Know what you are getting into…
What to consider when BUYING a business?
COVID-19 has been contained comparatively well in Australia, business activity is resurging in most areas except a few industries.
We are experiencing increased business sales/purchase transactions this year.
Below are matters to be considered in relation to a business purchase.
- Business itself – Is the business making money or not.
It can be examined in the seller’s accounting books and records such as BAS or audits first. Most business sale contract provide a provision regarding buyer’s trial period to verify weekly average gross income. If not satisfied, the buyer can terminate the contract and the deposit will be refunded to the buyer.
- What are you buying? – stock-in-trade, plant & equipment, and others?
The buyer must know what business assets they are buying. Whether the business assets include the goodwill, fixtures, fittings, furniture, chattels and the plant and equipment, industrial and intellectual property, work-in-progress (if any), and stock-in-trade, permits, licences, and other assets set out in any schedules attached to the contract.
- Lease – assignment or new lease?
The terms and conditions of either the existing lease or new lease is essential to the success of the business, so a thorough review must be done.
- Existing employee/s – whether to include as part of the purchase or not.
The buyer must carefully consider whether to make an offer to existing employee/s as part of business purchase as this may cause employment law issues after the purchase.
The above are essential issues to be considered when you purchase any business. Other issues may be additionally considered depending upon the nature of each industry.
If you are interested in or considering buying an existing business, we at STEPHENS & TOZER would love to assist you.
We are experts in all areas of property and business law. Expert advice, informed decisions results in a prosperous business!!!