Buying a Business
Many people dream of owning a business. Freedom from a Boss, time with family, economic security. The reality of business ownership can be a lot less romantic.
We encourage clients to do their research, look at the market and consider if the particular business is the best option for them.
We closely review the Contract for Sale to make sure the terms and conditions are well understood. Issues such as non compete clauses preventing a seller from opening another competing business for a period of time are critical. Does the business have the necessary licences? Who owns the intellectual property? Is the price 'walk in walk out' or 'stock at valuation'? Does the seller own all the equipment? Are there any charges registered against the business?
It is critical that the Contract reflect the commercial deal that was reached. We can assist in working out the best terms.
We work in very closely with Accountants and other advisers to make sure the client receives comprehensive advice.
Due diligence can be described as a fancy term for doing your homework. It is critical that clients undertake proper enquiries before going ahead with the purchase.
Check the financials closely especially the Profit and Loss statement, Balance Sheet and IAS returns. Make sure the financial information covers a few years.
Discuss the terms of the lease, make enquiries about potential competitors opening nearby, talk to other tenants in the shopping centre are all way to minimise risk.
Selling a Business
Having built a business over the years it is important that the sale goes through smoothly. We draft a contract including items such as the inventory, lease, licences etc to reflect the commercial terms agreed. We work in with the lawyers for the buyers to make sure all is in order before arranging exchange of contracts.
Exchange locks the buyer and seller into the deal so it is vital that the contract properly reflects the agreement.
Between exchange and settlement the stock take if relevant can be arranged. Licence transfers are prepared. We work in with your Bank if required to make sure there are no restrictions on transferring the business.
On settlement we make sure all payments are made, that ownership passes to the purchaser and that the seller is paid.
A number of our clients find operating a franchise is right for them. The Franchisor sets up a tried and tested business system that usually involves training, marketing and technical support.
Franchises are highly regulated with specific legislation covering this growing area. When buying a franchise business it is vital that we review the franchise agreement and disclosures with our client.
Commercial leases usually run for a number of years with options to extend for further periods. The location of a business can be a vital part in business success.
When selling a business the presence of an effective lease is often a big factor in negotiations.
We act for tenants and landlords in relation to commercial leases. The term or duration of the lease is critical, who pays for outgoings such as rubbish removal, who is responsible for maintenance of air conditioning are vital factors to consider.
The simplest structure to operate a business is as a sole trader. That may be suitable for some businesses but the risk is that personal assets are exposed to claims through the business.
Partnerships allow more than one person to operate a business. There is a risk that each partner can be liable for the debts of the partnership. Certainly a formal partnership agreement is highly recommended.
A company structure allows for the creation of a separate legal entity that continues after the death of an individual and offers some level of asset protection.
Trusts allow for the separation of the legal and the equitable ownership of a business. That means a Trustee, often a company, owns the assets, but various beneficiaries of the Trust can benefit from income from the Trust. The beneficiaries may be family members.
There is no one simple solution when it comes to selecting a business structure. We need to consider a range of factors before setting up the correct structure for our clients.