When buying a business, it is important to have a comprehensive understanding of the business in all respects and its operations before you become contractually bound to purchase. Too often, our lawyers are asked to deal with a situation where a buyer or seller has signed what they are led to believe is a ‘standard’ contract, which does not adequately protect the rights of that party.
Our Commercial and Business Lawyers on the Gold Coast can conduct a thorough pre- contract, legal due diligence of the business and identify the risks that can or may adversely affect the business and its future operations.
It is essential that from the outset, the terms of purchase and sale of the business are agreed and each party’s rights and obligations are clearly set out in a written contract. Our experienced Gold Coast and Queensland lawyers can assist you in drafting, negotiating and or reviewing the contract for sale prior to the parties transacting. We can advise you on matters relevant to the business and your purchase including but not limited to:
- what you are buying, be it shares in the corporate business or the business assets and how best to structure the purchase;
- legal advice on the business structure to ensure you acquire the business in the preferred entity to maximise tax outcomes and asset protection, including where you may be operating with others;
- what business assets are being sold including intellectual property and intangible assets;
- transfer duty implications and the calculation, payment and remittance of transfer duty (if it applies) to the Office of State Revenue;
- whether the business is sold on a walk-in walkout-basis (inclusive of stock) or sold with stock in trade or work in progress to be determined after a stocktake (including the contractual procedures for same) and paid in addition to the contract price;
- intellectual property rights, assignment and transfer or protection (such as trade marks);
- negotiating contract terms with third parties such as for franchised businesses;
- the apportionment of the purchase price between the goodwill of the business and its other assets, such as stock in trade, intellectual property, the fixtures, fittings and chattels of the business (in consultation with the parties’ accountants);
- the leasing requirements of the business;
- employees and their accrued entitlements and how they should be dealt with by either or both of the parties as part of the contract (depending on whether they will become transferring employees under the Fair Work Act 2009 (Cth) or otherwise;
- due diligence including in respect of any material contracts with clients, suppliers etc and their assignability or otherwise;
- all contractual arrangements on settlement; licences and permits required for the business; encumbrances and debts affecting the business assets and carrying out investigations and searches in respect of the business to ensure you are well equipped to make informed decisions;
- restraints and whether there are any restrictions on the vendor’s ability to open a similar business in the future; and
- any period for which the vendor is required to assist you in the operation of the business.
In addition to legal due diligence, you should satisfy yourself as to:-
- the books and records of the business and with the assistance of your accountant, carry out a financial due diligence of the business; and
- operational matters, including a trial period involving a physical attendance over a period of time to oversee daily operations and also to verify the trading performance over the trial period accords with the financial information presented at the outset of the proposed purchase.
This will ensure you have an understanding of the business operations, profitability and viability and enable you to determine the value of the business and business assets.
Our business and commercial law lawyers have acted for many buyers of businesses from small retail businesses in Queensland to multinational and international businesses and have the expertise to streamline the processes cost effectively whilst ensuring you receive comprehensive professional advice and are guided every step of the way through to completion.
If you are buying a business on the Gold Coast or anywhere in Queensland, do not hesitate to contact us today on 07 5526 0157 to make an appointment with one of our Gold Coast Lawyers to discuss your commercial and business legal matters.