Business Purchases & Sales

The sale or purchase of a business can be a high-stakes situation for both the seller and buyer.

If you are selling, you will want the best possible price and a smooth transition so you can move on to the next phase of your life, whether that be a new venture or retirement.

If you are buying, you want to make sure that you are getting everything you need to run the business successfully. This means carrying out due diligence like checking the terms of any commercial leases to be transferred, ensuring that you receive clear title to major assets, and confirming arrangements for the transfer of intellectual property. You may also need to know if you can obtain any specific licences required to run the business and whether there are any ongoing contracts that you will need to fulfil after the sale.

To understand what you need to know, and to negotiate the best possible outcome, you need an experienced solicitor in your corner. Each party should be legally represented. You may also need to consult a financial adviser to ensure the accounting and taxation aspects are considered. Together, your professional team can structure a transaction aimed at protecting your interests and achieving an optimum outcome.

Contract for Sale and Purchase of a Business

The terms and conditions for your business sale/purchase should be properly negotiated and documented in a watertight contract that checks all the boxes. The agreement should set out each party’s rights and responsibilities and cover a range of contingencies.

Following are some key considerations that may be relevant to the buyer, seller, or both when negotiating the sale/purchase of a business and preparing the contract.

• The need for a confidentiality deed to protect the seller before entering any negotiations with prospective purchasers.
• Financial due diligence, for example, reviewing the sales history, profit and loss statements, and business expenses including wages and running costs, and completing an inventory of assets and liabilities.
• The structure of the sale – does it involve the transfer of shares for part of the business or is it an outright purchase of the entire business? What is included and excluded – is it just the business name and goodwill, or plant, equipment, stock and inventory?
• The apportionment of the purchase price, Goods and Services Tax (GST) and other tax implications such as Capital Gains Tax (CGT).
• The suitability of and transfer arrangements for ancillary agreements such as commercial or retail leases and service contracts.
• Intellectual property such as business names, trademarks, and domain names and provisions for transferring these assets to the new owner.
• Employment arrangements – transfers, offers, redundancies, and calculation of leave and other entitlements, and the purchaser’s liability for existing employee entitlements.
• The inclusion of restraint of trade provisions, agreed training periods, representations, and warranties.
• Costs incidental to the purchase price such as agent’s commission, legal and accounting fees, transfer duty, registration fees and other government charges.

Whether you are buying or selling and whether the transaction involves the sale or purchase of assets, shares, or a combination, we can advise and guide you through the entire process – from initial enquiry, through negotiations and due diligence, to completion.

If you need assistance, email ja***@ti**********.com or call 07 3848 6861.