Business Purchase Lawyer

Our office is conveniently located in Sydney: 801, Level 8/100 William St, Woolloomooloo NSW 2011 (view in Google Maps).

How do our business purchase lawyers help?

Purchasing a business can be overrun with uncertainties such financial viability, legal compliance and market condition. We recognise these challenges and have a wealth of experience dealing with them and achieving outcomes for clients.

Our business purchase lawyers will guide you through the complexities and potential pitfalls. Whether you’re a seasoned entrepreneur or a newcomer, we provide tailored legal solutions that streamline your path to success.

Navigate negotiations and documentation with confidence and transition to your new business smoothly. Reach out to us today. 

Buying a Business: Key Considerations and Processes

When engaging in the purchase of a business, several crucial legal considerations come into play.

Seeking legal guidance early in the process is strongly advised to avoid potential pitfalls later on, as committing to an agreement or contract without proper insight can limit your negotiating power.

Key factors to address when purchasing a business

1. Parties and Assets

Clearly identify all parties involved in the transaction and precisely outline the assets being acquired. These assets can encompass equipment, business name, shares of a company, or other relevant components.

2. Premises Usage and Approvals

Establish the permissible uses of the premises where the business operates. Additionally, be aware of any necessary Council approvals or constraints on trade activities related to the business.

3. Price Determination

Determine the purchase price meticulously. This involves detailing the included inventory, evaluating goodwill and equipment value, deciding on a deposit amount, and addressing potential tax implications.

It might be necessary to enlist an independent valuer to accurately assess item values.

4. Training Consideration

Assess whether training is essential post-purchase and clarify how and where this training will be conducted.

What is the process of buying a business?

The process of buying a business requires careful planning, thorough due diligence, and strategic decision-making. Here’s a summary of the process:

1. Agreeing to key terms

The initial stage involves both parties agreeing on key terms, which can include:

1. Price;
2. Deposit;
3. Included Assets (e.g. customer lists, IP, business name, social media);
4. Excluded Assets (e.g cars used by the Vendor personally) (Note: Excluded Assets aren’t always applicable);
5. If the Vendor is going to assist in the business post settlement (Note: will they be an employee of the business or a contractor); and
6. Settlement Date.

2. Entering into Heads of Agreement (optional)

This step is not always necessary, especially for smaller transactions. A Heads of Agreement (HOA) outlines the preliminary terms and is often used in larger, more complex deals.

3. Drafting the Contract of Sale of Business

It is common practice for the Vendor to engage a lawyer to draft the contract (at their own cost). In some circumstances the parties will agree for the Purchaser to organise the contract. We can prepare this contract for either party.

4. Reviewing and negotiating contracts

Both parties typically engage lawyers to review and negotiate the contract terms, including:

• Adjustment of Employee Entitlements
• Vendor Warranties
• Indemnities
• Special Conditions

5. Signing contracts and paying the deposit

Upon signing the contracts, it is common practice for the purchaser to pay a 10% deposit to the vendor. The signed contracts are then exchanged between the parties.

6. Conditions precedent to settlement

Preparing for the settlement involves several key activities. This might look like:

1. Seeking the landlord’s consent to transfer or assign the lease;
2. Obtaining the ASIC key to allow the transfer of the business name;
3. Obtaining any necessary licences or transfer of licences to ensure the Purchaser can run the business (e.g liquour licence, food handling permits);
4. The Vendor ensuring that all PPSR’s are released and/or all directors guarantees are released or nominated to the Purchaser;
5. Updating contracts with employees who will be moving with the new owner, or terminating employees who will not be transferring;
6. Vendor to prepare all books and records to provide the Purchaser at settlement;
7. The Vendor will introduce the Purchaser to customers of the business;
8. If applicable, the Vendor will sign an employee contract or contractor agreement to work in the business post settlement.

7. Settlement

On the agreed settlement date, the parties convene to finalise the transaction. The vendor hands over:

1. Books, records, customer lists and contact details;
2. Original Lease and Disclosure Statement (if applicable);
3. Copies of any key contracts (e. if it is a café it could be a contract for leasing a coffee machine);
4. ASIC key to transfer business name;
5. Passwords for social media and domain name accounts;
6. Keys or access codes;
7. Signed transfer/assignment of lease.

The purchaser will make final payment and sign the transfer or assignment of lease. By following these steps, both parties can ensure a comprehensive and legally sound process of buying a business. At Progressive Legal, we offer expert guidance through each stage. Get in touch with us today for help.

Deposits in business purchases

In many cases, the seller may request a deposit from the buyer before the transaction’s completion. Understanding the stipulations surrounding the deposit is vital.

Determine whether the seller can utilise the deposit funds before the sale concludes or if the deposit is held in trust until the finalisation of the deal.

Lease agreement considerations

When purchasing a business, it’s common for there to be a lease agreement involved. For example, if the business operates within a rented space, you might acquire the business and its equipment while the landlord retains ownership of the premises.

It’s recommended to consult legal professionals to review and comprehend the lease’s terms and conditions.

Why do I need comprehensive legal documentation?

All legal documents related to the purchase must be unambiguous and comprehensible to both parties involved.

Seeking legal counsel before entering into any contracts or agreements is highly recommended to ensure your rights and interests are safeguarded throughout the process.

Taking these precautions can help navigate the complexities of business acquisitions and facilitate a smooth transaction.

How does a business purchase lawyer help?

When it comes to purchasing a business, the complexities involved can be overwhelming. From legal documentation to due diligence, negotiating contracts to understanding lease agreements, each phase requires a keen eye and expert advice. Here’s how they can help you in the process:

1. They accurately identify the assets being bought or sold such as equipment, intellectual property, and inventory.
2. Thoroughly review the target business’s financial records, contracts, legal obligations, and any potential liabilities.
3. Negotiate to ensuring that the terms align with your goals and protect your rights.
4. Review the lease agreement terms, advising you on key clauses, responsibilities, and potential pitfalls.
5. Make complex terms easy to understand, allowing you to make informed decisions.

Key takeaways

Buying a business is a significant step that demands careful consideration and expert guidance. At Progressive Legal, our business purchase lawyers are your trusted partner throughout this process, offering you valuable insights, legal acumen, and strategic support. Whether you are buying a business or selling a business, we are here to help.

With our guidance, you can confidently navigate the complexities of business acquisitions, making informed decisions that align with your aspirations and safeguard your future.

If you’re ready to take the next step in your business journey, reach out to us today for a consultation. Your success is our priority, and we’re here to guide you every step of the way.