Lawyers for Buying or Selling a Business
Buying or selling a business may be one of the biggest decisions you will make, from both a financial viewpoint and in general. Pair this with the complexities of buying or selling a business, and it can be a very stressful process!
It is crucial to get the right lawyer involved with your business sale or purchase and to get sound legal advice. Let our experienced lawyers make the purchase or sale process as smooth as possible for you.
We will be your trusted partner in this exciting new journey: read what one of our clients said about selling their business with us.
Our services include:
- Legal due diligence
- Structuring advice
- Negotiation and drafting of contracts, including any Terms Sheet and Sale of Business Agreement
- Review of related legal documents, such as the premises lease or supplier contracts
- Advice on intellectual property and other legal issues
- Assistance with transfer of ownership or lease, and completion
Steps in buying a business
Due diligence and structuring
If you are buying a new business, we recommend undertaking due diligence. This is the process of investigating the business’s structure, operating and financial records to ensure that it is a viable purchase, worth the price, and identifying key future risks.
You should always conduct your own due diligence, as well as seek financial due diligence advice and legal due diligence. Our article on due diligence when purchasing a business covers the basics.
Some key risk areas from a legal perspective include:
- No legal contracts in place, or easily terminated contracts in place with major customers
- Other contract risks, such as a lack of supplier contracts
- Being bound by unfavourable contracts, including leases
- Intellectual property risks: for example, the brand is not registered with IP Australia, or the brand is at risk of infringing another party
- Domain name risks: if the key value of the business is in a domain name, there are rules in Australia under which they can be claimed by someone who holds the registered trade mark
- Third party risks such as court proceedings or claims to equipment ownership
We can also provide advice as to the best structure to buy the business under, such as sole trader or company structures.
Contract review and negotiation
There will likely be multiple documents required to buy or sell a business, including a Terms Sheet, Sale of Business Agreement and transfer or variation agreements for any other documents that need to come with the sale, such as lease or supplier contracts. These documents should always be drafted or reviewed by an experienced lawyer representing you, and negotiated if necessary.
Once you have agreed to a Terms Sheet, the most important document for the purchase of a business is the sale contract, as this determines what you are paying for and what remedies you have if there is anything unexpected (including after the sale).
Completion
Once the Sale of Business Agreement is signed by all parties, the sale will be settled on another date, usually called the “Settlement Date” or “Completion Date”, where the balance of the purchase price is paid, all the related contracts are signed and exchanged, and the transfer forms (where relevant) are lodged.
Frequently asked questions
Do I need a lawyer to buy a small business?
Legally you can sign without one, but the sale contract determines what you’re actually buying and what happens if the business isn’t what it appeared. Legal due diligence and a properly negotiated agreement are the difference between buying an asset and buying a problem.
What does legal due diligence cover?
The contracts the business depends on, the lease, the intellectual property, employee arrangements, and any claims or disputes: the legal skeleton of the business. One of the biggest risk factors is personal properties securities registrations which can end up costing a significant amount if not properly settled beforehand. Legal due diligence runs alongside your own commercial checks and your accountant’s financial due diligence.
How long does a business sale take?
It varies with the deal: the contract stages typically run over some weeks, with settlement set for an agreed completion date. Generally, you will want to allow for at least 1 month to get from drafting to settlement/completion.
What does it cost?
A fixed fee, quoted upfront once we understand the transaction. The first consultation is free.
Next steps to buying or selling a business
At The Legal Shop, we understand the complex legal issues that can arise during the sale or purchase of a business. Book a free consultation today to learn how we can help you avoid costly mistakes.
