Stepping into the role of boss and buying your own business is a hugely exciting step in anyone’s career, but there is also a lengthy list of criteria that should be considered as you investigate the business opportunity that’s right for you.
From the contract of sale to the value of plant and equipment and the lease terms that come as part of the business exchange, here’s what you need to know.
Time in reconnaissance
There’s a great old saying in the business world, “time in reconnaissance is never time wasted”, and that certainly applies when you’re looking at buying a business.
You need to ascertain the validity of any figures provided, investigate the condition of plant and equipment offered as part of the business, and be sure there are no potential problems with the lease attached to the business premises.
All of these factors fall under the due diligence that any potential business owner should undertake. We advise that both a lawyer and accountant should be engaged to assist in this task to ensure all the i’s are dotted and the t’s crossed before you take over the reins of any enterprise.
As business lawyers, here are just a few of the items we investigate.
Contract of sale
The business contract of sale is the seminal document which outlines the terms and conditions of any business transfer, along with specifying what is included in the sale.
This document needs to be water tight as it is the binding agreement that protects you should anything go wrong.
Your contract of sale will indicate the price of the business, the terms of payment, cooling off period, plant and equipment included (and its value), the business goodwill and client information, and what intellectual property is to be provided as part of the transfer.
It will also outline any additional terms and conditions. For example, your contract may include a non-compete clause. This is an important clause to consider.
The non-compete clause will preclude the current business owner from setting up a business similar to yours within a specific area and/or timeframe.
Freehold or Lease terms
Some business sales may also involve the transfer of free-hold land, but most will involve leasing premises to continue a business as a going concern.
Negotiating lease terms is another critical component of the buying process, as it outlines the length of the current lease, the price of the rent, and the options you have available in the future to re-let that property.
Often this involves negotiating with a third party (the property landlord) to ensure your new business won’t be affected by the sudden unavailability of the business premises.
About T & T Lawyers
T & T Lawyers are experienced in all areas of business law including contracts, franchise acquisitions, lease negotiations and more.
We believe offering a legal service is about building relationships. Our role is not just to step in during an emergency, but to assist you as a trusted advisor throughout the highs and lows of your business’ life.
Whatever your legal need, we are just a phone call away. Every business needs a lawyer in their corner.
You can learn more about our services here, or contact us directly for further advice.
