Business Sales & Purchases.
The role of a lawyer when assisting with the purchase or sale of a business is to get “the deal done”.
This can essentially be broken up into 3 distinct phases.
Drawing up the Contract
Drawing up the Contract captures the preparation and negotiation of the contract for sale. It is designed to clearly map out what is being bought and sold and what obligations each party has both during and after the sale.
Most business brokers have their own set of precedents and there are generic contracts which are available online. However, our experience is that these documents (particularly the generic ones) are geared towards brick-and-mortar retails shops.
They aren’t a good fit for industrial businesses or professional services businesses. And neither are that strong when the sale involves vendor terms or earn-out arrangements which might trigger unpleasant tax consequences if inadequately worded.
Having the sale contract professionally drafted by a lawyer is the first step in having peace of mind that the deal won’t go sideways if things don’t go smoothly.
2. Settlement
Not all settlement agents can do business settlements.
The procedures for settling a business are very different that land. Therefore, business settlements tend to be carried out by commercial lawyers - not settlement agents.
At Your Legal HQ, we ensure that every business sale and purchase is handled by a lawyer. This is not so we can charge more. Rather, the lawyer is on hand to ensure that the little problems which always creep up can be dealt with or compromised before either side loses their patience and walks away from the deal.
3. Due Diligence
Due diligence is not something only your accountant does. You also need a lawyer.
Yes your accountant should be involved in due diligence - either in preparing the disclosure bundle for the buyer or in reviewing the other sides financial books. But that is not the only due diligence.
How we can help
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Check corporate registers have been maintained.
Check or prepare Consent to Sell Shares in the Company are provided and correct.
Check the ASIC register is up to date and complete.
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Any assets that have a security interest registered against them by a 3rd party, will be removed or transferred with consent.
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Ensure all current licences to run the business are correct and valid.
Determine if new or renewed licenses will be needed due to change in ownership.
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Ensure the key contracts remain if buying/selling the business (the goodwill).
Ensure key contracts are fair or whether they should be re-negotiated for the Buyer.
Written confirmation from the Seller that there is no outstanding claim on the business by a customer or supplier.
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Determine key employees.
Determine employee entitlements (Wages, leave, Superannuation).
Determine workers’ compensation insurance and claims.
Services provided by contractors.
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Determine what IP is being sold;.
Determine who owns the IP.
Check and clear/remove any security registered over the IP.
Determine the IP rights of the business in Australia and overseas.
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Determine business liabilities (overdraft & bank debts).
Determine the security over liabilities.
Determine the undisclosed (hidden liabilities).
Determine cross-guarantees or director guarantees
Determine and review lease agreements for vehicles, plant & equipment.
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Determine if any actions are pending by (or against) the Business in any Australian court.
Check any indemnities that may limit exposure to the Buyer, or amend the Contract to protect our client.
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Check the Contract Schedule for current insurances - obtain and review.
Obtain claims history and status of current claims which may affect the Buyers ability to insure moving forward.
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Correct any asset valuations.
Correct any liabilities with creditors.
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Determine the current and future tax and CGT liabilities of the Business (Income Tax, CGT, GST, Payroll Tax, Land Tax).
Advise on business restructure (if available) to minimise tax on the business sale.