Purchasing or Selling a Business
Obtain professional advice
Establishing yourself as a business owner requires careful planning, including understanding your legal requirements. It is important that you obtain advice from our office in order to have the correct structures in place.
Starting up a new business can involve purchasing an existing business or franchise, or setting up your own enterprise. While existing businesses and franchises provide immediate cash flow and have infrastructure in place, the purchase can be a complex process and therefore, you must obtain advice from a solicitor.
Deciding on the business structure has implications for the running of your business in relation to taxes, liabilities, ownership and profitability. The four common structures are:
sole proprietor/trader (owned and run by an individual)
partnership (arrangement of people to cooperate but not as a separate legal entity)
company (body corporate which is a separate legal entity from its shareholders)
trust (holding property for the benefit of one or more persons)
Our solicitors and your accountant can advise you on the best suited structure considering your tax position, personal legal liability and available of capital.
Buying an existing business:
Serious negotiations usually commence with an agreement in principle that is followed by our solicitors conducting necessary due diligence. This process includes checking business records such as licenses, permits and registrations, plans and operations, financials, meeting minutes and intellectual property of the business.
Do not sign anything without first seeking our advice.
The contract :
We will peruse the terms of the proposed contract in order to protect your interest. The following are some of the things that you need to consider when purchasing a business:
your rights to the business name
the price of existing stock and the fixtures and fittings to be included in the sale
the vendor’s warranties and representations on the sales performance of the business
‘goodwill’ (a figure that determines the intangible advantages built up by the business, i.e. reputation and connections, which differentiate the value of an existing business from a new business)
your need for a restraint of trade on the seller to prevent direct competition within reasonable proximity
your access to client lists and records
transfer of licenses and permits required for the running of the the business at that location
assignment of the lease
employment contract of existing employees
Setting up a business:
Choosing a recognisable business name is the first step in ensuring your success as well as deciding on the location, funding options, business structure, insurance and basis for engaging workers in the business.
Operating a business:
There are many facets of law you need to consider while operating a business. Guidance on these matters before they become an issue may save your business costs and reduce exposure to your personal assets. It is important that you seek advice from our solicitors on legal issues arising from:
- copyright trademark
- asset protection
- tax liability
- consumer protection and trade practices
- debt recovery
- employee relations
Leasing vs Buying Premises
Your business location (foot and vehicle traffic) and the size of the premises will have a significant impact on the success of the business. Short-term renting provides flexibility if the business grows quickly, while long-term leases with affordable rent prices can give your business stability. If you are planning to customise your location or install a premium fit out, you should consider purchasing real estate that is zoned for your business.
If you decide to lease a premises, the terms and condition of the lease can be negotiated. Please contact our office to seek legal advice so that we can amend the proposed lease to reflect your needs. The following are a few things you need to consider:
duration of the lease
share of outgoings
Please contact our Everton Park or Oxley office if we can be of any assistance to you.