Lawthentic Loop

Keep up-to-date with all Lawthentic things

Lawthentic Loop

Keep up-to-date with all Lawthentic things

Get yourself the right support by way of an experienced business agent, accountant and business lawyer.

Selling or buying a business

Get yourself the right support by way of an experienced business agent, accountant and business lawyer.

Every business, like every person, is unique and boasts a plethora of distinctive characteristics. It’s not surprising then, that the issues which arise in every business sale or purchase transaction are just as unique.

Whether you’re moving away from your existing business or embarking on a new (ad)venture, here’s what’s at the top of our list of things you need to know.

Purchase price and GST

Both seller and buyer should be clear on the purchase price and whether it includes trading stock and other variables. The sale or purchase of a business may also attract GST, which means tacking on another 10% to the price.

Due diligence

Do your homework! Consider which of the business’ assets are included, this means both the tangible and intangible variety. It’s important to ascertain whether tangible assets are owned or leased, whether they are free of encumbrances and if they can be transferred. A valuation should also be obtained to determine the business’ worth – have a business agent give you an indication of comparable sales! What’s more, the inclusion of a monitoring period, and the transparency it promotes, is a pro for both seller and buyer.

Financial performance

The purchase price is affected by income and profits. Get your accountant to nut-out the business’ financial data so you’re clear on its performance before selling or buying.

Lease and landlord’s consent

If a lease is involved in the sale or purchase, the landlord’s consent plays a vital role in the transaction. The landlord’s consent is required to assign an existing lease or to grant a new one. Typically, the landlord will assess whether the buyer is going to be a valuable tenant before agreeing to assign or grant a new lease. As the seller, be aware that if the landlord doesn’t consent, the sale may fall over. As the buyer, if you are taking over an existing lease, you should ensure the remaining period is enough for you to earn what you paid for the business – remember, the landlord is under no obligation to grant a new lease at the expiry.

Permits and licenses

Permits and licences can be pivotal. Local council and other government authority permits and licenses must be in place, such as a development application and need to be transferred at settlement.

Employees

Will key employees remain with the business? If there are continuing employees, an adjustment needs to be made for wages and entitlements such as annual leave and long service leave.

Restraint of trade

As the buyer, the last thing you want is for the seller to set up a similar new business around the corner and for your customers to be diverted away from your business. A proper restraint will include a duration, geographic area and restricted activities.

Training

Training is essential to properly operate the business and ensure there is no decline in customer service and in the goods or services provided. Training can be pre-settlement, post-settlement, or both. To facilitate a smooth transition, the buyer may pay the seller to continue on for a few weeks after settlement.

The right advice

Get yourself the right support by way of an experienced business agent, accountant and business lawyer. Engaging professionals with the right expertise will provide you with invaluable advice, insight and industry knowledge and help you navigate through the process.

If you’re starting a new chapter in business, let’s grab a bite and chat about the unique issues involved in your sale or purchase transaction, we’ll give you a fixed quote, and then get straight down to business. Drop us an email today

Get in touch

Anything you’d like to tell us?*

Archive

Archive