negotiating with the vendor.
Buying/Selling a Business – Other Considerations
CFS Legal competent business lawyers review those issues for your purchases/sales:
- contracts, does it have a key contract with customers or suppliers? Are they enforceable?
- Stock, what is stock? Does it include in the transaction?
- Plants & equipment, is plants and equipment part of the transaction? The value of the plants and equipment?
- Employees, employment contracts, are they staying with the business?
- Financial statements and finance. Does the business have any mortgage?
- Transitional assistance, how long does the vendor provide handover assistance?
- Restraint of the vendor, goodwill is part of the transaction for some businesses, having a restraint clause on the vendor is important to protect you from the vendor setting up a competing business for a period of time.
Shareholder Dispute
CFS Legal experienced commercial lawyers offer shareholder, unit holder and partnership agreements. Before your purchase a business, speak to CFS Legal business lawyers, we advise you the business structure suits your circumstance and prepares the relevant agreement in order to manage future business disputes. The agreement sets out terms and conditions concerning how the business will be managed and operated, how to divide profits, how partners exit the business and so on.
Speak to CFS Legal Commercial Lawyers in confidence when you plan to buy or sell a business. Email: info@cfslegal.com.au