Business Purchases & Sales
Sydney Business Lawyers has the breadth and depth of experience required for you to entrust them with your next business purchase or sale. More than 30 years experience ensures that they can deliver for you on time and on budget.
Making a decision to sell or purchase a business can be much more than just agreeing on a price. Not clearly identifying the issues and how they will be dealt with can be a costly mistake. We recommend that you get your lawyer involved in the transaction as early as possible, rather than doing that after you think that you have negotiated a deal. We find this works well because party expectations will have been addressed and managed before the essentials of the deal have been agreed. In that way, important issues do not either have to be dealt with from scratch or reworked. If they do, it can create a sense in a party that the goal posts are being moved and that the wheel is being reinvented. This can contribute to further time and cost, compromise your position if you choose to accept the deal as negotiated rather than change things or if you choose to change things, compromise the deal itself.
A business transaction can cover many issues and the following is list of some of them:
- Heads of agreement setting out the essential terms and conditions of the transaction. You will need to clearly spell out if the heads of agreement form a binding contract or whether they are to be non binding.
- Due diligence can be critical in ensuring that a purchaser is getting both what it is paying for and value for money. Privacy issues must be managed during the due diligence and consideration given to the use of confidentiality agreements, particularly when dealing with a competitor.
- Does the sale/purchase take place by way of a sale of assets only or does the purchaser take over the seller’s entity. The take over of the entity may save stamp duty, but as a purchaser, is it worth inheriting any skeletons that may be locked up in the seller’s business entity?
- As a purchaser, essential pre purchase requirements are agreeing on the structure of the entity that you will use, agreeing with your partners the essential terms and conditions by which you will own and operate the business, ensuring your finance is approved and you know that you can satisfy your lender’s requirements.
- The taxation implications of the transaction, including GST, stamp duty, income tax (including as to the apportionment of the purchase price) and CGT (including where there is a post settlement performance component of the purchase price).
- Any premises lease must be well understood by a purchaser.
- Understanding what the stock position is to be on settlement, including the basis of valuation and determining what stock is obsolete.
- Restraints of trade are often required to protect the value of the goodwill being acquired and care must be taken to ensure that the restraint will be enforceable.
- Managing employee transition, including ensuring that neither the seller nor the purchaser receives any unintended tax advantage in terms of the adjustment of employee entitlements on settlement.
- The ability to assign existing supplier and customer contracts.
- Protecting and securing the intellectual property that forms part of the assets being acquired.
- Software used in the business and its assignment to a purchaser.
- Does all plant & equipment comply with all occupational health and safety laws?
- Are there any potential environmental issues that may affect the decision to purchase? Certainly the contamination issue may impact on a finance application of a purchaser.
- Does the business comply with all statutory requirements?
- Should the transaction documents include any conditions to cover post settlement financial performance or other warranties that may have been made by or should be given by the seller?
- Where the seller or the purchaser is not a person, are personal guarantees required?
If you would like any assistance with your next business sale or purchase, please contact Sydney Business Lawyers on 8915 4900 or mail@sydneybl.com.au.