BUYING AND SELLING BUSINESSES
Hunter Legal & Conveyancing possess a professional team who handle conveyancing on a regular basis. Our goal is to help people buy and sell businesses efficiently, so our clients can relax and focus on their day to day.
We work alongside our clients to strategise the transaction, with a focus on positive long term outcomes. We appreciate that selling or buying a business will have a significant effect on our client’s livelihood, thus we will endeavor to safeguard this.
We are experienced in dealing with the conveyancing for businesses of any size or industry, such as medical, agriculture, education, tourism, retail, catering and trade services.
In addition to locating a licensed conveyancer or solicitor, anyone planning to buy or sell a business may also consider
- Deciding on a purchase price.
- Deciding whether a financial planner, broker and/or business advisor is required.
- Understanding the value of the business. Which is largely, calculating the value of the assets, current and future revenue, goodwill and expenses (such as GST CGT, liabilities).
- Maintaining awareness of the upcoming negotiations. This will usually revolve around deposit amount, settlement length, handing over the business (i.e. training the new owner on certain systems) and special conditions in the Contract of Sale.
- Planning how to manage existing employee contracts and entitlements.
The diagram below represents the typical process of buying and selling businesses.
REQUESTING INFORMATION FROM THE OWNER
Buying or selling a business is a commercial transaction and it’s up to the buyer to perform as much research as possible. Of course, the intricate legal and business process is an important element to this. However, the buyer needs to consistently consider one central question: is this a good deal for me? Buyers should be absolutely clear about what they’re trying to achieve.
The buyer is able to request any amount of information from the seller, whether it be profit and loss statements, equipment warranties, marketing figures or performance reports. The seller can withhold the information, or ask the buyer to sign a non disclosure form before providing this.
Questions buyers should probably ask:
- What’s your process?
- What contracts do you have in place?
- Can you provide all your licensing, accreditation and permit information?
- How can you accurately demonstrate a positive return on investment?
Things buyers should look out for
- Their confidence level moving into the industry
- Does the business quote correctly? (Underquoting can be difficult to change)
- What does the business know about their customer acquisition?
- Do you agree with the current processes? Is the business “winging it” or do they have sound procedures in place?
- What does the business do to provide value to their customers and a high level of service?
TRADING BUSINESSES IN NSW - WHAT YOU NEED TO KNOW
There are many support systems for business owners that are provided by the NSW Government. For example, the NSW Government’s website contains business directories, where business owners can browse for different services in their local area, such as identifying business advisors.
The advantage of this is that each business must apply for membership to become listed in the directories and satisfy the NSW Department of Industry's criteria.
Of course, there are other support systems, so please contact your conveyancer or Industry NSW to learn more.
Performing Due Diligence
Simply put, due diligence is performing a series of checks before buying or selling a business.
For the buyer, they would want to ascertain information relating to the business structure, taxation records, legal compliance, lease agreements, existing contracts, employment contracts, assets and anything else of note.
For the seller, they would want to ensure everything above is in order. Savvy buyers will look over the business with high attention to detail - and probably have the assistance of an experienced legal team performing an in-depth search of the business.
HOW WE CAN HELP
- Preparing or reviewing the Contract of Sale. Including any special conditions.
- Planning with you and your financial advisor in relation to the long term goals and taxation planning of the property.
- Negotiating with the other parties legal representation to clear all outstanding agenda items (i.e. workers compensation cases) so you can start with a clear slate.
- Ensuring the property is suitable for your operations (both now and in the future).
- Advising on related manners, such as business structure, insurance policies and banking requirements.
- Advising on lease and sublease agreements.
- Resolving disputes.
Can you help with the intellectual property? For example, ownership of a website or trademarks?
Yes, there are both physical and nonphysical assets to consider when buying and selling businesses. For example, you might be purchasing an engineering company and its workshop. However, they may also have a high performing website you want to obtain.
We make considerations for all intellectual property and will run through a checklist to ensure everything is transferred.
Can you help me understand the existing employment contracts and options moving forward?
Yes. We can help you understand the existing contracts and the future implications this will bear, we will cover this during our planning stage.
If an employee is receiving workers compensation when I buy the business, who is responsible for their future payments?
The payments will continue to be the responsibility of the Workers Compensation Insurer at the time of the injury.
There are vastly different financial considerations, such as leases, commercial agreements, outstanding invoices etc. Are you able to compile this and clearly outline the financial circumstances moving forward?
Yes. We can guide you on every step of the way.
When businesses are changing owners, we will work with the other parties legal representatives to calculate any rent, lease agreements, strata fees, employee entitlements (i.e. annual leave), outstanding invoices and anything else of note.
At settlement, everything will be taken care of and the businesses will have a clean slate.
Find an advisor in your area - Department of Industry NSW
Value your business - Business.gov.au