Sale and Purchase of Business
With the sale and purchase of business, no matter whether you are buying or selling, it is essential to seek legal advice at the earliest possible opportunity.
The benefits for Sellers of early legal advice are:
- Exploring tax effective strategies relating to the sale
- Reviewing and calculating employee entitlements
- Discussing with your Accountant the apportionment of the purchase price between the assets of the business including plant and equipment, stock and goodwill so that you maintain a tax effective position in the sale
- Reviewing existing contracts and agreements such as license agreements required for the operation of the business and lease agreements – and considering how to deal with these agreements in the sale – whether a transfer is best or a termination of the existing arrangements and new arrangements for the Buyer is preferred
- Reviewing existing financial arrangements for the business and what requirements need to be met to discharge those arrangements.
The benefits for Buyers of early legal advice are:
- Being aware of the stamp duty and tax implications of the purchase
- Protecting what you are purchasing by insisting that our recommended clauses for Buyers are included in the contract – including a restraint of trade clause protecting the value of any goodwill that you have purchased
- Having the time to conduct proper due diligence in relation to the sale meaning that the existing business agreements and contracts are reviewed, the financial statements of the business are reviewed and full investigations are made with respect to the financial viability of the business to make sure that the business is worth buying for the amount that you are paying or at all
- Having the time to properly consider the appropriate structure for the business and to prepare any necessary documents to establish that structure
- Having the time to consider how to buy a business if that business is currently being run in a company structure – whether to buy the assets of the business from the existing company into your own new business structure or whether to purchase the shares in the existing company.
Proceeding with the sale or purchase of business
Once you have decided to proceed after receiving your early advice, we can provide you with legal representation from start to finish, whether you are a Buyer or Seller.
If the business has been sold privately, we can prepare the contract and disclosure statement required for the parties to consider and later sign.
If the business has been sold through a real estate agent, then we can liaise with the agent and begin work on your matter as soon as we receive the contract and disclosure statement from them.
The amount of legal work involved with your transaction will depend on the complexity of the business and whether you are the Buyer or the Seller.
A simple business sale
If the sale of business transaction is on a “walk in walk out” basis and there are no legal documents to prepare other than the contract, then the tasks of your lawyer will be straightforward and may include the following, depending on whether you are the Seller or the Buyer:
- Preparing a settlement statement setting out your costs for the transaction
- Making sure all of the assets of the business are ready to be transferred to the purchaser
- Making any necessary arrangements with your bank
- Arranging settlement with the representative for the other party to the transaction
- Making arrangements to transfer the business name
- Making sure the financial records for the business are supplied at settlement if required by the Buyer
- Attending at and completing settlement of the transaction
- Stamping the contract and remitting any stamp duty payable by the purchaser.
Complex business transfers
More often than not, a transfer of a business requires a lot of attention to detail to make sure everything is co-ordinated and in place in time for settlement. How we approach your transaction will depend upon whether you are a Buyer or Seller.
The sorts of things that we can take care of for you in a more complex business transfer include:
- Encouraging the Buyer and the Seller to work together to train the Buyer where necessary on how to run the business and help the Buyer establish relationships with third parties that the business deals with such as Suppliers
- Commencing work as early as possible on obtaining any consents or permissions or licenses that usually take time to obtain such as the consents required to transfer a franchise or to obtain a liquor licence
- Discharging existing agreements or contracts with third parties such as Suppliers of the business and preparing new ones for the Buyer or preparing transfers of the existing arrangements from the Seller to the Buyer
- Making sure any leasing arrangements that the Seller has with the owner of the business premises are discharged and that the Buyer secures their own rights as the Lessee of the business premises
- Conducting searches of the Personal Properties Securities Register and arranging any other necessary searches so that full information is at hand about any encumbrances registered over assets of the business
- Arranging a discharge of all financial securities in the name of the Seller that are secured over assets of the business
- Ensuring appropriate financial arrangements are in place for the Buyer in readiness for settlement
- Considering any gift certificates or vouchers for the business that are outstanding at settlement and how they are to be dealt with
- Arranging the transfer of registration of any vehicles included in the sale
- Coordinating the conveyancing of any land which is involved in the sale
- Conducting a stock take
- Preparing the settlement statements
- Arranging, attending and completing settlement
- Ensuring that each party has a copy of the required business records to make each of them compliant with the legal requirement to retain business records for the required period
- Stamping the contract and remitting the stamp duty.
There are many other matters that may require attention, depending on the type of business that is being transferred.
Whether you are a Buyer or a Seller, our team at Mildwaters Lawyers can take care of your legal needs with the sale and purchase of business.
Make contact with us today so we can get started to ensure that your business sale or purchase proceeds smoothly.