Buying an existing business without a lawyer can be risky. A lawyer can play a variety of roles if you are considering buying a business (or even starting a new business). You want to ensure that you are not inheriting the debts and legal problems of the former owners. For instance, what if they have misrepresented the sales or income of the business? Do they have the right to the business name? How much time is left on the lease? Do they owe money on the inventory or equipment and could it be repossessed by the suppliers? Does the landlord agree to the sale?
The popular belief of a lawyer’s role in the process of buying a business is limited to the technical aspects such as preparing a purchase agreement or reviewing a lease, or even just incorporating a new company. Our role as lawyers doesn’t have to stop there. We can assist in investigating these and other important components when buying a business, as part of the due diligence process.
It is the duty of lawyers to ensure that you understand the risks you are confronting, which sometimes get overlooked in the enthusiasm to acquire or start the new business.
All in all, our goal is to advise you thoroughly, in plain language and deliver that advice to you in a timely manner.
Our lawyers have strong negotiation skills, ensuring that all the technical legal issues are addressed throughout the transaction, and that your interests are protected.
As they say, prevention is better than cure, so when buying any business, you should do your due diligence before you sign a binding contract with the seller. That means carefully examining the business in detail so that you can assess the value of the business and the risks you may face with buying it.
The due diligence period is your chance to ask questions about the business and, done correctly, can be the difference between purchasing a business that puts money in your pocket, and buying one that ends up costing you money. Make sure you understand what you’re getting yourself into – such as what the market is like, who your major competitors will be, and who the major customers and suppliers are.
If the seller won’t agree to a due diligence period; or won’t introduce you to their suppliers, landlord or real estate agent; or does not disclose relevant information to you (such as their financial statements, or evidence of key licences and permits) it may be cause for concern and you should only proceed with great caution.
In doing your due diligence, you should always get independent financial advice from an accountant or business advisor on the books and financial situation of the business, and independent legal advice on the contract and other legal aspects. Our Business Law team will be more than happy to assist you throughout your due diligence period, to help put your mind at ease on during this important purchase.
Call us now on 1300 907 335 or complete the contact form for a confidential discussion about your proposed business purchase.