Buying a business? Don’t get stuck with a lemon!
Are you looking at buying a business? Are you already thinking about how you will spend your huge profits on exotic holidays and expensive sports cars? Before you reach for your passport or grab the keys to a Ferrari, it is vital that you come see our Business Law team at Callea Pearce to ensure you have properly considered the purchase of a business. With the right advice from our expert team, we will help you avoid making a costly mistake that could set you back years financially.
If you are considering buying a business, there are many things you need to do from a legal, financial and general business perspective. Getting the right advice from the start is vital, especially
before signing any documents.
Proper research will assist in uncovering a profitable business and avoiding lemons. Prior to purchasing, you should research the following aspects of the business:
- Past, current and forecasted sales
- Current business systems
- Any problematic legal obligations or liabilities
- All necessary information, rights and assets included in the sale
- Cash flow
We are here to help
Whilst this may be your first business purchase, we deal with business purchases everyday. We can help you conduct your due diligence to avoid any nasty surprises and arguments down the track.
When purchasing a business there is a lot of documentation to be gathered, read and understood.
The seller may require you to sign a confidentiality agreement to stop you from using confidential information for any purpose other than buying the business. You should make sure you fully understand the agreement before you sign it.
Some of the information you should gather and review includes:
- Financial statements
- List of plant, equipment, assets and stock
- List of customers and suppliers
- Current employees
- Important contracts (eg leases, asset financing)
Completing your due diligence is just the first step. Once you have decided to buy, we can document the transaction by formulating a legally binding contract. Such contracts are not one size fits all, hence it is of vital importance you seek advice so that we can tailor the contract to suit your needs. There are many issues to consider, including:
- There will be legal, financial and taxation consequences of the structure you adopt, so expert advice is essential. The right structure could afford you more flexibility and control and could limit your liability if something goes wrong
- Price and terms of payment
- You will need to determine how and when the price will be paid
- Legal contract
- This will set out the various terms agreed to by the parties and can include items such as non-competition provisions to prevent the seller from creating a competing a business after the sale.
Buying a business can be a complex transaction. Our Business Law team would love to see your business succeed. We are able to make sure you have done adequate research, understand the risks and have received the right advice.
Please Contact Us or drop into one of our offices located at Melton, Werribee and Bacchus Marsh to have our Business Law team assist you with your business purchase. Just promise to send us a postcard when you eventually go on your exotic holiday!
All information in this article is of a general nature and should not be treated as legal advice. You should seek legal advice from us before acting on any of the above information.