Purchasing a Business? Matters to consider
When a business owner intends on purchasing a business, they visualise themselves running and operating the business they have acquired but do no think of all the steps and legal requirements in between. The process of purchasing a business can be lengthy and confusing and entails a process a new business owner simply does not want to undergo alone, that is where we come in handy. Our lawyers can act on your behalf in a business purchase ensuring that the deal you are getting is in your best interest and that the process of acquiring the business is smooth.
Here are some things a lawyer will advise you of and what to expect in the Business Purchase Process:
- Review the Sale of Business Contract
If you have come to an agreement with the vendor of the business, they must provide you directly or your lawyer a sale of business contract disclosing all required information about the business you are purchasing including the purchase price, key dates, assets and equipment that come with the business also.
A lawyer will always advise that it is in your best interests to have the sale of business contract reviewed and obtain the relevant advice before anything. The review and advice will give you a clear understanding of the terms and requirements that you will be subject to once the contract is formally binding.
- Amendments/ Negotiations to the Contract
This is a great reason as to why a contract review is important. Reviewing the contract will ensure that your lawyer can act in your best interest and advise you of any terms that may be unfavorable to you. As the purchaser, you can advise your lawyer on terms you would like included and they can negotiate with the vendors representative on your behalf to obtain the best outcome or compromise for you.
- Transfer / Entering of a New Lease
Some businesses involve a lease on the premises on which the business is operated from. Therefore, the lease must either be transferred to the purchaser, meaning the vendor must assign their rights under the lease to you. This is done by preparing a deed allowing the transfer from the vendor to you as the purchaser. However, in transferring a lease the landlord of the premises must consent to the new tenant taking over and may require further information to assess your suitability as a tenant.
Otherwise, if you are entering into a new lease the old lease will have to be terminated and the new lease may commence from the day the old lease is surrendered.
It is suggested that if you are entering into a new lease to get the agreement reviewed to understand your rights and obligations once you occupy the premises.
- Contract Exchange and Settlement
After all the documentation and agreements have been finalized and prepared, they are to be signed by the required parties and a copy of the documents is to be provided to each representative. A date will be set upon which the vendor has the time to finalize all the required obligations to vacate the business and premises, allowing the new purchaser to begin operation.
Please note that this is a summarized guide on the process of business purchases and the matters depend on a case by case basis. If you require assistance with purchasing a business and are after a representative to act on your behalf, please do not hesitate to contact us on (03) 9942 7790 or alternatively, email our Principal Lawyer, Nick Karolidis at nick@karolidis.com.au for further information.