There are hidden traps and pitfalls for which you will need advice before purchasing or selling a business.
Never purchase or sell a business without a written contract prepared or checked by your solicitor.
Businesses are very diverse and many have industry specific documentation that is required, such as purchase of a news agency or a taxi-plate.
If you are purchasing a franchise, the documentation will be prepared by the franchisor and you need to ensure you have proper legal advice before signing.
The contract to buy or sell should include:
- The deposit to be paid
- An adjustment of outgoings such as rent if applicable, utilities, waste removal
- An agreed date for completion of the sale
- Any special c onditions that may be required to suit your particular circumstances
Other matters which your solicitor will address with you and with the other party include:
- Inclusion of fixtures, fittings and other equipment?
- Government and Council permits and licenses needed to operate the business
- Whether or not development approval is required from the council to operate the business at a particular location
- Stock in Trade
- Work in Progress
- Book Debts
- Intellectual property
- Business names
- Contact details for the business – in particular you need to ensure you are purchasing the right to the phone numbers and fax number which may have been in existence for many years and are essential to the business
- Lease – if applicable whether it be the granting of a new lease or transfer of an existing lease
- Price and asset apportionment
- Training and Tuition from the outgoing owner
- The protection of employees and their existing entitlements, and who pays those entitlements, such as long service leave and annual holidays, particularly if you intend to keep existing employees as their entitlements may continue to accrue even though they have been employed by you for a short time only
- GST – is the business the sale of a going concern which would mean the sale is GST free
- Restraint of Trade: To ensure the vendor is prohibited from operating or being concerned with (for example as an employee) a similar business for a period of time and in a defined area